CPF Top up questions

[maple96]

Hi Guys,

My mum is over 55 already, and i wish to give her monthly allowance in the form of CPF top up, so as to also enjoy tax reliefs for myself.
....
is there any limit in her CPF balance that may lead to me not being to enjoy the tax reliefs?

Thanks.

A simple answer is : yes, u can claim tax relief only if u topup RA to current frs limit, and subject to 7k pa per eligible contributor.

How to calculate how much u can topup?

Simple answer: login to her cpf acct, check the amt she can topup to current FRS (it will be shown)

How does CPFB calculate this amt?

Here are the detailed rules from CPFB website:

Recipient age 55 and above*
Current FRS^ less Retirement Account (RA) savings#
*
You may wish to check with your recipient on his SA/ RA savings#*to find out more about the amount of the tax relief that you can receive for cash top-ups.
*
Please note that a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed, including any relief on cash top-ups made under the Retirement Sum Topping-Up Scheme.

^ The cap is based on current FRS, rather than the Enhanced Retirement Sum (ERS), to keep tax benefits focused on supporting basic retirement needs. Cash top-ups beyond*the above caps will not be eligible for tax relief.

RA savings refer to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received) plus amounts withdrawn such as monthly payouts and payout eligibility age lump sum withdrawal.

 

[dork32]

So you have $181k in your account, next year you earn $8140 interest and the account becomes $189.14k while the FRS becomes 186k. Your RA savings is calculated as $189.14k - $8140 = $181k, so you have $5k room to top up.

why so complicated?

why dont just say frs increase by 5k, so room for top up increase by 5k?

 

[o2atom]

May I know for CPF employment Contribution for month of work Dec that gets contributed in January, does this count to the Annual limit of $37740 for the New year?
ie month of work Dec 18 contribution in January 19 is this counted in annual limit for 2019?
Thanks

If the Transaction Year is 2020 (regardless of whether it is for contribution in 2019), it will be counted in the annual limit of 2020.

 

[Okenba]

Actually, I've always been a bit puzzled by this. Does this mean that even if SA is above FRS, I can still RSTU every Jan when FRS increases?

Eg. 2019 FRS is 176,000
2020 FRS is 181,000
If my SA is 200,000 can I still RSTU 5k in Jan 2020? (181,000-176,000=5,000)

Edit: Just tried. Cannot.
But RA can? Can't try that...

 

[maple96]

Actually, I've always been a bit puzzled by this. Does this mean that even if SA is above FRS, I can still RSTU every Jan when FRS increases?

Eg. 2019 FRS is 176,000
2020 FRS is 181,000
If my SA is 200,000 can I still RSTU 5k in Jan 2020? (181,000-176,000=5,000)

Edit: Just tried. Cannot.
But RA can? Can't try that...

Only the dumb will use RA topup rules to apply to SA topup rules. Pls read the detailed rules and how to calculate amt u can topup to RA.

If your SA balance is above current FRS, u cannot topup any more.

If your RA balance (see definition in prior post) is below current FRS, u can topup to current FRS.

 

[BBCWatcher]

Only the dumb will use RA topup rules to apply to SA topup rules....

If your RA balance (see definition in prior post) is below current FRS, u can topup to current FRS.

A Retirement Account can also be topped up to the current Enhanced Retirement Sum.

Do you also think someone is “dumb” for applying SA top up rules to RAs?

 

[maple96]

A Retirement Account can also be topped up to the current Enhanced Retirement Sum.

Do you also think someone is “dumb” for applying SA top up rules to RAs?

This is more dumb to read my reply out of context. We are talking about topup to claim tax relief.

My prior post already stated can topup to ERS, but dun confuse it with topup for tax relief purpose!

Who now is applying SA topup rules to RA? U want to engage in Chicken and duck debate?

U posted a reply a few days ago without highlighting the errors made by tangent314!

Make sure you specify her (the recipient’s) NRIC number, of course.

 

[babyrobo]

Only the dumb will use RA topup rules to apply to SA topup rules. Pls read the detailed rules and how to calculate amt u can topup to RA.

If your SA balance is above current FRS, u cannot topup any more.

If your RA balance (see definition in prior post) is below current FRS, u can topup to current FRS.

If the RA balance ($178k) is not yet at current FRS limit ($181k), can the person age above 55 years old as of 2020 1st Jan still top up his/her own RA (top up $3k)and get a tax relief?

 

[maple96]

If the RA balance ($178k) is not yet at current FRS limit ($181k), can the person age above 55 years old as of 2020 1st Jan still top up his/her own RA (top up $3k)and get a tax relief?

Let me clarify what u wrote:

CPF member is already above 55 before 2020, want to topup RA in Jan 2020 to claim tax relief?

His RA balance at 1/1/2020 is 178k. How much can he topup to claim tax relief? Is it 181k - 178k = 3k?

Summary: If this person never topup his RA after turning 55, assuming his FRS at 55 was $X and he never withdraw any monies from RA, he can topup 181k less $X =$Y, if $Y is more than $7k, he can only claim $7k tax relief.

How to check how much u can topup to RA to claim tax relief?

Login to CPF, check amt of RA u can topup to current FRS (cannot remember the exact description).

(dun forget to read the rest of the CPF rules in my prior post here https://forums.hardwarezone.com.sg/124800139-post561.html)

 

[tangent314]

why so complicated?

why dont just say frs increase by 5k, so room for top up increase by 5k?

Not that I want to make it complicated. This is CPF's actual words.

In addition, only cash top-ups within the following caps will be eligible for tax relief:

Recipent age 55 and above*: Current FRS^ less RA savings#

# RA savings refer to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received) plus amounts withdrawn such as monthly payouts and payout eligibility age lump sum withdrawal.

So it's important to note the difference between RA savings and RA account balance, and understand where it is from the CPF's words that allows you to top up further despite interest earned.

 

[Okenba]

Only the dumb will use RA topup rules to apply to SA topup rules. Pls read the detailed rules and how to calculate amt u can topup to RA.

If your SA balance is above current FRS, u cannot topup any more.

If your RA balance (see definition in prior post) is below current FRS, u can topup to current FRS.

Ai. That's not very nice bro. I can also say that people who are rude or type about their own death on a public forum must have been through a traumatic childhood with abuse from their parents, or that their parents must have been losers who do not teach them any manners...

But I don't. Because it's rude.

I'm sure most of the people on this forum were not abused as children. Most of the comments here are so nice and polite.

 

[maple96]

Ai. That's not very nice bro. I can also say that people who are rude or type about their own death on a public forum must have been through a traumatic childhood with abuse from their parents, or that their parents must have been losers who do not teach them any manners...

But I don't. Because it's rude.

I'm sure most of the people on this forum were not abused as children. Most of the comments here are so nice and polite.

This is not the first time u wrote such worst than rude remarks and curses, sharing your own unfortunate experiences and own misfortunes with examples so vividly, so it is a conclusion on your own self!

 

[maple96]

If the Transaction Year is 2020 (regardless of whether it is for contribution in 2019), it will be counted in the annual limit of 2020.

U might be right. But it does not make much difference since it is still a total of 12 mths contributions, unless u get a big salary increase.

Anyway, fyi, refund had been processed.

 

[a4973]

U might be right. But it does not make much difference since it is still a total of 12 mths contributions, unless u get a big salary increase.

Anyway, fyi, refund had been processed.

So by now if there is no refund line entry in CPF account and no letter indicating refund is due means all MC and VC for 2019 are accepted?
Thanks

 

[maple96]

So by now if there is no refund line entry in CPF account and no letter indicating refund is due means all MC and VC for 2019 are accepted?
Thanks

Should be safe, u can check your CPF statement for 2019 which is ready now, it will show total MC and total VC, add it up, if it does not exceed annual limit, u are safe.

 

[angtc11]

So by now if there is no refund line entry in CPF account and no letter indicating refund is due means all MC and VC for 2019 are accepted?
Thanks

FYI, I received a letter from CPF more than a week ago that they will be refunding me, can check if you got such a mail too

 

[henrylbh]

So you have $181k in your account, next year you earn $8140 interest and the account becomes $189.14k while the FRS becomes 186k. Your RA savings is calculated as $189.14k - $8140 = $181k, so you have $5k room to top up.

No so simple as you explained. 181k in RA could already have interest in it and one can still top up as much as 7k for tax relief.

 

[lifeafter41]

No so simple as you explained. 181k in RA could already have interest in it and one can still top up as much as 7k for tax relief.

7k? That’s interesting?
I thought it’s only 5k from 2019 to 2020, ie 2019 176k to 2020 181k for RA....

Unless one include the Medisave top up of 2.8k from 57.2k to 60k

 

[tangent314]

That's why you need to understand the CPF wordings.

Let's say in 2019 you form your RA with $176k
2020, the account grows to $183940 from interest (FRS = $181k)
2021, the account grows again to $192198 from interest (FRS = $186k)

Although $192198 is above the 2021 projected FRS of $186k, you still can top up $7k tax free because your RA savings is still considered to be $176k as the interest earned is not counted. After the top up, your RA savings becomes $183k while your RA balance becomes $199198.

Then in 2022 when FRS becomes $191k and your RA balance becomes $208066, you still can top up another $7k because $191k - $183k > $7k

 

[henrylbh]

That's why you need to understand the CPF wordings.

Let's say in 2019 you form your RA with $176k
2020, the account grows to $183940 from interest (FRS = $181k)
2021, the account grows again to $192198 from interest (FRS = $186k)

Although $192198 is above the 2021 projected FRS of $186k, you still can top up $7k tax free because your RA savings is still considered to be $176k as the interest earned is not counted. After the top up, your RA savings becomes $183k while your RA balance becomes $199198.

Then in 2022 when FRS becomes $191k and your RA balance becomes $208066, you still can top up another $7k because $191k - $183k > $7k

The above explanation is slightly clearer than your earlier statement, though a bit cumbersome than that given by CPF.

You need to understand CPF wordings, yet you can introduce own wordings like you still can top up $7k tax free