CPF Top up questions

[JF123456]

The CPF Annual Limit for an "all three account" contribution is $37,740 to be precise.


Sorry, no option. The contribution is allocated according to the rules for your age and including your MediSave Account's Basic Healthcare Sum limit. If you're age 54 and make a voluntary contribution of $37,740, here's how it'll be allocated:

MA: ~$8,000 (to top it up to $60,000, the 2020 Basic Healthcare Sum)
SA: $11,729.59
OA: ~$18,010.41 (the MA portion above the Basic Healthcare Sum spills over into your OA since your SA has already reached the Full Retirement Sum)

A bit of advice, though: you're better off making a MediSave contribution first followed by an "all three" contribution. The total of these two contributions should be $37,740 or less. You get exactly the same result in terms of balances, but just in case you have enough taxable income in 2020 (Year of Assessment 2021) you'll get tax relief on the MediSave portion. For example, if you decide to go back to work (family emergency?) and/or have taxable rental income, you may get some tax relief. It doesn't hurt to split this up into two successive top ups and might help, so you might as well do it that way.


Yes, that's right.


For the MediSave portion, as soon as immediately, if you have a MediSave payable medical expense.

For the rest, as early as age 55. You already have plenty of dollars in your OA+SA to fund your Retirement Account to the Full Retirement Sum when it's created on your 55th birthday. Consequently all dollars added now to both your OA and SA can be withdrawn at age 55.

If you want to withdraw dollars from your Retirement Account, this top up may reduce the maximum amount you can withdraw (with a sufficient property pledge or charge). If you don't plan to withdraw many (or any) Retirement Account dollars, or (better yet) if you plan to boost your Retirement Account above the Full Retirement Sum, then this particular detail doesn't matter.


Via CPF Form MHC-TRF, yes. Please note that the transferred funds would be drawn from your spouse's Special Account first, and those funds are earning at least 4% interest too. So it doesn't generally make sense to do this.

However, I can think of one situation when this might make sense. Let's suppose your spouse meets all the following conditions:

(a) Under age 55;
(b) Has a Special Account with a balance that is a little above the Full Retirement Sum, or less than that amount; AND
(c) Will have taxable income in 2020 (pay income tax in Year of Assessment 2021).

In this case, she could transfer Special Account dollars to your MediSave Account, then top her Special Account back up to the Full Retirement Sum, with tax relief. If her Special Account is at or below the Full Retirement Sum, then up to $7,000 of tax relief is available this way. If her Special Account is slightly above the Full Retirement Sum then the two of you have to do a little extra calculating.

You would still have the $37,740 that you can top up, and (with your MediSave Account full, or fuller), more or all of that $37,740 would flow into your OA and SA.

Unfortunately there's no MediSave-to-MediSave transfer available between you and your spouse, but you can pay each other's MediSave payable expenses, as you prefer.

If I need to explain this particular maneuver in a little more detail, please let me know.

Thanks so much for taking time to write this reply. Ok, xfer fr my spouses cpf does not gain any advantage since her SA is higher than FRS.

Now, her MA is now 59K n she is working. Can she cash top up 1k, n then claim tax relief? Or she can't since she shd probably reach the limit v soon with her employer's contribution ?

 

[JF123456]

I agree, and that's also a good idea, but the CPF Board won't tell you about most of the optimization "tricks" and "hacks" such as the one I just described. Such details are fun to discuss here.

That's the problem. They won't tell u the " loophole" if there is any. Lol.

 

[BBCWatcher]

Now, her MA is now 59K n she is working. Can she cash top up 1k, n then claim tax relief? Or she can't since she shd probably reach the limit v soon with her employer's contribution ?

She can top up her MA with tax relief, to push the balance up to $60,000 (2020 BHS), as long as she expects to have enough room below the CPF Annual Limit. If she earns less than $6,000 per month OR expects less than $30,000 in variable pay this year (bonuses, commissions, etc.) then she should have some amount of room below the CPF Annual Limit.

Relatedly, if she is able to make top ups with tax relief and you are not, then it’s best if she pays the Integrated Shield base plan premiums (or MediShield Life premiums) for the household.

 

[Bluestoneman]

Hi guys,
OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55? Appreciate if someone can shed some light ! Thank you!!

 

[shin89]

Hi guys,
OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55? Appreciate if someone can shed some light ! Thank you!!

FRS limit for SA, you can't top up 200k

 

[Thoreldan]

Hi guys,
OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55? Appreciate if someone can shed some light ! Thank you!!

Side track abit, do u have investments ?
If not, any intention to start ? 350k is quite a bit to sit in a bank account.

 

[Bluestoneman]

FRS limit for SA, you can't top up 200k

Thanks for replying. Can I top up to OA ? I am unemployed.

 

[tangent314]

You cannot directly top up money into your OA, however there are two ways to achieve that.

1. You can refund any OA that you have used to pay for your flat, plus accrued interest, into your OA. https://www.cpf.gov.sg/members/FAQ/...Housing Scheme&folderid=11762&ajfaqid=2186682

2. You can make a voluntary contribution of up to $37740 per year, which will be split in between your OA, SA and MA account at a ratio depending on your age. https://www.cpf.gov.sg/members/FAQ/...+for+Employees&ajfaqid=2184960&folderid=11177

 

[BBCWatcher]

You can also top up your Special Account in one go to $181,000 (the Full Retirement Sum), which you should probably do first. That money earns 4% interest, not the 2.5% your Ordinary Account earns.

For the up to $37,740 voluntary contribution you have the option to put it all in MediSave, also a 4% interest earning account.

Do you plan to return to the workforce, employed or self-employed?

 

[henrylbh]

You can also top up your Special Account in one go to $181,000 (the Full Retirement Sum), which you should probably do first. That money earns 4% interest, not the 2.5% your Ordinary Account earns.

That's crazy, to top up SA to FRS in one go and knowing he is 48 and unemployed and who knows how long more.

 

[henrylbh]

Thanks for replying. Can I top up to OA ? I am unemployed.

You can't top up OA whatever the amount. You can only top up SA to limit of FRS. You can make voluntary contribution (not same as top up) up to the annual limit and the contribution will go into OA, SA and MA according to your age group.

But you can return to OA whatever amount of OA plus accrued interest that was used for housing.

 

[henrylbh]

Hi guys,
OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55? Appreciate if someone can shed some light ! Thank you!!

Current FRS is $181k. The max you can top up this year is the difference between what you have $140 and $181k.

If you top up to the prevailing max FRS, the max you can withdraw at 55 is amount in excess of prevailing BRS less cash top ups with sufficient property pledge/charge.

Example, if you top up 41k to SA (FRS limit), at 55 you can only withdraw 181k - 90.5k (BRS) - 41k = 49,5k.

BRS is half of FRS and BRS is made up of working contributions or transfer of Cpf, not cash top up.

 

[BBCWatcher]

OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55?

(Emphasis added.)

Thanks for replying. Can I top up to OA ? I am unemployed.

That's crazy, to top up SA to FRS in one go and knowing he is 48 and unemployed and who knows how long more.

That's not crazy at all. It's the exact opposite of crazy. First of all, Bluestoneman specifically asked about setting aside the Full Retirement Sum at age 55. Bluestoneman will not reach the FRS with current balances, and (if left unresolved) Bluestoneman's future lifetime retirement income collectable from age 65 onward will be that much lower. That's a problem.

Bluestoneman does have S$350K sitting in a bank. After depositing S$41K of that cash into a Special Account, Bluestoneman would still have S$309K left. Assuming Bluestoneman can collect a bank interest rate that keeps pace with inflation, that would mean Bluestoneman could draw down that pile of cash over the next 17 years at a pace of just over S$18,000 per year (2020 dollars), i.e. S$1,500 per month. Which is a lot more than Bluestoneman's future CPF LIFE payout with a Retirement Account funded to the Full Retirement Sum at age 55, which may still be a problem, but it's less of a problem if Bluestoneman tops up his/her Special Account today to the Full Retirement Sum.

Bluestoneman will also still have the option to withdraw significant Retirement Account funds at age 55, which is less than 7 years from now. And Bluestoneman will have a lot more dollars at age 55 because his/her Special Account earns 4% interest, not bank interest.

As it stands right now, Bluestoneman is probably looking at a significant lifestyle reduction from age 65+. It makes perfect sense to smooth the trajectory of Bluestoneman's lifestyle at least to some extent so that it doesn't fall too sharply when Bluestoneman's cash pile runs out. Raising the age 55+ and age 65+ resources would be extremely wise, along with making sure that today's lifestyle fits within S$1,500/month (2020 dollars) or preferably less.

Bluestoneman may also wish to consider selling his/her 5 room HDB leasehold to trade down to a smaller, more affordable unit, or to rent out rooms to generate income.

Current FRS is $181k. The max you can top up this year is the difference between what you have $140 and $181k.

If you top up to the prevailing max FRS, the max you can withdraw at 55 is amount in excess of prevailing BRS less cash top ups with sufficient property pledge/charge.

Example, if you top up 41k to SA (FRS limit), at 55 you can only withdraw 181k - 90.5k (BRS) - 41k = 49,5k.

To elaborate, if Bluestoneman's Special Account is topped up now to the current Full Retirement Sum then the 4% interest is extremely likely to outrun the expected ~3% annual increase in the Full Retirement Sum. That'll mean that some number of dollars will remain in Bluestoneman's Special Account after the Retirement Account is formed on his/her 55th birthday. Right now, none of that is going to happen: the Special Account balance is currently too low to catch up to the Full Retirement Sum, and the S$350K bank deposit is running way behind because it isn't earning anywhere near 4% interest.

In simple terms, Bluestoneman is relatively cash rich, property rich, and retirement income security poor. Fortunately, that imbalance is easy to fix, now.

 

[henrylbh]

Hi guys,
OA $0
SA $140K
MA $30K
Bank savings $350k
Property 5 room

I am 48 years old. Does it make sense to top up $200k into my SA with my cash savings to earn the interest? Can I withdraw my remaining SA after setting FRS aside at age 55? Appreciate if someone can shed some light ! Thank you!!

That's not crazy at all. It's the exact opposite of crazy. First of all, Bluestoneman specifically asked about setting aside the Full Retirement Sum at age 55. Bluestoneman will not reach the FRS with current balances, and (if left unresolved) Bluestoneman's future lifetime retirement income collectable from age 65 onward will be that much lower. That's a problem.

Not that he wants to top up to FRS, he is just thinking aloud and like to know whether topping up 200k into SA (if that is possible) will allow him to with the excess of FRS i.e. 200 less 41k (to make up FRS). I offer no advice since he is unemployed. I merely mentioned what the rules allowed and he decides for himself based on his own circumstances.

 

[BBCWatcher]

I offer no advice since he is unemployed. I merely mentioned what the rules allowed and he decides for himself based on his own circumstances.

No, that's not what you did, Henry. You did this:

That's crazy, to top up SA to FRS in one go and knowing he is 48 and unemployed and who knows how long more.

I profoundly disagree with your characterization, and I've explained why in detail. If you still think topping up a Special Account in these overall circumstances is "crazy," then you at least ought to offer Bluestoneman a better idea. So what's the better idea?

 

[henrylbh]

I said, I DID not give advice. I merely shot down your advice

 

[BBCWatcher]

I said, I DID not give advice. I merely shot down your advice

"Not that" is clearly advice.

OK, so evidently you think a 48 year old with S$350K sitting in the bank, a 5 room HDB unit, unemployed, and only S$140K in combined CPF OA+SA would be "crazy" to move S$41K from his/her bank account into 4% interest earning (and creditor proof) CPF SA, leaving S$309K in his/her bank account, considerable CPF liquidity less than 7 years from now, reliably greater total wealth (starting within only a couple months), and the assurance (by default anyway) of higher age 65+ retirement income for life. In that case, what's your better idea?!?! You clearly object, so now offer a better suggestion....

....Or do you want to retract your "crazy" characterization now?

If you want to stick to your advice, own it, and explain it. If you made a mistake, own that.

 

[dork32]

"Not that" is clearly advice.

considerable CPF liquidity less than 7 years from now, .

if you have frs at 48, not working, your cpf is not liquid at 55

 

[dork32]

309k to last for 17 years is not a lot of money if you are unemployed or do not have a steady stream of income. 350k is not much better.

the correct advice is to transfer from bank to your sa provided you are very sure that your 309k can last you till 65, provided that you do have means to earn beyond the 4% cpf is giving you.

 

[henrylbh]

He has been comfortable with safety of liquidity over the years and never really thought of topping up his CPF until situation becomes different. But now he is exploring whether he can top up 200k and get back close what he puts in, certainly he would consider.

If FRS remains, he will be able to withdraw 49.5k without topping up SA. But if he tops up 41k into SA to meet FRS, by pledging his property he could still withdraw 49.5k only.

But will rising BRS and prospect of declining interest, the amount withdrawable may diminish by the time he turns 55.