Emily is about to turn 60 years old and is thinking of retiring. She heard that she could commence a tax free pension from her super fund from the age of 60. Her current pension balance is $550,000 and is held in a self-managed superannuation fund (SMSF) to which she and her brother are the members and trustees.
Emily wrote to the trustees as a member of the fund requesting she be paid a pension from her 60th birthday on the 1 March 2017 and advised them of her pending retirement.
The trustees then responded to the member confirming they have received and accepted the request. The trustees advise Emily of the balance supporting the income stream, the tax components and the minimum pension. As Emily is starting a pension mid-year she will only need to take a pro-rated amount of the minimum (4mths/12mths x $22,000 being the first year minimum).
When Emily is in pension phase the earnings on her balance will be tax free. She must draw her minimum every year in order to continue receiving these tax concessions.
Emily is aware that she is able to make further contributions until she is 65. See our next case study on in-specie transfers of assets to super.
This is general illustration only, and the results will differ depending on the investment returns achieved which cannot be guaranteed.
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.