From OA to SA

[endlssorrow]

any special months to do it? i see many people wann transfer like year of end? WHY? just to enjoy income tax discount?

but then i tot even transfer from Jan, Feb, or October.. u still get to enjoy the tax discount mah?

 

[highsulphur]

there's no tax benefit from transferring from OA to SA

 

[BBCWatcher]

You should make any OA to SA transfers you wish to make before the end of the calendar month. That's in order to maximize interest. For example, if you're able to transfer OA to SA on July 31 instead of on August 1, you'll earn the higher SA interest rate on that money for July.

 

[highsulphur]

You should make any OA to SA transfers you wish to make before the end of the calendar month. That's in order to maximize interest. For example, if you're able to transfer OA to SA on July 31 instead of on August 1, you'll earn the higher SA interest rate on that money for July.

actually that's not true.

cpf accounts use the min balance of the month for interest calculation

 

[SBC]

Transferred a few k last year to take adv of the higher interest. Hits FRS in the beginning of the year.

Now cannot transfer already.

 

[henrylbh]

actually that's not true.

cpf accounts use the min balance of the month for interest calculation

What BBC said is correct as far as OA-SA is concerned.

 

[sgdividends]

I can share that the interest is based on the lowest balance for each month .

So u have to time it such that it hits the SA just nice or just before the start of the month.

 

[highsulphur]

What BBC said is correct as far as OA-SA is concerned.

They will use the highest balance for calculation of interest?

 

[sgdividends]

They will use the highest balance for calculation of interest?

No lowest balance .

The worst case is u transfer within a month and your SA and OA will be slugged with the lowest balance .

Best case is zhun zhun ..It's actually very difficult..Haha safer to lose on OA then SA, and transfer 5 working days before end of month

 

[kehyi4]

From my experience, transfer OA to SA will not lose interest whatever the day of the month. I saw this written somewhere in the CPF website. Will find it when I get home

 

[Mecisteus]

Additional interest divided by 12 multiplied by amount to be transferred. How much loss can that be if you transfer begin or end?

 

[henrylbh]

They will use the highest balance for calculation of interest?

No lowest balance .

The worst case is u transfer within a month and your SA and OA will be slugged with the lowest balance .

Best case is zhun zhun ..It's actually very difficult..Haha safer to lose on OA then SA, and transfer 5 working days before end of month

Wait for kehyi4 to point you to the link.

 

[BBCWatcher]

Here it is:

Q: Will my Ordinary Account (OA) savings transferred to my Special Account (SA) enjoy the SA interest rate in the month of transfer?

A: Yes, your OA savings will start earning the SA interest rate in the month of transfer.

 

[kehyi4]

That's the one. Thx BBCw

 

[highsulphur]

thanks for the clarification

 

[henrylbh]

Just addiing -

I would like to clarify, only for the transfer from your own Ordinary to Special Account (SA), you will then earn the SA interest rate in the month of transfer.

If you were to make a transfer from your OA to your father’s Retirement Account, he will start earning interest in the following month.

 

[sgdividends]

Hi,
I feel that the QA from CPF is quite vague actually.

https://www.ifa.sg/cpf-interest/
(Not promoting , just sharing and not my link )

I actually called CPF to verify whether they used lowest balance and they said yes . This is within the context of transferring my CASH to CPF SA for tax savings ( I know this thread is OA to SA). The CSO very cute even advise me to do on 21 of march to be safe and not to lose interest

The principle of calculation should be the same.

Unless, different scenarios got different way of calculation then..Win Liao...Really convolugated

 

[BBCWatcher]

The principle of calculation should be the same.

Well, CPF says that it works differently when you're transferring your own OA funds to your own SA. And there's some logic behind the different treatment. CPF OA funds are already working for you, already earning interest. It'd be at least "really weird" if you lost a month of interest with such a transfer. Fortunately, you don't.

One interesting "quirk" is that, it seems, you can pick up an extra month of SA interest if you transfer OA funds in the same month when they land in your OA. For example, let's suppose you and your employer deposit $200 on July 25 into your OA (your and your employer's compulsory contribution). Ordinarily that $200 wouldn't earn July interest. But, if you transfer those funds to SA in July, will they earn SA interest for the full month of July? Maybe -- and wouldn't that be nice?

Anyway, given the ways that CPF credits interest, here are the basic "rules of thumb" to optimize CPF and non-CPF interest:

1. Make cash top-ups near the end of the month, to your account and to others' accounts. (But not exactly at the end of the month. You want to allow enough time for CPF to credit the funds within that same month.)

2. For OA to SA conversions (same individual), try to make your decision and get the conversion done before the end of the month. An online conversion is quick -- the transfer is reflected in your account within a few seconds, typically.

3. For OA to SA/RA transfers (one individual to another), it doesn't really matter too much when you make that transfer, but I would recommend not doing it during the last week of the month. Just to make sure the deduction and the credit both occur in the same calendar month, which is the best you can do.

4. Make any withdrawals on the first day of the calendar month.

 

[sgdividends]

Thanks BBC watcher..
Hmm I still find it weird to be able to earn an extra month interest of SA..Defies logic ..I really do need to call CPF again though I have no motivation as I'm not doing that..hehe

 

[peaceheart]

You all still make regular transfer/cash contribution to SA?

I transferred a lump sum years back and that's it.