CPF Top up questions

[dork32]

i'll be 55 in end 2019
i have met my cohort's FRS in SA & 2018 BHS in MA & will continue to work till at least my 55th.
my objective is to get my poorly performing cash into preferably SA or OA to earn the higher interest & still be able to call on the funds on demand under the Withdrawal at 55 framework.
i gather that i can either do Capital Repayment and / or VC to all 3 a/cs

please share the pros & cons for using cash for each

(1) Capital Repayment - PROS = , CONS =
(2) VC to all 3 a/cs - PROS = , CONS =

vc better. vc money goes into oa and sa for you. sa earn 4%, higher than oa. since you have frs, sa is like money in the posb saving without the atm card.
capital repayment money go into oa.

vc limit is 37k per year.
capital repayment limit is amount you took out to buy the house.

 

[dork32]

vc better. vc money goes into oa and sa for you. sa earn 4%, higher than oa. since you have frs, sa is like money in the posb saving without the atm card.
capital repayment money go into oa.

vc limit is 37k per year.
capital repayment limit is amount you took out to buy the house.

also after you pay back all that you have taken out, you cannot do capital repayment anymore.

the 37k vc limit is renewed every year.

so the trick is to do vc till you max out, then you do capital repayment.

 

[henrylbh]

Hi,

My mum is 61 this year. She has a substantial amount in OA and much lesser in SA and the FRS in RA. Can I check if she can withdraw funds from her OA account as and when she likes now (based on withdrawal after age 55)? Any implications other than interest lost from OA?

Can she also transfer her OA to SA to earn higher interest and still retain flexibility to withdraw the funds if the above is possible?

I'm thinking of the viability of topping up her SA for tax rebate, before withdrawing from her OA in lieu of household allowance.

Appreciate advice as I'm not sure on the CPF withdrawal process after 55.

Hi BBC,

To further clarify, if her RA account is less than the current RS ($171,000). Will my top up to her RA still get tax relief? I get the impression that this can be done from IRAS website below:

"However, to keep tax benefits focused on supporting basic retirement needs, there is no tax relief for any amount of cash top-up which exceeds the limit on cash top-up amount for computing tax relief (i.e. Current Full Retirement Sum (FRS) – Retirement Account (RA) savings)."

I think her RA could be less than the current FRS. I will need to check later.

Your mom is in an enviable position compared to many and has flexibility to manage what she has in CPF, liking depositing or withdrawing funds anytime she likes. At 61, the way you described she must have met her cohort min sum in RA, and still have substantial amount in her OA and some SA. She would be under the old RSS unless she opt for CPF Life.

You can forget about topping up your mom's RA for tax relief because it seems she has met her cohort's min sum which is either 131k or 139k depending on when is her birthday month. She also cannot transfer her OA to SA, though she can transfer it to RA to FRS or ERS.

The current FRS is 171k and with her min sum at 55, the latter amount since then would more likely grow close to 171k or more.

 

[SKenny]

wow, your mum is in a good position :thumbsup:

She can withdraw money from CPF anytime she wants, yes, but the funds will be withdrawn from SA first, then OA, ie she will need to empty her SA before she can withdraw from OA

Also, after 55, transfer from OA to SA is not allowed. Similarly, she will not be able to top up SA, so your plan won't work

More info available at CPF FAQ:
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/withdrawals-of-cpf-savings-from-55

Actually the priority of withdrawal from CPF is;
1. Interest earned from SA in that year
2. Interest earned from OA in that year
3. Principal amount in SA
4. Principal in OA.

 

[a4973]

also after you pay back all that you have taken out, you cannot do capital repayment anymore.

the 37k vc limit is renewed every year.

so the trick is to do vc till you max out, then you do capital repayment.

dork32, thank you thank you, very helpful

 

[henrylbh]

Actually the priority of withdrawal from CPF is;
1. Interest earned from SA in that year
2. Interest earned from OA in that year
3. Principal amount in SA
4. Principal in OA.

Want to be exact, then you missed out contribution during the month and interest on MA?

 

[SKenny]

Want to be exact, then you missed out contribution during the month and interest on MA?

Why don't you fill everyone in? Instead you raised some red herrings?? Just saying.....

 

[henrylbh]

Don't mean to be offensive Just arrange the 2 in logical sequence to the default sequence you mentioned.

 

[kehyi4]

Don't mean to be offensive Just arrange the 2 in logical sequence to the default sequence you mentioned.

Or look to the source?

" Please note that the Board processes all withdrawals for members who are 55 and above, using the following deduction sequence:
* interests earned in the Special Account, then Ordinary Account, from the beginning of the year up to the month before the withdrawal, followed by
* contribution/refunds credited to the Special Account, then Ordinary Account, in the same month of the withdrawal, and lastly,
* monies in the Special Account, then Ordinary Account. "

btw, no mention of MA interest... I don't think MA interest can be withdrawn...

 

[henrylbh]

Or look to the source?

" Please note that the Board processes all withdrawals for members who are 55 and above, using the following deduction sequence:
* interests earned in the Special Account, then Ordinary Account, from the beginning of the year up to the month before the withdrawal, followed by
* contribution/refunds credited to the Special Account, then Ordinary Account, in the same month of the withdrawal, and lastly,
* monies in the Special Account, then Ordinary Account. "

btw, no mention of MA interest... I don't think MA interest can be withdrawn...

I think above not complete. I am sure interest on MA should be included.

Can you confirm with CPF?

 

[Jazzbie]

Your mom is in an enviable position compared to many and has flexibility to manage what she has in CPF, liking depositing or withdrawing funds anytime she likes. At 61, the way you described she must have met her cohort min sum in RA, and still have substantial amount in her OA and some SA. She would be under the old RSS unless she opt for CPF Life.

You can forget about topping up your mom's RA for tax relief because it seems she has met her cohort's min sum which is either 131k or 139k depending on when is her birthday month. She also cannot transfer her OA to SA, though she can transfer it to RA to FRS or ERS.

The current FRS is 171k and with her min sum at 55, the latter amount since then would more likely grow close to 171k or more.

I would have thought so but just checked that there was only 130K in RA. Not sure what was done in the past to result in this but she may have done something to protect it

 

[maple96]

I think above not complete. I am sure interest on MA should be included.

Can you confirm with CPF?

Confirmed MA interest not included when u withdraw, so MA monies can no longer be withdrawn. My relative withdraw, start with SA interest then OA interest, etc

 

[streams]

Hi folks,

medisave new limit is 54.5K, advisable to top up 2.5K to get some tax break? I would like to do so if it is true. thanks

 

[henrylbh]

I would have thought so but just checked that there was only 130K in RA. Not sure what was done in the past to result in this but she may have done something to protect it

If you sure she got only 130k in her RA at 61 with lots of balance in OA, then some unusual events must have taken place.

If 130k now means she unlikely to have met her cohort min sum when she was 55 and lots of money flowed back to her OA after 55. She has little SA means she continued working passed 55.

In above case, not sure whether you can top up her RA for tax relief as she now has 130k but unlikely to have met min sum when she was 55.

Also advisable to find out whether she need to make good any shortfall in min sum at 55 before she allowed to withdraw her SA/OA.

 

[Jazzbie]

If you sure she got only 130k in her RA at 61 with lots of balance in OA, then some unusual events must have taken place.

If 130k now means she unlikely to have met her cohort min sum when she was 55 and lots of money flowed back to her OA after 55. She has little SA means she continued working passed 55.

In above case, not sure whether you can top up her RA for tax relief as she now has 130k but unlikely to have met min sum when she was 55.

Also advisable to find out whether she need to make good any shortfall in min sum at 55 before she allowed to withdraw her SA/OA.

Yes, she worked passed 55.

I will try to find out from CPF on the tax rebate.

No isse to set aside to meet FRS if want to withdraw. It is not that far off now anyway if based on cohort FRS.

 

[kehyi4]

Hi folks,

medisave new limit is 54.5K, advisable to top up 2.5K to get some tax break? I would like to do so if it is true. thanks

Yes, you can top up 2.5k (VC to MA) to get tax relief

but note that VC MA is subject to CPF Annual Limit ($37,740 currently). This means that if your CPF contributions from employment (both employer and employee portions) reaches CPF AL, your VC MA will be refunded to you without interest and no tax relief will be given

 

[henrylbh]

Or look to the source?

" Please note that the Board processes all withdrawals for members who are 55 and above, using the following deduction sequence:
* interests earned in the Special Account, then Ordinary Account, from the beginning of the year up to the month before the withdrawal, followed by
* contribution/refunds credited to the Special Account, then Ordinary Account, in the same month of the withdrawal, and lastly,
* monies in the Special Account, then Ordinary Account. "

btw, no mention of MA interest... I don't think MA interest can be withdrawn...

Ha ha, this is what I had from CPF Board -

Please note that the Board processes all withdrawals for members who are 55
and above, using the following deduction sequence:
i) interests earned in the Medisave, Special then Ordinary Accounts from the
beginning of the year up to the month before the withdrawal, followed by
ii) contribution/refunds credited in the Medisave, Special then Ordinary
Accounts of the same month of the withdrawal, and lastly,
iii) excess monies above the Medisave Minimum Sum in the Medisave
Account, Special Account then Ordinary Account.

May be they have dropped Medisave (in 2018)?

 

[Jazzbie]

Yes, you can top up 2.5k (VC to MA) to get tax relief

but note that VC MA is subject to CPF Annual Limit ($37,740 currently). This means that if your CPF contributions from employment (both employer and employee portions) reaches CPF AL, your VC MA will be refunded to you without interest and no tax relief will be given

The CPF Annual Limit will not apply if top up $7K to SA straight right?

 

[henrylbh]

The CPF Annual Limit will not apply if top up $7K to SA straight right?

Top up to SA capped at prevailing FRS and tax relief capped at 7k.

 

[kehyi4]

The CPF Annual Limit will not apply if top up $7K to SA straight right?

Yes, top up to SA (it's called RSTU - Retirement Sum Top Up scheme) is separate from CPF AL

btw, after 55, you can't top up SA, only can top up to RA under RSTU