Want to access your super before you retire? Here are 3 things you need to know.
A Transition to Retirement (TTR) pension (also known as a Transition Income Stream or TRIS) is a way of accessing your super while you’re still working. This can sound like an attractive opportunity, but there are some things to be aware of first.
1. What is it?
Essentially, a TTR or TRIS is an account-based pension from which lump sum withdrawals can be made, but only in limited circumstances. (Like all Self-Managed Superfund regulations, these circumstances can vary depending on numerous factors. If you would like further information on this, give us a call on (08) 8172 9172.)
2. When can I access it?
You have to be at your preservation age (between 55 and 60) to start a TTR pension or a TRIS.
3. What will it cost me? While no tax is payable on pension withdrawals after the age of 60, some tax may be payable on pension withdrawals made between preservation age and 59. This means if you’re turning 60 in a particular financial year it may be financially advantageous to defer pension withdrawals until after your birthday.
Consider ‘Judy’ as an example.
Judy turns 60 on March 10th, 2020. If she withdraws the minimum pension amount of $40,000 on March 9th, this payment will be taxed at her marginal tax rate less a 15% ‘Pension Rebate’.
By simply deferring accessing the pension withdrawal until after her 60th birthday, Judy’s pension withdrawal will be tax free. This equates to a tax saving of $9,600.
What a difference a day makes!
As always, you should seek advice about your own individual circumstances to determine if a TTR or TRIS is right for you. For advice for your specific circumstances please call our office on (08) 8172 9172 or email us at firstname.lastname@example.org.