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 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 an SMSF namely a "Simple Account Based Pension" and a "Transition to Retirement Pension". 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. For more information on the minimum pension amount, please click 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. For more information on commencing a Pension, please click 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.
Can I choose the withdrawal types?
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 to make either Pension or Lump Sum withdrawal in addition to the annual minimum pension amount, which must be made as Pension withdrawals.
We caution that Pension withdrawals and Lump Sum withdrawals are two different withdrawal types and different rules apply. For more information on the difference between Pension withdrawals and Lump Sum withdrawals, please click here.
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 accumulates in the SMSF environment indefinitely. If you access your Super Benefit after age 65 as a Simple Account Based Pension (SABP), you never pay tax on the investment income and capital gains in the SABP account. However the amount of superannuation benefits that you can use to commence an SABP is limited by the Transfer Balance Cap. For more information on Transfer Balance Cap, please click here. 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 eligibility and work test / work test exemption if applicable, 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 (if you have commenced an additional SABP using the contribution amount) at any time following the contribution.