Superannuation Discussion + market volatility

[There'sOnlyOneJimmy]

Well it was initially taxed before it became the $110k
Either as personal income
Capital gains tax, etc

I suppose lottery winnings would be an exception

My apologies, I misinterpreted what you said.

On exceptions, a couple of popular ones are after downsizing a primary residence or receiving an inheritance.

 

[andye]

Spouse said "might as well do it now or I can easily divorce you and claim my share"

I annually go down to the ED when mrsandye is working and get the Spouse Split contribution form witnessed by one of the docs so they can see how much I love her ❤

 

[Pushka]

Well it was initially taxed before it became the $110k
Either as personal income
Capital gains tax, etc

I suppose lottery winnings would be an exception

We dumped in around $650 k when we sold our family home a couple of years ago into two separate accounts with HESTA. It’s done very well.

 

[Quickstatus]

HESTA

Love those ISF

 

[Pushka]

Love those ISF

We sold our family house the two months before Covid hit China. At the time when things were so unsure we thought Phew, good timing. But then, for some goddam reason, real estate soared in price. We do the maths, our house would have been worth a lot more now. But then we look at our Hesta account and think, well, we did ok. And no one would have predicted either Covid or real estate prices. On the upside, we are selling our place on the river, holiday shack. Yay for Covid. A large property on the river front. Watch this space.

 

[burmans]

Any point in putting in the annual $25K concessional contribution each year if the expected accumulation account balance will be over $1.6M by retirement age? (with conservative assumptions)

Accumulation account taxed at 15% (no Medicare) so if your marginal tax + Medicare over 15% then yes. Of course need to consider that there are restrictions on taking money out.

 

[burmans]

The new level is now $1.7 million per person that is partially tax sheltered in superannuation so try to get there sooner rather than later.
No one likes the way Governments fiddle with the rules but the latest lift to $1.7 million was helpful.

Though I held off starting for a year to get that $1.7m limit, if I’d put my $1.6m a year ago it would have blitzed that $1.7m by now!

 

[cove]

Because of our ages of 71 and 69 we have been drawing off our SMSF enough to keep under that cap as tax free pensions. We are enjoying the tax free pension money rather than letting the funds grow into that 15% tax rate beyond the cap.
With the stock market roaring the pension amounts this year were quite large.
Getting those franking credits as tax refunds into our SMSF are amounts you need to allow for to stay under the cap.
Most couples don’t need more than $3.4 million to cover off retirement and with almost no travel these days those numbers look pretty ok.
We avoided putting real estate into our SMSF as it requires valuations to be updated regularly.

 

[Jacques Vert]

...but my hope is that there won’t be any retrospective adverse changes made.

Fat chance of that ever happening.

 

[There'sOnlyOneJimmy]

Because of our ages of 71 and 69 we have been drawing off our SMSF enough to keep under that cap as tax free pensions. We are enjoying the tax free pension money rather than letting the funds grow into that 15% tax rate beyond the cap.

If I’m reading your comment correctly, I get the impression that you think that you need to keep the balance of your super pension account below the cap ($1.6 - $1.7M).
That is not correct.
The cap relates to the amount that you are allowed to transfer in to your pension account, not the balance of the account.

From the ATO Website:
“If the amount in your retirement phase account grows over time (through investment earnings) to more than your personal transfer balance cap, you won’t exceed your cap.”

Link here:

ATO website currently unavailable

www.ato.gov.au

 

[Flashback]

Because of our ages of 71 and 69 we have been drawing off our SMSF enough to keep under that cap as tax free pensions. We are enjoying the tax free pension money rather than letting the funds grow into that 15% tax rate beyond the cap.
With the stock market roaring the pension amounts this year were quite large.
Getting those franking credits as tax refunds into our SMSF are amounts you need to allow for to stay under the cap.
Most couples don’t need more than $3.4 million to cover off retirement and with almost no travel these days those numbers look pretty ok.
We avoided putting real estate into our SMSF as it requires valuations to be updated regularly.

And with the AUD depreciating against the GBP that can't help! Fortunately it has slowed down now.

 

[andye]

A question (not sure how dumb)
If you have transferred in $1.6M but has grown in value to >$1.7M this is fine in the pension account, but could you add in another $100k now. If not timing of any transfers could be important (would make sense to do at a market low if you are in a position to do so)

 

[There'sOnlyOneJimmy]

A question (not sure how dumb)
If you have transferred in $1.6M but has grown in value to >$1.7M this is fine in the pension account, but could you add in another $100k now. If not timing of any transfers could be important (would make sense to do at a market low if you are in a position to do so)

If you have transferred in $1.6M before 30 Jun 2021, then you can’t add any more.
Refer to this link for a full explanation:

ATO website currently unavailable

www.ato.gov.au

 

[Quickstatus]

Because of our ages of 71 and 69 we have been drawing off our SMSF enough to keep under that cap as tax free pension

I don’t understand.
Upon retirement and the creating of the pension phase account you can transfer maximum $1.6M (now $1.7M) into the pension account. Once you transfer that full amount you cannot transfer any more even if future transfer caps are raised through indexation.
However once that $1.7M is in the pension account it can grow due to earnings which are tax free such that the balance goes above $1.7M .

 

[Quickstatus]

if I’d put my $1.6m a year ago it would have blitzed that $1.7m by now!

And while the $1.6m sat in the pension account it’s earnings would have been tax free compared to taxed at 15% in the accumulation super account. So a comparison may reveal that by delaying your overall balance would be slightly less due to the tax issue

 

[cove]

OK you made me look at our current shares in our SMSF and there is $1.3 million in surplus on cost on our current share portfolio. The good news is that it is all tax free currently.

 

[Flashback]

OK you made me look at our current shares in our SMSF and there is $1.3 million in surplus on cost on our current share portfolio. The good news is that it is all tax free currently.

Better get that gap loaded up to bring you up to the top level then!

 

[cove]

Yes @Flashback my bad decision was Westpac but that was the only one out of nine shares. Almost at breakeven on Westpac now.

 

[Flashback]

Yes @Flashback my bad decision was Westpac but that was the only one out of nine shares. Almost at breakeven on Westpac now.

I sold those off a long time ago, 10+ years - they weren't looking good then and it sounds like not looking good now! One of the big 4 banks to buck the trend I suppose.

 

[cove]

If I took off the last 2 years dividends from our cost we would be just ok on Westpac. Westpac have been simplifying their business but way too slowly for shareholders.