Possible to over top-up MA?

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Let’s say, As of today, i have $60k in my MA. The new limit is $63k. But top up $7k, got tax relief right? So if i top up $7k, what happens to the balance $4k? Overflow to RA, OA? Is this allowed?

 

[Okenba]

Yah. Refund. Won't overflow.

 

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So tax relief will also apply to $3k only?

 

[lzydata]

Btw $7k tax relief cap is for self top ups to the SA/RA, not Medisave. But it is subject to other caps such as the annual CPF contribution cap and the personal tax relief cap of $80k.

 

[pop]

Ok, what about if i top up $3k to MA first, then i do a VC, will that be ok? Meaning VC amount split for MA will now overflow to SA instead?

 

[pop]

Btw $7k tax relief cap is for self top ups to the SA/RA, not Medisave. But it is subject to other caps such as the annual CPF contribution cap and the personal tax relief cap of $80k.

Oh, ic. Thanks.

 

[BBCWatcher]

Ok, what about if i top up $3k to MA first, then i do a VC, will that be ok? Meaning VC amount split for MA will now overflow to SA instead?

That's OK, provided:

(a) Your $3,000 MA voluntary contribution fits within both the CPF Annual Limit and the Basic Healthcare Sum.

(b) Your "all three account" voluntary contribution fits within the CPF Annual Limit. Please note only self-employed individuals are eligible for tax relief with this type of contribution.

 

[pop]

That's OK, provided:

(a) Your $3,000 MA voluntary contribution fits within both the CPF Annual Limit and the Basic Healthcare Sum.

(b) Your "all three account" voluntary contribution fits within the CPF Annual Limit. Please note only self-employed individuals are eligible for tax relief with this type of contribution.

I realise I don’t qualify for tax relief anyway as i hit ERS already. What do you mean by (a)? My MA will become $63k once i top up with $3k. So means when i VC, the MA portion will overflow to my SA, ya? I already had RA set up as above 55.

 

[BBCWatcher]

I realise I don’t qualify for tax relief anyway as i hit ERS already.

You qualify for tax relief for your MA voluntary contribution if you're otherwise eligible (haven't maxed out the total $80K tax relief limit, still have enough income that'll actually be taxed).

What do you mean by (a)? My MA will become $63k once i top up with $3k.

Yes.

So means when i VC, the MA portion will overflow to my SA, ya?

If you subsequently do an "all three account" Voluntary Contribution -- which must also fit within the CPF Annual Limit, so the most it could possibly be is $34,740 ($37,740 less your $3,000 to MA less your compulsory contributions) -- then the portion allocated to MA will end up in your OA. That's because you've reached the Full Retirement Sum (much more than that, as it happens), so a "double spillover" should occur.

 

[pop]

If you subsequently do an "all three account" Voluntary Contribution -- which must also fit within the CPF Annual Limit, so the most it could possibly be is $34,740 ($37,740 less your $3,000 to MA less your compulsory contributions) -- then the portion allocated to MA will end up in your OA. That's because you've reached the Full Retirement Sum (much more than that, as it happens), so a "double spillover" should occur.

Oh, not overflow to SA? After my RA created, my SA is low now, thought it would overflow there.

 

[BBCWatcher]

Oh, not overflow to SA? After my RA created, my SA is low now, thought it would overflow there.

Sorry, no.

Moreover, your Basic Healthcare Sum is fixed for life when you celebrate your 65th birthday. For example, if your 65th birthday is in the year 2021, then your BHS will be set at $63,000 and stay at that level for the rest of your life.

 

[pop]

Sorry, no.

Moreover, your Basic Healthcare Sum is fixed for life when you celebrate your 65th birthday. For example, if your 65th birthday is in the year 2021, then your BHS will be set at $63,000 and stay at that level for the rest of your life.

Thanks, BBCW. On 2nd thoughts, if the $3k is counted towards my VC limit of, 37,740, then i should just VC one lump sum. No point doing $3k to MA first then VC. End result is still the same.

 

[BBCWatcher]

I’m confused. When I select medisave top up, it says tax deductible on the tab. So it’s not tax deductible?

STOP. You should not be putting any dollars into MediSave today (January 1) unless there's an addition to or subtraction from your MediSave Account that you expect on January 1, 2, 3, or 4. If there's no MediSave addition or subtraction within the next 3 days, there is no rush.

 

[BBCWatcher]

Thanks, BBCW. On 2nd thoughts, if the $3k is counted towards my VC limit of, 37,740, then i should just VC one lump sum. No point doing $3k to MA first then VC. End result is still the same.

The results can be different in at least two ways:

1. If you're not self-employed but are otherwise eligible for tax relief, the tax relief result is different. Do the $3K MA first.

2. If you haven't reached the Full Retirement Sum, the allocations to your three accounts are different. Do the $3K MA first.

I can't think of how doing the $3K MA first would hurt in this situation, and it could very much help.

 

[pop]

The results can be different in at least two ways:

1. If you're not self-employed but are otherwise eligible for tax relief, the tax relief result is different. Do the $3K MA first.

2. If you haven't reached the Full Retirement Sum, the allocations to your three accounts are different. Do the $3K MA first.

I can't think of how doing the $3K MA first would hurt in this situation, and it could very much help.

Erm you got me confused now. The $3K top up to MA doesn’t qualify for tax relief right? (2) is out since i hit ERS in my RA already. But not clear about (1) though.

 

[Value.Matrix]

Erm you got me confused now. The $3K top up to MA doesn’t qualify for tax relief right? (2) is out since i hit ERS in my RA already. But not clear about (1) though.

Read the rules lah basically.

(1) For top up to MA (VCMA) to qualify for tax relief, you need to fulfill both criteria.
(A) your medisave is below BHS (which is locked once you hit 65) AND
(B) it is within the $37,740 cpf annual limit.
AND below $80,000 personal tax relief

If you have kosong in SA and maxed medisave, check the OA/SA/MA contribution rate properly as per your age.

 

[pop]

Read the rules lah basically.

(1) For top up to MA (VCMA) to qualify for tax relief, you need to fulfill both criteria.
(A) your medisave is below BHS (which is locked once you hit 65) AND
(B) it is within the $37,740 cpf annual limit.
AND below $80,000 personal tax relief

If you have kosong in SA and maxed medisave, check the OA/SA/MA contribution rate properly as per your age.

Got it. Thanks.

 

[pop]

STOP. You should not be putting any dollars into MediSave today (January 1) unless there's an addition to or subtraction from your MediSave Account that you expect on January 1, 2, 3, or 4. If there's no MediSave addition or subtraction within the next 3 days, there is no rush.

Just curious. What’s the reason? What if i top up MA today?

 

[BBCWatcher]

Just curious. What’s the reason? What if i top up MA today?

You won't earn any interest on your MA contribution in January until next month (from February 1). In the meantime, you are earning a small bit of bank interest on your cash.

So why would you lose ~29 days of bank interest unless you get something in return?

 

[articland05]

You won't earn any interest on your MA contribution in January until next month (from February 1). In the meantime, you are earning a small bit of bank interest on your cash.

So why would you lose ~29 days of bank interest unless you get something in return?

but I do need to make the top up before my regular salary contribution kicks in right?

otherwise my 3k contribution will need to be reduced accordingly

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