CPF Top up questions

[compuser]

1. I want to get the tax relief for year 2017 by topping up the CPF account.
If I top up $7000 now, will I be able to age the full CPF interest for the entire year? Or I will only get interest prorated from December?

2. Will I be eligible for the tax relief for year 2017 for the self top up if i do it now?

3. My wages per mth is currently 6k, age 36. Did it hit any ceiling that limits what I can get?

4. For the tax relief for 2018, should I top up in Jan or December?

 

[JuniorLion]

1. I want to get the tax relief for year 2017 by topping up the CPF account.
If I top up $7000 now, will I be able to age the full CPF interest for the entire year? Or I will only get interest prorated from December?

2. Will I be eligible for the tax relief for year 2017 for the self top up if i do it now?

3. My wages per mth is currently 6k, age 36. Did it hit any ceiling that limits what I can get?

4. For the tax relief for 2018, should I top up in Jan or December?

CPF interest is calculated monthly, based on the lowest amount in your account, and credited yearly.

1. If you top up now, you will get the interest for December only.

2. Yes, if you do your top up before 31 December 2017.

3. Depends on how many months of bonus you get. If you get 5 months bonus, then you will hit the ceiling. Maximum contribution is $37740 into CPF pear year.

4. For Tax Relief purposes, it doesn't matter which month you top up, as long as it is before December 31. On the other hand, to maximize your interest rates, you should top up in January.

 

[henrylbh]

1. I want to get the tax relief for year 2017 by topping up the CPF account.
If I top up $7000 now, will I be able to age the full CPF interest for the entire year? Or I will only get interest prorated from December?

2. Will I be eligible for the tax relief for year 2017 for the self top up if i do it now?

3. My wages per mth is currently 6k, age 36. Did it hit any ceiling that limits what I can get?

4. For the tax relief for 2018, should I top up in Jan or December?

No interest for top up in Dec. But must top up by Dec to get tax relief next year or YA 2018.

 

[JuniorLion]

No interest for top up in Dec. But must top up by Dec to get tax relief next year or YA 2018.

Oh yes, you are right!

 

[BBCWatcher]

2. Yes, if you do your top up before 31 December 2017.

CPF must credit your top-up before the end of the calendar year in order to qualify for tax relief in the next Year of Assessment (which is based on the previous calendar year). The absolute latest crediting deadline is only via a paper check handed to a CPF officer at a CPF customer service office before 10:00 a.m. on the last business day of the year. AXS, e-Cashier, and other top-up channels have earlier deadlines, usually a couple business days earlier.

December 31, 2017, is a Sunday, so that will definitely be past the top-up deadline for the year.

3. Depends on how many months of bonus you get. If you get 5 months bonus, then you will hit the ceiling. Maximum contribution is $37740 into CPF pear year.

The CPF Annual Limit does not apply to Special Account (or Retirement Account) top-ups. You can top up a Special Account all the way up to the Full Retirement Sum ($166,000 in 2017) if you wish, in one go. Tax relief is capped at $7,000.

It is possible to top up the Medisave Account, and with tax relief (and no $7,000 limit to that tax relief). Medisave top-ups must fit within the CPF Annual Limit of $37,740 (and within the Basic Healthcare Sum, which is $52,000 in 2017). Indeed, I generally recommend voluntarily topping up Medisave first, if able. But doing some of both is great. For example, if your wages are $6,000/month plus a 13th month bonus of $6,000, then your total compulsory CPF contributions (below age 55) will be $28,860 (employer plus employee). That should leave a $8,880 gap between your compulsory contributions and the CPF Annual Limit ($37,740 minus $28,860 is $8,880). Thus you would be able to top up your Medisave Account by $8,880 and your Special Account by $7,000 (or more; the amount above $7,000 without tax relief). Your total tax relief would be $15,880 for your voluntary contributions. And you could contribute another $7,000 to a spouse's Special Account. Assuming your spouse has limited worldwide income (less than $4,000), you would get another $7,000 of tax relief, for a total of $22,880 of voluntary CPF contribution-related tax relief in this example.

There is a total tax relief limit of $80,000 (including CPF compulsory contributions and other tax reliefs), and of course you can't get tax relief if you're in the zero percent tax bracket.

 

[JuniorLion]

CPF must credit your top-up before the end of the calendar year in order to qualify for tax relief in the next Year of Assessment (which is based on the previous calendar year). The absolute latest crediting deadline is only via a paper check handed to a CPF officer at a CPF customer service office before 10:00 a.m. on the last business day of the year. AXS, e-Cashier, and other top-up channels have earlier deadlines, usually a couple business days earlier.

December 31, 2017, is a Sunday, so that will definitely be past the top-up deadline for the year.


The CPF Annual Limit does not apply to Special Account (or Retirement Account) top-ups. You can top up a Special Account all the way up to the Full Retirement Sum ($166,000 in 2017) if you wish, in one go. Tax relief is capped at $7,000.

It is possible to top up the Medisave Account, and with tax relief (and no $7,000 limit to that tax relief). Medisave top-ups must fit within the CPF Annual Limit of $37,740 (and within the Basic Healthcare Sum, which is $52,000 in 2017). Indeed, I generally recommend voluntarily topping up Medisave first, if able. But doing some of both is great. For example, if your wages are $6,000/month plus a 13th month bonus of $6,000, then your total compulsory CPF contributions (below age 55) will be $28,860 (employer plus employee). That should leave a $8,880 gap between your compulsory contributions and the CPF Annual Limit ($37,740 minus $28,860 is $8,880). Thus you would be able to top up your Medisave Account by $8,880 and your Special Account by $7,000 (or more; the amount above $7,000 without tax relief). Your total tax relief would be $15,880 for your voluntary contributions. And you could contribute another $7,000 to a spouse's Special Account. Assuming your spouse has limited worldwide income (less than $4,000), you would get another $7,000 of tax relief, for a total of $22,880 of voluntary CPF contribution-related tax relief in this example.

There is a total tax relief limit of $80,000 (including CPF compulsory contributions and other tax reliefs), and of course you can't get tax relief if you're in the zero percent tax bracket.

Thanks for providing a detailed write-up for my summarized answers.

 

[testerjp]

Is this the right page and which is the correct option?
https://www.cpf.gov.sg/eSvc/Web/Misc...ashierHomepage

To top up to CPF special account, assume I'm below 35 years old, should select ," Top up my own/recipient SA under the Retirement Sum Topping-Up Scheme" ?


I read at some other posts, people were recommended top up Medisave then let it overflow.
Why are people doing that and why is that better?

 

[JuniorLion]

Is this the right page and which is the correct option?
https://www.cpf.gov.sg/eSvc/Web/Misc...ashierHomepage

To top up to CPF special account, assume I'm below 35 years old, should select ," Top up my own/recipient SA under the Retirement Sum Topping-Up Scheme" ?


I read at some other posts, people were recommended top up Medisave then let it overflow.
Why are people doing that and why is that better?

Yes, correct page.

Short answer: It's actually the same. But some people prefer to have a full Medisave account, which can be used to pay for their Integrated Shield Plans (CPF Life, etc), whereas Special Account can not be used for it.

Long answer: Somebody else will explain it in a better way than I do.

 

[BBCWatcher]

Short answer: It's actually the same. But some people prefer to have a full Medisave account, which can be used to pay for their Integrated Shield Plans (CPF Life, etc), whereas Special Account can not be used for it.

Slightly longer answer (in addition to the points you made):

1. Interest on your Medisave Account is the same high rate, and it's credited to your Special Account.

2. Since your Medisave Account contributions must fit within the CPF Annual Limit, it's generally harder to make voluntary Medisave contributions as your salary/wages go up during the course of your career. So it makes sense to seize the less common opportunity first, while you still can.

3. Special Account top-ups must go into CPF LIFE (lifetime retirement annuity payouts). While that's not a problem from my point of view, some people for some strange reason(s) would prefer to participate in CPF LIFE at the Basic Retirement Sum (BRS) level. With top-ups you're unlikely to be able to participate in CPF LIFE at the low BRS level, so you might prefer to have fewer Special Account top-ups, to get closer to BRS-level CPF LIFE participation rather than FRS-level.

4. Yes, once your Medisave Account reaches the Basic Healthcare Sum (BHS) then your compulsory Medisave contributions spill over into your Special Account.

5. Ordinary Account funds can be converted to Special Account -- and that's often a wise thing to do. That's not true of Medisave funds, so in some sense you might prefer to aim voluntary top-up funds into Medisave first.

6. It may make more sense to top up your spouse's Special Account first, before your own Special Account, assuming your spouse's global income is under $4,000 (and thus you can get tax relief for that top-up). So you'd top up your Medisave (while you can) and your spouse's Special Account. The latter is important for collecting bonus interest across the household, assuming you've maxed out your own bonus interest.

7. As pointed out, medical calamities can occur at any age, so having Medisave funds available helps address that risk. The Special Account is for retirement, still very important but not happening until age 55+ (age 65+ for CPF LIFE payouts).

 

[S1mpleGuy]

Is this the right page and which is the correct option?
https://www.cpf.gov.sg/eSvc/Web/Misc...ashierHomepage

To top up to CPF special account, assume I'm below 35 years old, should select ," Top up my own/recipient SA under the Retirement Sum Topping-Up Scheme" ?


I read at some other posts, people were recommended top up Medisave then let it overflow.
Why are people doing that and why is that better?

For medisave topups, i should select contribute to medisave instead of topup to pay cpf life premiums? Is there a difference?

 

[BBCWatcher]

For medisave topups, i should select contribute to medisave instead of topup to pay cpf life premiums? Is there a difference?

Yes. The latter most likely sets a specific amount (your MediShield Life premium amount), which is convenient if that's all you're trying to do. But that's not what you're trying to do. You're trying to obtain tax relief, so you want to select that option and pick your own top-up amount.

 

[testerjp]

Can i put it that put in medisave is because can still use it in case of emergency. However, that amount can't be taken out at all.


Put in Special account, can at least withdraw out the excess after hitting the BRS?

 

[JuniorLion]

Can i put it that put in medisave is because can still use it in case of emergency. However, that amount can't be taken out at all.


Put in Special account, can at least withdraw out the excess after hitting the BRS?

Both Medisave and Special Account can be used for legacy purposes - you can nominate your children to receive it, either in cash or in their CPF Accounts.

It's always good to view CPF Accounts (OA, SA, Medisave) as a form of forced savings, which you can tap on, in various situations.

 

[kehyi4]

Put in Special account, can at least withdraw out the excess after hitting the BRS?

Just want to remind that cash top-up to SA under RSTU for tax relief -> cannot be withdrawn under BRS as they are earmarked for RA

Under FRS however, whatever sum you have above FRS, no matter the source, can be withdrawn

 

[BBCWatcher]

Just want to remind that cash top-up to SA under RSTU for tax relief -> cannot be withdrawn under BRS as they are earmarked for RA

Right. Special Account top-ups must go into CPF LIFE (retirement annuity payouts).

Opinions vary, but I think it's generally the smarter play to use limited dollars to top up Medisave first, while you can (while you're below the CPF Annual Limit). And also prioritize a spouse's Special Account, assuming he/she has less than $4,000 of global income. The former is because medical calamities can happen at any age, and you'll bring forward the day when compulsory Medisave contributions will spill over into your Special Account. (Ordinary Account to Special Account conversions help, too. If you don't need all of your Ordinary Account -- and many people don't -- then do that, too.) Topping up a low income spouse's Special Account helps spread financial security across the whole household and maximizes bonus interest.

 

[kehyi4]

Just want to remind that cash top-up to SA under RSTU for tax relief -> cannot be withdrawn under BRS as they are earmarked for RA

Under FRS however, whatever sum you have above FRS, no matter the source, can be withdrawn

ah, i forgot to elaborate - When CPF calculates BRS, it excludes cash top-ups under RSTU, ie RSTU does not count towards BRS and is earmarked separately

What this means:
If you have contributed 21k under RSTU and BRS is 83k, then what you can withdraw under BRS is FRS -BRS -RSTU, or 166k -83k -21k = 61k

Actually, it's somewhat less than that, because interest earned by RSTU is also unwithdrawable

This info is not found on CPF FAQ or website, but was "discovered" by HWZ-MM forumers when they queried CPF via email questions and replies

 

[greddy88]

Right. Special Account top-ups must go into CPF LIFE (retirement annuity payouts).

Opinions vary, but I think it's generally the smarter play to use limited dollars to top up Medisave first, while you can (while you're below the CPF Annual Limit). And also prioritize a spouse's Special Account, assuming he/she has less than $4,000 of global income. The former is because medical calamities can happen at any age, and you'll bring forward the day when compulsory Medisave contributions will spill over into your Special Account. (Ordinary Account to Special Account conversions help, too. If you don't need all of your Ordinary Account -- and many people don't -- then do that, too.) Topping up a low income spouse's Special Account helps spread financial security across the whole household and maximizes bonus interest.

Can one top up only his spouse MA account but not the OA or SA?

Reason is because the spouse isn't working and no point topping in other accounts, since one gone in they can never be touched.
At least MA can pay for some medical insurance and Elder Shield policies.

 

[hwmook]

Can one top up only his spouse MA account but not the OA or SA?

Reason is because the spouse isn't working and no point topping in other accounts, since one gone in they can never be touched.
At least MA can pay for some medical insurance and Elder Shield policies.

Yes, there is MA top up option.

 

[hwmook]

Can i put it that put in medisave is because can still use it in case of emergency. However, that amount can't be taken out at all.


Put in Special account, can at least withdraw out the excess after hitting the BRS?

If you can meet BRS then I don't see why you can't meet the BHS. Once you meet BHS, it will overflow into your SA anyway and form part of your retirement sum.

 

[BBCWatcher]

Can one top up only his spouse MA account but not the OA or SA?

Yes, you can. However, if your spouse is already in the zero percent tax bracket then there's no tax relief with a MA top-up.

I think it's smarter to maximize available tax reliefs first, before making any MA or SA top-ups that don't qualify for tax relief.

At least MA can pay for some medical insurance and Elder Shield policies.

That's true, but it's smarter for the spouse in the higher tax bracket to assume Medisave payable insurance premiums from his/her MA, for the whole household.