Accessing your Super Benefit when aged over 65
Once you reach age 65, you can access your Super Benefit at any time whether you have retired or not. There are absolutely no restrictions to accessing your Super Benefit when Over 65. Your Super Benefit can be accessed as either a Pension or Lump Sum Withdrawal.
Pension withdrawals when aged over 65
When you reach aged age 65 you have the option of commencing a Pension Income Stream from your SMSF. A Pension simply means that periodically (eg each month or other period you nominate) cash is transferred from your SMSF Bank Account to your personal Bank Account to fund your living expenses. There are two types of Pensions you can start in a SMSF namely a "Simple Account Based Pension" and a "Transition to Retirement Pension (TRAP)". When you are over 65 you can only commence a Simple Account Based Pension.
If you do decide to commence a Simple Account Based Pension from your SMSF and are aged over 65, then you must take a Minimum Pension Income per year. Further details about the Minimum Pension amount can be found in the Pension Section of our website here. There is no Maximum Pension Amount if you are aged over 65 and you are free to access all your Super Benefit as desired. No tax is payable on Pension Withdrawals made after 65. Further details about commencing a Pension can be found here.
Lump Sum withdrawals when aged over 65
The alternative way to access your Super Benefit when you reach age 65 is as a Lump Sum Withdrawal. A Lump Sum Withdrawal is simply an amount accessed from your SMSF that is not a Pension Payment. You can make lump sum withdrawals whenever you like from your SMSF once you turn 65. There is no Maximum Lump Sum Amount if you are aged over 65 and you are free to access all your Super Benefit as desired. No tax is payable on Lump Sum Withdrawals made after 65.
You can choose whether Withdrawals are a Pension Withdrawal or a Lump Sum Withdrawal
If you have NOT commenced a Pension from your SMSF all withdrawals made from your SMSF will be treated as a Lump Sum Withdrawal when aged over 65. Alternatively, if you have commenced a Pension from your SMSF, you have the choice of whether a withdrawal will be treated as a Pension Withdrawal or a Lump Sum Withdrawal.
Not required to access Super Benefit when aged over 65
If you are aged over 65 you are not required to access your Super Benefit as either a Pension or a Lump Sum Withdrawal. The choice is entirely yours. In fact you can let your Super Benefit accumulate in the SMSF environment indefinitely. It is noted it is generally tax advantageous to commence accessing your Super Benefit after age 65 as a Simple Account Based Pension. This is because when you commence a Simple Account Based Pension you never pay tax on the income and capital gains on your SMSF Investments. Similarly any monies you access as a Pension will be tax free also after age 60.
Contributions when aged over 65
If you are aged over 65, contributions to superannuation (assuming you satisfy the relevant work test, namely you must have worked for at least 40 hours in a period of not more than 30 consecutive days in the particular financial year), are not preserved and can be immediately withdrawn as a lump sum or pension at any time following the contribution. It is noted that this is still the case even if you have commenced a Simple Account Based Pension.
To demonstrate the benefits of commencing a Pension using your own personal circumstances click here to participate in our Interactive "Pension Analysis" and see how much tax you can save.
To determine if it is possible to make Pension or Lump Sum Withdrawals from your SMSF and the taxation implications thereon using your own personal circumstances click here to participate in our Interactive "Super Access and Tax Analysis".