New contribution strategies for retirees

Case study 1: Utilising the bring-forward rule when you are about to turn 75

• Henry’s date of birth is 15 April 1948
• His super balance is $1 million
• He has a personal share investment portfolio of $600,000

As Henry turns 75 in the 2022–23 financial year, based on his date of birth, he has until 28 May 2023 to make the contribution (28 days after the end of the month Henry turns 75), and not 30 June 2023 as would be the case if he were younger.

Case study 2: Utilising the bring-forward rule twice

• Julia’s date of birth is 11 December 1950
• Her super balance is $800,000
• She has a personal share investment portfolio worth $550,000

Julia turned 71 on 1 July 2022 so she can trigger the bring-forward rule and contribute up to $330,000 into her super from her personal share portfolio in the 2022–23 financial year. This reduces her share portfolio balance to $220,000. She will then not be able to make further non-concessional contributions for the 2024 and 2025 financial years.

In the 2026 financial year, Julia will be eligible to trigger the bring-forward rule again. Assuming her share portfolio has now grown to $280,000, she can contribute the entire amount into her super account.

However, as she turns 75 in the 2026 financial year, she has until 28 January 2026 to make that contribution and not 30 June 2026.

By planning ahead, anyone turning 75 in the 2026 financial year should be able to trigger the bring-forward rule twice from the 2022–23 financial year if they have the means and inclination to do so.

Case study 3: Delaying non-concessional contributions until after retirement

• Roger is 65 and will retire in December 2022
• His final employment income will be $200,000
• His super balance is $1 million
• He has an investment property valued at $500,000 (bought 10 years ago for $300,000)

Roger would like to sell his investment property and contribute $330,000 of the proceeds into his super account. Under the new rules effective 1 July 2022, Roger is better off delaying the non-concessional contributions until after 1 July 2023 given work test rules will not apply and he has until age 75 to make these contributions.

He can trigger the bring-forward rule and contribute $330,000 between 1 July 2023 and 30 June 2024. Given he would not have any employment income at that point, the tax on his $100,000 property capital gain would be based on a lower marginal tax rate of 34.5% including Medicare levy.

Roger would also be able to trigger the bring-forward rule again after 1 July 2026 to contribute the remaining property sale proceeds.