Do you have more than $1.6 million in total across your pension accounts?
Just a quick note to let you all know the clock is ticking for investors who want to take advantage of the more generous tax concessions available in super this financial year. As of July 1, new rules come into effect that will reduce contribution limits.
Pension account limits
Super has two phases, an accumulation phase where you grow your retirement savings in a concessional tax environment, and pension phase where no tax is paid on earnings or withdrawals. Under existing rules, there are no limits on the amount of money you can hold in super. But from July 1, a maximum of $1.6 million can be held by a retiree in a tax-free pension account.
Non-concessional contributions before July 1 that push the balance above $1.6 million can stay in super.
But individuals who have more than $1.6 million in a pension account on that date will be required to put the excess back into an accumulation account where earnings are taxed at 15 per cent, or take the excess out of super entirely. This $1.6 million is counted across every superannuation fund you have. If you have more than one pension account, you need to add the account balances together for the purposes of calculating your $1.6 million limit.
If you have one or more pension accounts that together add to more than $1.6 million, please make sure you contact us ASAP to discuss your options.