Q: From reading SuperGuide articles, I can see that from July 2017, there is no longer a special contributions cap for people between 50 and 74 years, but a general concessional contribution cap of $25,000 a year for all age groups. I can also see that for non-concessional contributions, the cap is now $100,000 from July 2017. Is this $100,000 cap for NON-concessional contribution the same regardless of the age of the person? I am nearly 65 and I would like to know if the limit of $100,000 a year applies to people over 65.
Yes, for the 2017/2018 year, the non-concessional (after-tax) contributions cap of $100,000 applies to individuals aged up to 74 years, as does the $25,000 concessional (before-tax) contributions cap.
Note that for the 2016/2017 year, a higher non-concessional (after-tax) contributions cap of $180,000 applies to individuals aged up to 74 years, and a higher concessional cap of $35,000 applies to individuals aged 49 years or over on 30 June 2016 (and $30,000 cap for individuals aged 48 years or younger on 30 June 2017).
Note: Taking effect from 1 July 2017, the federal government has cut the annual non-concessional cap to $100,000 a year (from $180,000 a year) with an upper lifetime limit based on a person’s total superannuation balance (see SuperGuide article New $100,000 cap: Cut to non-concessional contributions cap). Also taking effect from 1 July 2017, the federal government has removed the over-50s concessional (before-tax) contributions cap of $35,000 and cut the general concessional cap to $25,000 (see SuperGuide article Concessional contributions caps to be slashed from July 2017).
You must satisfy a work test when making super contributions on or after the age of 65. You must work 40 hours in a 30-day period in the financial year in which you plan to contribute. I explain the contribution rules in more detail in the SuperGuide article, Superannuation contributions: Wearing two caps for 2017/2018 year.
Note: Anyone aged 75 years or over cannot make voluntary super contributions, although an employer can make compulsory super contributions for an employee aged 75 years or older (for more information about ageless Superannuation Guarantee contributions see SuperGuide article Employer super (SG) contributions paid for over-70s). For more information about the ban on voluntary contributions beyond age 74, see SuperGuide article Super contributions beyond the age of 75.
Bring-forward rule not available for over-65s
If an individual is under the age of 65, he or she can also take advantage of the ‘bring forward’ rules when making non-concessional (after-tax) contributions. The ‘bring forward’ rule allows you to make up to two years’ worth of non-concessional contributions in advance.
For the 2017/2018 year, an individual under the age of 65 can make $300,000 in non-concessional contributions representing his or her cap for that year, and for the next two years. For the 2016/2017 year, an individual under the age of 65 can make $540,000 in non-concessional contributions representing his or her cap for that year, and the next two years. Note there are transitional rules for those individuals who have triggered bring-forwards in the 2 years before July 2017 (see SuperGuide article
Note: For individuals aged 63 or 64, there is a quirk in the law that permits such individuals to take advantage of the bring forward rules even though some of the contributions relate to years where they reached the age of 65. I explain this quirk in the SuperGuide article Non-concessional contributions: Tread carefully when aged 63 or 64 or 65 (3 Q & As).
I explain how the contributions caps work in more detail in the SuperGuide articles:
I am 75 and working casually as a teacher. I was salary sacrificing until I reached 75 and then I was unable to contribute. I found this unfair as the government is encouraging us to work longer but will not allow as to salary sacrifice!
I thought that it was intended to allow those aged between 65 -74 who are retired to allow super contributions to be made.
Please advise if my thinking is wrong.
Thanks
Hi Mal
Thanks for your email. The government is not proceeding with the removal of the work test for over-65s, due to its forced compromise on the non-concessional contributions cap rules.
The work test for over-65s will remain in place post-July 2017, which means an individual aged 65 years or over can still make super contributions, subject to meeting the work test.
Cheers
The SuperGuide team
Hi
I am an adviser. I was shocked when Macquarie super wrap sent my clients Salary Sacrifice amounts back to his employer as he was over age 65. The law states that after age 65 only statutory SGC amounts are acceptable. All salary sacrifice must stop after age 65 as super fund can not accept, as not SGC 9%.
is this right? is Macquarie wrong? Other companies do not distinguish between SGC and Salary sacrifice. All just Concessional and/or non concessional.