Accessing Your Self Managed Superfund
Running your own self managed superfund (SMSF) is an alternative to putting your money in a retail or industry fund. In fact, today SMSFs are the largest and fastest growing super segment in Australia, so why take the plunge into it? There are some key advantages such as greater control over your super, more flexibility and investment choice. With SMSF, you decide what you want to manage and what you don’t. For example, you can pull your super with family or other members of the fund or you can borrow to buy a property with your super. However, starting an SMSF can feel like learning to drive. It can be empowering and exciting, but you need to understand the rules and the risks before you start.
One of the main concerns people have about self managed superfund is if they can access they super whenever they want. While there are some special circumstances that allow a trustee to get some or all of their money earlier, as a general rule, a trustee cannot withdraw money from their super until what is called as their preservation age.
Preservation age is between 55 and 60 and depends on when you were born.
Before July 1, 1960 55 July1,1960 to June 30,1961 56 July1, 1961-June 30, 1961 57 July 1, 1962 – June 30, 1963 58 July 1, 1963 – June 30, 1964 59 From July 1, 1964 60
But reaching your preservation age is just one of the requirements for withdrawing money from your self managed superfund. If you are still working between your preservation age and 60, you can only take what is called a non-commutable income stream, which is a pension that will supplement your income. If you stop working between your preservation age and 60, then you may be illegible to get unlimited access to your SMSF, but you will be required to pass a genuine retirement test. This includes the obligation of having terminated your employment and have no intention of going back to work for more than 10 hours a week.
Once you turn 60, then things will get a lot simpler. All the benefits of your fund will be tax-free, whether you decide to take them as pension or a lump sum. However, you will have to qualify for access by ceasing gainful employment. This can be as simple as changing jobs, for example, if you are a director of a company, resigning as an employee.
Turning 65 means that you can access your SMSF at any time regardless if you are working or not. You can decide to take all or part of your super as pension or lump sum, or a combination of both. In order to access your super you will have to contact your SMSF expert and fill out the required documents.