Retirement account question

henrylbh

henrylbh

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katana71 said:
It wouldn't be that obvious if your balance SA (your Y) is already more than enough to Top up in your RA (yes there is a limit to how much you can top-up and the limit is your ERS) i.e. no need X at all. Then you are getting 4% whether in SA or 4% in the RA. If still in SA you got the flexibility. You can't do anything once the funds are transferred to your RA.
Click to expand...
Read my comments specifically relating to his thought in which he is considering transfer of his balance oa/sa to ra at 55 or later at 65.
 
katana71

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henrylbh said:
Read my comments specifically relating to his thought in which he is considering transfer of his balance oa/sa to ra at 55 or later at 65.
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Not sure which post you meant, as you made several comments. However, I am specifically pointing only to comparing SA and RA components only. And not factoring using cash.
 
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dgeralds

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Hi All

Im 55 and I have the follow now.

OA 54K
SA 240K
MA 61K
RA 279K

Come Jan 2022, can I top up cash to my RA, SA and MA? By how much? Thank you.
 
K

karakorum1999

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dgeralds said:
Hi All

Im 55 and I have the follow now.

OA 54K
SA 240K
MA 61K
RA 279K

Come Jan 2022, can I top up cash to my RA, SA and MA? By how much? Thank you.
Click to expand...
(1) Your current MA is below BHS of $63k, so you could already cash top up $2k provided this can be within Annual limit of $37,740 for 2021.

(2) Your MA balance on 1 Jan 2022 should be $63k or less (depending on contributions from employment and interest). In any case, there will be a new 2022 BHS (not yet announced but let’s say it is $66k). So you can cash top up $3k to your MA to reach the new BHS limit - just do it before your Jan mandatory contributions get credited. With the new rules, no need to worry about the Annual Limit - you can top up for tax savings for sure.

(3) At 55 and above, there is no way to cash top up your SA. SA can only increase from employment and interests.

(4) in Jan 2022, you can cash top up your RA by $9k to reach $288 (2022 ERS, already announced). No tax savings.
 
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dgeralds

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karakorum1999 said:
(1) Your current MA is below BHS of $63k, so you could already cash top up $2k provided this can be within Annual limit of $37,740 for 2021.

(2) Your MA balance on 1 Jan 2022 should be $63k or less (depending on contributions from employment and interest). In any case, there will be a new 2022 BHS (not yet announced but let’s say it is $66k). So you can cash top up $3k to your MA to reach the new BHS limit - just do it before your Jan mandatory contributions get credited. With the new rules, no need to worry about the Annual Limit - you can top up for tax savings for sure.

(3) At 55 and above, there is no way to cash top up your SA. SA can only increase from employment and interests.

(4) in Jan 2022, you can cash top up your RA by $9k to reach $288 (2022 ERS, already announced). No tax savings.
Click to expand...
Thank you very much.

Is there a easy way to compute the difference between the CPF annual limit ($37,740) and what I have contributed so far for the current year 2021?
 
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zoneguard

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karakorum1999 said:
(3) At 55 and above, there is no way to cash top up your SA. SA can only increase from employment and interests.
Click to expand...

Voluntary contributions to all 3 accounts will still work. CPF annual limit $37,740 will apply for all contributions( mandatory and voluntary). For age 56,
Code: 
>55,<=60    42.86%    19.64%    37.50%

19.64% will go to SA and most of it go to OA once 2022 BHS is reached in MA as SA is already at FRS in 2021.
 
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BBCWatcher

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If you're age 55 now it's highly likely you'll have some room below the CPF Annual Limit in 2021 since your monthly payroll-related compulsory contributions have ratcheted down somewhat starting at age 55. I think it's quite safe for you to make a Voluntary Contribution to your MediSave Account now. If you're trying to beat a payroll cycle then make the VC via PayNow QR a couple days before your compulsory contribution typically hits. Otherwise November 29, 2021, via PayNow QR works.

The absolute "worst" case is that the CPF Board refunds some or all of your VC to MA without interest. If that happens they'll do it sometime in February, 2022, probably. But that's not a bad thing! It would actually be a very good thing, because then you'd have even more room in your MA to add dollars in 2022. Starting on January 1, 2022, you'll be able to make VCs to your MA without worrying about the CPF Annual Limit. And the first $8,000 is eligible for tax relief.

I'll describe this "CPF hack" in another thread, for general benefit.
 
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karakorum1999

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dgeralds said:
Thank you very much.

Is there a easy way to compute the difference between the CPF annual limit ($37,740) and what I have contributed so far for the current year 2021?
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As other posters have mentioned, I forgot that you’re 55 this year (July I think based on your earlier posts on CPF shielding). That means from Aug to Dec 2021, your total mandatory contributions from employment for Ordinary Wages is $1,560/mth (26%) instead of $2,220 (37%) - that means you have a $3,300 gap to do your VC, and this is not affected by your Additional Wages. So if you have not done any VC yet for 2021, you should VC to your MA right away (or wait till Sep if you wish since you only need to VC $2k).

You can access CPF e-cashier to check your allowable VC (but only to-date and does not yet take into account contributions from the rest of the year).
 
BBCWatcher

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Make the VC to MA before the payroll cycle hits this month (November, 2021), whenever that is, or on November 29, 2021, if there's no payroll cycle to beat. Use PayNow QR to do it.

"Just do it." In this situation the CPF Annual Limit shouldn't be binding, and even if it is that would be a good thing. A refund in February, 2022, would mean additional room to make a VC to MA for more tax relief.

If there's any deduction from MA in 2021 -- for insurance premiums, for example -- then go right ahead and fill the MA back up to the BHS. Even if that means a partial or full refund, which would be a very good thing in these circumstances.
 
andyhtc

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Just curious if I can opt for BRS with a pledge on my property and then use cash to top up to ERS?
 
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dgeralds

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BBCWatcher said:
Make the VC to MA before the payroll cycle hits this month (November, 2021), whenever that is, or on November 29, 2021, if there's no payroll cycle to beat. Use PayNow QR to do it.

"Just do it." In this situation the CPF Annual Limit shouldn't be binding, and even if it is that would be a good thing. A refund in February, 2022, would mean additional room to make a VC to MA for more tax relief.

If there's any deduction from MA in 2021 -- for insurance premiums, for example -- then go right ahead and fill the MA back up to the BHS. Even if that means a partial or full refund, which would be a very good thing in these circumstances.
Click to expand...
Thank you. Just did VC to MA using PayNow QR.
 
BBCWatcher

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andyhtc said:
Just curious if I can opt for BRS with a pledge on my property and then use cash to top up to ERS?
Click to expand...
The Enhanced Retirement Sum limit is calculated to include prior withdrawals. What you take out of a CPF Retirement Account effectively reduces your ERS, dollar for dollar.

In 2021 here are the Basic, Full, and Enhanced Retirement Sums:

BRS = $93,000
FRS = $186,000
ERS = $279,000

So let's suppose you celebrate your 55th birthday this month (November, 2021), and your CPF Retirement Account is funded to the Full Retirement Sum (from SA and OA). You then immediately withdraw $93,000 (the BRS) with a property pledge/charge in place.

OK, now you change your mind in December, 2021, and you want to deposit $186,000 into your CPF Retirement Account to push the balance up to $279,000 (the ERS). Can you do that? No, sorry, not allowed. The ERS is calculated inclusive of withdrawals. The most you can add back in 2021 in this example is $93,000, not $186,000. In other words, a withdrawal from your RA permanently and irrevocably reduces your effective ERS limit. (Unless CPF changes the rules, but this rule has been around a while and seems unlikely to change.)
 
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Moonwalker0921

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karakorum1999 said:
(1) Your current MA is below BHS of $63k, so you could already cash top up $2k provided this can be within Annual limit of $37,740 for 2021.

(2) Your MA balance on 1 Jan 2022 should be $63k or less (depending on contributions from employment and interest). In any case, there will be a new 2022 BHS (not yet announced but let’s say it is $66k). So you can cash top up $3k to your MA to reach the new BHS limit - just do it before your Jan mandatory contributions get credited. With the new rules, no need to worry about the Annual Limit - you can top up for tax savings for sure.

(3) At 55 and above, there is no way to cash top up your SA. SA can only increase from employment and interests.

(4) in Jan 2022, you can cash top up your RA by $9k to reach $288 (2022 ERS, already announced). No tax savings.
Click to expand...

karakorum1999 said:
(1) Your current MA is below BHS of $63k, so you could already cash top up $2k provided this can be within Annual limit of $37,740 for 2021.

(2) Your MA balance on 1 Jan 2022 should be $63k or less (depending on contributions from employment and interest). In any case, there will be a new 2022 BHS (not yet announced but let’s say it is $66k). So you can cash top up $3k to your MA to reach the new BHS limit - just do it before your Jan mandatory contributions get credited. With the new rules, no need to worry about the Annual Limit - you can top up for tax savings for sure.

(3) At 55 and above, there is no way to cash top up your SA. SA can only increase from employment and interests.

(4) in Jan 2022, you can cash top up your RA by $9k to reach $288 (2022 ERS, already announced). No tax savings.
Click to expand...
u can ask your spouse to help to top-up your RA account using cash , She/He will get the tax savings for this amount .
 
yoongf

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Hmm... lets say i hv ERS in OA+SA, and i prefer to minimise the CPFLife amt to BRS level. With a property pledge, i intend to leave the excess and draw down regularly as and when required.
In the past, we could transfer the full amount to RA (to earn the 4%) and do a AMP. But with the recent rule change, seems like any transfer to RA will auto add to CPFLife premium.

What can be done nw.. to achieve BRS level CPF Life and a FRS level (at 4%) of AMP?
 
andyhtc

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BBCWatcher said:
The Enhanced Retirement Sum limit is calculated to include prior withdrawals. What you take out of a CPF Retirement Account effectively reduces your ERS, dollar for dollar.

In 2021 here are the Basic, Full, and Enhanced Retirement Sums:

BRS = $93,000
FRS = $186,000
ERS = $279,000

So let's suppose you celebrate your 55th birthday this month (November, 2021), and your CPF Retirement Account is funded to the Full Retirement Sum (from SA and OA). You then immediately withdraw $93,000 (the BRS) with a property pledge/charge in place.

OK, now you change your mind in December, 2021, and you want to deposit $186,000 into your CPF Retirement Account to push the balance up to $279,000 (the ERS). Can you do that? No, sorry, not allowed. The ERS is calculated inclusive of withdrawals. The most you can add back in 2021 in this example is $93,000, not $186,000. In other words, a withdrawal from your RA permanently and irrevocably reduces your effective ERS limit. (Unless CPF changes the rules, but this rule has been around a while and seems unlikely to change.)
Click to expand...

Thanks. It is quite hard to outsmart the CPF mechanism :LOL:
 
andyhtc

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yoongf said:
Are u planning to join CPF Life at FRS or ERS?
Click to expand...

I recall the default is FRS in CPF Life. Anything more to get to ERS limit will need to top up and I intend to do so using cash.

I estimate that I could be financially independent in my early 50s and the issue will be where to park my cash in a very secured place earning some decent interest rate as I continue working until around 60 years old.
 
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