Can you collect super while you are still working?

 In this article we discuss how you can collect super from your SMSF ( Self managed Super Fund) before retiring from the workforce

Transition to Retirement Income Stream (TRIS) or Transition to Retirement (TTR) are the technical strategies that allow you to collect super whilst you are still working.
You can access your super if you are age 55 and still working long as you have reached your preservation age which is 55 for anyone born before 1 July 1960, and gradually increases to 60 for anyone born after 30 June 1964. You would meet a condition of release for a transition to retirement pension. This is important if you wish to access part of your superannuation entitlement.
If you can commence a Transition to Retirement (TTR) pension from your self-managed superannuation fund (SMSF). The minimum amount of pension if you are under age 65 is 4% of his account balance and up to 10% of your account balance as your maximum pension in a financial year. If your pension commences part way through the year, the minimum amount is based on a pro-rata calculation from the commencement date. The maximum amount of TTR pension you can receive is 10% of your pension’s account balance. This pension must be paid as a non-commutable income stream.
You can also continue making SGC contributions (Employer Concessional contributions) into your SMSF once you commenced a TRIS pension. You can salary sacrifice into your SMSF and replace it with a TRIS pension. By doing this your SMSF will pay 15% tax on the sacrificed salary instead of you paying tax at your marginal tax rate. You need to be mindful of your contributions cap of $30,000 per annum, or if you are aged 49 years of age or over on 30 June 2014, your concessional contribution cap is $35,000 per annum.
The tax advantages of accessing a TRIS pension from your SMSF is that the investment earnings from the SMSF’s assets supporting the pension are tax-free. If you sell Growth asset in your SMSF while in pension mode the capital gain is tax free.
If you are aged 60 or older, your pension is also tax-free in your hands. If you are aged 55 to 59, the taxable component of your pension is taxed at your marginal tax rate with a 15% tax offset. Still very tax effective.
You TRIS pension is very flexible, it can be stopped and recommenced at any time. All ways review your SMSF Trust deed to ensure your SMSF’s Trust Deed allows for a TRIS pension.
Always keep minutes, member’s letter stating their intention, TRIS Applications, Trustee conformations as they will be required for the Auditor. As well it is a requirement to maintain all records for a specific time frame.
Please call Wealth & Retirement Solutions to see if a strategy to collect super in retirement is right for you.