From OA to SA

[henrylbh]

so are there pros & cons wrt to topping SA with cash vs with OA? just within the context of cpf. understand if use cash may lose out on other opportunities outside cpf.
i am only looking towards maximizing for retirement via lump sum withdrawal at 55 & thereafter monthly payouts, not considering / interested in property , education , CPFIS

If you think or project that your SA will not reach FRS (just estimate 2-3% annual increase) from working by the time you reach 55, better transfer all your OA to SA now since you have no use for it. But make some room for topping up SA for tax relief since you are paying tax.

 

[henrylbh]

coming to 50 in Dec

Then better transfer all OA to SA now. Else at 55, they will transfer your OA to SA. No choice.

 

[elnewbie]

Ok that explains your focus on retirement.

In your case, your entire SA balance will be drained out into RA and there will be some OA balance also drained out to make up your FRS in 5 years time.

If you get tax incentives, you can contribute 7k this year via cash to SA and then use OA to top up the difference in your SA to the FRS level. If you still have excess cash after doing this, can do a capital repayment to OA, if you had previously bought your property using CPF funds.

coming to 50 in Dec

 

[elnewbie]

I don't think you mean the entire OA balance. He can only transfer up to the prevailing FRS which is $166k.

Then better transfer all OA to SA now. Else at 55, they will transfer your OA to SA. No choice.

 

[elnewbie]

Just to share, for those who are in their 50s, CPF holds monthly talks on strategizing your CPF balances and what to do when turning 55

Just have to sign up at their website to attend the next talk. They also provide free bento lunch as well during these talks. Might as well squeeze out as much as you can from the govt.

 

[a4973]

If you think or project that your SA will not reach FRS (just estimate 2-3% annual increase) from working by the time you reach 55, better transfer all your OA to SA now since you have no use for it. But make some room for topping up SA for tax relief since you are paying tax.

Then better transfer all OA to SA now. Else at 55, they will transfer your OA to SA. No choice.

I don't think you mean the entire OA balance. He can only transfer up to the prevailing FRS which is $166k.

really appreciate the focus you guys are giving.
but back to my initial point is that as my cash on hand are performing poorly in CIMB 1% & 0.8% accounts, i am more keen on using cash to top up my SA rather than using my OA to top up SA.

 

[a4973]

Ok that explains your focus on retirement.

In your case, your entire SA balance will be drained out into RA and there will be some OA balance also drained out to make up your FRS in 5 years time.

If you get tax incentives, you can contribute 7k this year via cash to SA and then use OA to top up the difference in your SA to the FRS level. If you still have excess cash after doing this, can do a capital repayment to OA, if you had previously bought your property using CPF funds.

may i ask how is your proposal different from just using cash 56K to straight top up SA therefore OA not touched , still earning 2.5%.

 

[elnewbie]

Firstly, did u use CPF for housing previously ??

I think you missed my earlier point.

The strategy is that you don't wanna top up to SA directly as any funds which are topped up to SA will be locked in after 55, except the portion which is above the FRS. The rationale is that in future, if you need to do further lump sum withdrawal, you can at least take advantage of the BRS scheme by using the 2 step method of:

1. Transfer OA to SA
2. Do capital repayment to OA.

If you top up directly to SA, monies used under this cannot be taken out under the BRS option.

Hope this is clear.

really appreciate the focus you guys are giving.
but back to my initial point is that as my cash on hand are performing poorly in CIMB 1% & 0.8% accounts, i am more keen on using cash to top up my SA rather than using my OA to top up SA.

 

[henrylbh]

I don't think you mean the entire OA balance. He can only transfer up to the prevailing FRS which is $166k.

Can only transfer to prevailing FRS. Continue doing so the following years when FRS increases but may not be much if there is contribution from work.

If I were him, I will also make as much VC as possible since time is near and all VC becomes available for withdrawal anytime from 55, assuming his cash is idle. That's better than any FD or SSB for the next 5 years.

 

[elnewbie]

Please see my other reply just posted. My method gives you more options, even though the end result looks the same.

may i ask how is your proposal different from just using cash 56K to straight top up SA therefore OA not touched , still earning 2.5%.

 

[henrylbh]

may i ask how is your proposal different from just using cash 56K to straight top up SA therefore OA not touched , still earning 2.5%.

If you can spare 56k cash to top up SA, do so immediately to start earning 4% and leave OA untouched, unless you want to stagger the top up to get tax reliefs.

 

[a4973]

Firstly, did u use CPF for housing previously ??

I think you missed my earlier point.

The strategy is that you don't wanna top up to SA directly as any funds which are topped up to SA will be locked in after 55, except the portion which is above the FRS. The rationale is that in future, if you need to do further lump sum withdrawal, you can at least take advantage of the BRS scheme by using the 2 step method of:

1. Transfer OA to SA
2. Do capital repayment to OA.

If you top up directly to SA, monies used under this cannot be taken out under the BRS option.

Hope this is clear.

did some searching on my own, found the CPF retirement booklet <https://www.cpf.gov.sg/Assets/members/Documents/CPF_Retirement_Booklet.pdf>, believe the below illustration is the point you have made.
i do understand that each individual have own requirements but is it pretty much the common consensus to withdraw as much as possible at 55 even down to BRS instead of leaving funds at FRS level in RA for higher monthly payouts after 65?

Mr Ravi
Mr Ravi’s Ordinary Account savings at age 55 : $100,000
Mr Ravi’s Special Account savings at age 55 : $180,000
Mr Ravi has a total of $280,000 in his Ordinary Account and Special Account.
The Full Retirement Sum of $166,000 will be set aside in his Retirement Account
which will provide him with a monthly payout of $1,380 from age 65 for life. He can
withdraw the remaining amount of $114,000 in his Ordinary and Special Accounts.
If he owns a property with suffi cient property charge/pledge, he can also choose
to set aside his Basic Retirement Sum4 of $83,000 in his Retirement Account and
receive a correspondingly lower monthly payout of $750 from age 65 for life. In this
case, he can withdraw $114,000 from his Ordinary and Special Accounts, and an
additional $83,000 from his Retirement Account.

 

[apatheticme]

That means to say if my SA is above FRS, my OA will be left untouched to earn 2.5%? Can I withdraw the OA then?

You can, just keep in mind that withdrawal of funds must be done in a certain order. I will just quote verbatim.

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 Special Account, then Ordinary Account, from the beginning of the year up to the month before the withdrawal, followed by
ii) contribution/refunds credited to the Special Account, then Ordinary Account, in the same month of the withdrawal, and lastly,
iii) monies in the Special Account, then Ordinary Account.

 

[SBC]

Surprised to know that there are sequence of sources of the CPF fund for the purpose of withdrawal !!

Is it meant for CPF internal? Transparent to CPF members?

 

[Opps-gal]

If do step 2, can the top up amount for housing be used again the purchase a new housing after selling the first housing?

Firstly, did u use CPF for housing previously ??

I think you missed my earlier point.

The strategy is that you don't wanna top up to SA directly as any funds which are topped up to SA will be locked in after 55, except the portion which is above the FRS. The rationale is that in future, if you need to do further lump sum withdrawal, you can at least take advantage of the BRS scheme by using the 2 step method of:

1. Transfer OA to SA
2. Do capital repayment to OA.

If you top up directly to SA, monies used under this cannot be taken out under the BRS option.

Hope this is clear.

 

[Opps-gal]

Does anybody know if never meet minimum sum, can don't pledge housing?

did some searching on my own, found the CPF retirement booklet <https://www.cpf.gov.sg/Assets/members/Documents/CPF_Retirement_Booklet.pdf>, believe the below illustration is the point you have made.
i do understand that each individual have own requirements but is it pretty much the common consensus to withdraw as much as possible at 55 even down to BRS instead of leaving funds at FRS level in RA for higher monthly payouts after 65?

Mr Ravi
Mr Ravi’s Ordinary Account savings at age 55 : $100,000
Mr Ravi’s Special Account savings at age 55 : $180,000
Mr Ravi has a total of $280,000 in his Ordinary Account and Special Account.
The Full Retirement Sum of $166,000 will be set aside in his Retirement Account
which will provide him with a monthly payout of $1,380 from age 65 for life. He can
withdraw the remaining amount of $114,000 in his Ordinary and Special Accounts.
If he owns a property with suffi cient property charge/pledge, he can also choose
to set aside his Basic Retirement Sum4 of $83,000 in his Retirement Account and
receive a correspondingly lower monthly payout of $750 from age 65 for life. In this
case, he can withdraw $114,000 from his Ordinary and Special Accounts, and an
additional $83,000 from his Retirement Account.

 

[a4973]

Firstly, did u use CPF for housing previously ??

I think you missed my earlier point.

The strategy is that you don't wanna top up to SA directly as any funds which are topped up to SA will be locked in after 55, except the portion which is above the FRS. The rationale is that in future, if you need to do further lump sum withdrawal, you can at least take advantage of the BRS scheme by using the 2 step method of:

1. Transfer OA to SA
2. Do capital repayment to OA.

If you top up directly to SA, monies used under this cannot be taken out under the BRS option.

Hope this is clear.

i've done the Transfer OA to SA.
seem like capital repayment to OA is a chore, cant do online
got to go counter
thanks for the advice

 

[Opps-gal]

i've done the Transfer OA to SA.
seem like capital repayment to OA is a chore, cant do online
got to go counter
thanks for the advise

Need to fill up form and go counter to do repayment. But if need to move house, can take it out again?

 

[a4973]

Need to fill up form and go counter to do repayment. But if need to move house, can take it out again?

don't know.
as things stand, no intention to move
but logically i would think can

 

[highsulphur]

Need to fill up form and go counter to do repayment. But if need to move house, can take it out again?

Yes you can use refunded money for next property purchase