ACCESS to superannuation is heavily restricted. In addition to age restrictions there are also restrictions depending on the type of superannuation a person has.
Q I have about $120,000 in an accumulation super fund, all of which is unrestricted non-preserved. Of this, $65,000 is untaxed and $55,000 taxed. I am aged 64 and in paid employment one day a week. Can I withdraw $20,000 tax free or do I have to trigger some sort of release?
A Before a condition of release is met, superannuation is classed as a preserved benefit. When a condition of release is met, and the superannuation is not paid out, the benefits become unrestricted non-preserved benefits that can be accessed at any time.
In your case you must have previously met a condition of release so you can access your unrestricted non-preserved benefits whenever you want. Any lump-sum payment or pension you take from your superannuation must be taken in equal proportions of its components. As you are over 60, the untaxed benefit would be taxed at 16.5 per cent and no tax is payable on the taxed benefits.
Q I have a deferred annuity that I started in 1991. The value of this investment was $53,419 as at June 30, 2009. It is made up of unrestricted non-preserved benefits of $12,619 and preserved benefits of $40,800. I turn 65 in August and plan to continue working full time. Is it possible for me to withdraw the above deferred annuity amount, without any penalty, when I turn 65?
A As you are still working you cannot access the preserved component of your superannuation until you reach 65. If you wanted to access your superannuation before then, you would have to resign from your current employer. Under the new superannuation rules there will be no tax payable on any of the payout you receive.
Q Is there anywhere that I can find out the average rate of return on self-managed super funds? My rate for last financial year was minus 2.62 per cent and for the year before it was minus 25.67 per cent. However, my average rate of return from 1999-2000 to 2008-09 was 11.59 per cent. Should my fund administrator give me some idea as to how I compare with their average client, or does some independent body publish this information?
A There is no requirement for an SMSF administrator to provide this information. I do not know of anyone, other than the ATO, that could provide it. A more meaningful comparison would be the performance of externally managed super funds. There is a website, selectingsuper.com.au, that publishes performance results for 136 funds. According to their table at January 31, 2010, the average performance for a balanced fund was minus 2.6 per cent for three years and positive 5.3 per cent for 10 years.
Q Where an SMSF has two members both working full time, one is 55 and the other is 70, what are the consequences of the fund going into pension phase compared with totally withdrawing the super as a lump sum? Also, has one member breached the rules by borrowing from the other member?
A The 70-year-old member can take their accumulated benefit either as a pension or a lump sum. The 55-year-old can only commence a transition to retirement pension if they plan to retire from full-time employment. There is no contravention of the super regulations if a member borrows from another member; super funds can, however, never provide loans to members.
Questions can be emailed to max@taxbiz.com.au
Self-Managed Superannuation Funds: A Survival Guide, by Max Newnham, is available in bookstores.
