Death benefit nominations
Thursday 22 February 2024 at 11:00 am AEDT
This webinar will guide you through the importance of death benefit nominations as they apply to large and small superannuation funds. We will cover what you should consider when making a nomination as well as some of the twists and turns that can unexpectedly occur. This webinar is a must for all super fund members and not just for those who are retired or nearing retirement
Q: In the December webinar, a question was posed asking “If I don’t need the funds yet, can I leave the fund in accumulation phase?”. The answer was yes, but you’ll pay 15% tax on any gains.
Why wouldn’t one convert to pension phase; take out the minimum requirement either monthly or in bulk for that financial year; rebank back into super; and be in a tax free environment? I appreciate this only can happen until 75yo.
A: The main reason not to convert to pension is if the person has already reached their transfer balance cap and cannot transfer further funds into the pension phase.
Alternatively, it may be that their total super balance is higher than the general transfer balance cap and they are therefore prevented from making further non-concessional contributions. If concessional contributions are also not an option (due to already contributing up to the cap, or not meeting the work test to make deductible contributions), then being forced to make withdrawals from the pension phase that must then be invested outside super may be undesirable.
Many people do commence pensions and reinvest their withdrawals as super contributions, just as you propose. As you noted, further contributions are not possible after age 75, except downsizer contributions from the sale of a home.
Remember that contributions cannot be made into a pension, so a separate accumulation account must be maintained to receive them.
You can learn more about these issues in the articles below.
If you’re one of the many people who has made additional contributions to super after starting a pension (or you plan to) there are decisions to be made about how to manage it. Should you start a new pension with the additional savings, leave money in the accumulation phase, or close your existing pension to combine the funds into one new pension? Read about what to consider when you top up a super pension.
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