Bring-forward rule explained: How to make large super contributions

Q: I’m a self-funded retiree and about to turn 60. I would like to make a $390,000 contribution to my accumulation super, $30,000 concessional plus $360,000 non-concessional using the bring-forward rule. Can I immediately, after making these contributions, transfer my accumulation super to a pension account, or do I need to wait three years due to the bring-forward?

A: There’s a few little issues that we need to look at here. The 30 second answer is no, you don’t need to wait your three years. If you’ve met a condition of release which allows you access to your money, you could start a pension if you meet those conditions of release. But there are, of course, some other bigger issues that we need to keep in mind.

I suppose the first one is when you’re making non-concessional contributions, or when you’re looking to access that three-year bring forward rule, which allows you to put in a larger amount, you need to make sure that you do check your total super balance, exactly what we just went through before. Remember that your total super balance on 30th of June last year, so 30th of June 2024, last financial year, affects our ability to make non-concessional contributions or how much of our non-concessional cap we can use up. The annual $120,000 non-concessional cap applies unless we use the bring forward rule, which allows us to contribute up to $360,000 in any one year, or combination of years over a three-year period. It allows us to make larger contributions, for instance, if we’re looking to retire and start pensions, or we’re younger and we come into other amounts of money.

There are also age restrictions on making non-concessional contributions. We can do it anytime up until age 74, so not yet 75. The non-concessional bring forward rules can also be made up to age 74, not yet 75. Check your total super balance on 30th of June 2024. If it was above $1.9 million, then your non-concessional cap this year in the 2025 year is zero. If you’re not below that general transfer balance cap, if your TSB is not below that $1.9 million, then your non-concessional cap is zero. Any amount you make this, you will be excess.If it was between $1.66 and $1.9 million, I’ll show you that shortly, then you may have reduced access to that three-year bring forward rule.

You mentioned, can you do this now? Of course, you need to check all of those things, your TSB, to make sure you fall within those levels. Also just think about whether you may have triggered the three-year bring forward rule last year or the year before, or even, say, 2022 or 2023. Are you still within that three-year period? If so, think about how that might affect you.

For those looking to make larger non-concessional contributions under the three-year rule, this is quite an important slide. The left hand side looks at what your total super balance was on 30th June last year, and then how much you can use under the non-concessional contribution cap rules this year. For instance, as I mentioned before, if your total If your total balance is above $1.9 million, then your non-concessional cap this year is zero. Any amount will be excess. If your total super balance was below $1.66 million on 30th June 2024, then you could use the full three-year bring forward all that $360,000 to be contributed. Please do keep these in mind, especially if you do fall between those two brackets, because it may restrict how much you can contribute using the non-concessional contributions.

To get to the specific question, the money is in there, we’re assuming it’s all been done in a compliant way, you then do not need to wait for that three-year bring forward rule to end before you start a pension. The contribution has been made, it’s been allocated to your account, it’s a member benefit. In order, of course, to start the pension, you do need to meet a condition of release that allows you to access your super benefits.

Now, when I look at the question that has been posed, you’re probably falling into that bottom blue box there, which is retirement after age 60. If you do cease an arrangement under which you’re gainfully employed, and that happens after you turn 60, then all your money at that time becomes unrestricted, not reserved. You can start a pension. What we’ve looked at here is the ability to make the contribution, once it’s been accepted, if you meet a condition of release, that we’re looking at on this slide, you can then start a pension. You don’t need to wait for that three-year period to come to an end.

When it comes to non-concessional contributions, there are some tricky things to be aware of, as I mentioned, with those brackets on balances. Jump on and have a look at the non-concessional super contributions guide. It takes you through all that, and it might just be a handy reference tool for you if you’re looking to make a larger non-concessional contribution amount. It’s something certainly worth looking at.

If you’re someone now looking to then access your money after you’ve made those contributions, have a look at the recently updated article around accessing super. This covers all the conditions of release. It sets out all the conditions that need to be met when you want to access some money from super, ranging from retirement through to permanent incapacity. Another great article by Barbara there. Have a look at that around accessing superannuation benefits.