Cashing out RA before retirement

T

ThatGuy_ZA

Senior Member
Joined
Nov 2, 2012
Messages
507
Reaction score
236
Location
Southern Suburbs, Cape Town
My wife and I plan to emigrate in the foreseeable future and would like to move all of our assets offshore as soon as we settle. We're aiming to emigrate before turning 30 so there is no chance that we will leave the money here until retirement age.

What portion of my hard earned RA will our lovely government take off my hands in this scenario?

Any tips/tricks to minimize the "donation to corruption"?
 
I haven't looked into this too hard, but there is a clause where you can get the money if you financially emigrate. However they are busy passing legislation that will not allow you to take out your money until at least 3 years have passed.

As I understand it, that is the new requirement now.
 
ThatGuy_ZA said:
My wife and I plan to emigrate in the foreseeable future and would like to move all of our assets offshore as soon as we settle. We're aiming to emigrate before turning 30 so there is no chance that we will leave the money here until retirement age.

What portion of my hard earned RA will our lovely government take off my hands in this scenario?

Any tips/tricks to minimize the "donation to corruption"?
Click to expand...

I'm afraid your RA is locked in until you 55. You have until 28 February 2021 to financially immigrate to get around this but based on the supplied information it sounds like this is not an option for you. In future after you have emigrated with your tax affairs all in order and having declared being a non-resident on your SARS Returns for 3 consecutive tax years you will be allowed to access the money.

Going forward stop contributing to your RA and rather make use of pension, provident and TFSA retirement vehicles if you proceeding with a backup plan of potentially remaining in SA, all of these allow you to access the funds before retirement with certain conditions
 
From
ThatGuy_ZA said:
My wife and I plan to emigrate in the foreseeable future and would like to move all of our assets offshore as soon as we settle. We're aiming to emigrate before turning 30 so there is no chance that we will leave the money here until retirement age.

What portion of my hard earned RA will our lovely government take off my hands in this scenario?

Any tips/tricks to minimize the "donation to corruption"?
Click to expand...
From March next year comes a new rule. Even if you emigrate your pension will have to stay here for the next 3 years and only then can you move it abroad.
 
Corelli said:
From

From March next year comes a new rule. Even if you emigrate your pension will have to stay here for the next 3 years and only then can you move it abroad.
Click to expand...

The new rule will be applicable to RA withdrawals, with reference to pension funds you will still be able to withdraw the full amount upon leaving your employer and transfer it out under either R1mil discretionary allowance or R10mil with tax clearance. Do correct me if i'm wrong though.
 
Zukat said:
The new rule will be applicable to RA withdrawals, with reference to pension funds you will still be able to withdraw the full amount upon leaving your employer and transfer it out under either R1mil discretionary allowance or R10mil with tax clearance. Do correct me if i'm wrong though.
Click to expand...
It applies to withdrawals from RA and Preservation Funds only ( and will only be applicable to Preservation Funds if you have already taken your one withdrawal)
 
RVQ said:
I'm afraid your RA is locked in until you 55. You have until 28 February 2021 to financially immigrate to get around this but based on the supplied information it sounds like this is not an option for you. In future after you have emigrated with your tax affairs all in order and having declared being a non-resident on your SARS Returns for 3 consecutive tax years you will be allowed to access the money.

Going forward stop contributing to your RA and rather make use of pension, provident and TFSA retirement vehicles if you proceeding with a backup plan of potentially remaining in SA, all of these allow you to access the funds before retirement with certain conditions
Click to expand...
The requirement to emigrate is falling away, whether you financially immgerate or not will be irrelevent once the proposed amendments come into law.

Under the proposed amendment bill you need to cease to be a RSA tax resident and you need to remain a non tax resident for 3 consecutive years before you can withdraw from a RA and Preservation Fund ( 2nd withdrawals).

You need to apply the physical presence test OR the ordinary residence test to determine if you are a RSA tax residence or not.
 
Koosvanwyk said:
The requirement to emigrate is falling away, whether you financially immgerate or not will be irrelevent once the proposed amendments come into law.

Under the proposed amendment bill you need to cease to be a RSA tax resident and you need to remain a non tax resident for 3 consecutive years before you can withdraw from a RA and Preservation Fund ( 2nd withdrawals).

You need to apply the physical presence test OR the ordinary residence test to determine if you are a RSA tax residence or not.
Click to expand...

What are the rules about withdrawing from provident funds?
 
RVQ said:
I'm afraid your RA is locked in until you 55. You have until 28 February 2021 to financially immigrate to get around this but based on the supplied information it sounds like this is not an option for you. In future after you have emigrated with your tax affairs all in order and having declared being a non-resident on your SARS Returns for 3 consecutive tax years you will be allowed to access the money.

Going forward stop contributing to your RA and rather make use of pension, provident and TFSA retirement vehicles if you proceeding with a backup plan of potentially remaining in SA, all of these allow you to access the funds before retirement with certain conditions
Click to expand...

What are the rules about withdrawing from provident funds? Are they easier to withdraw from?
 
maumau said:
What are the rules about withdrawing from provident funds?
Click to expand...

You resign from your job and you tell them you want to cash it out (which you will be taxed for), same as one would do with a pension fund.

What will change for provident funds from March next year is that all money put into the provident fund after that date will be treated like a pension fund. (money put in before then will be treated like before), but the ability to access all when leaving a job remains the same at this time.
 
supersunbird said:
You resign from your job and you tell them you want to cash it out (which you will be taxed for), same as one would do with a pension fund.

What will change for provident funds from March next year is that all money put into the provident fund after that date will be treated like a pension fund. (money put in before then will be treated like before), but the ability to access all when leaving a job remains the same at this time.
Click to expand...

Thank you for this explanation :thumbsup:
 
maumau said:
What are the rules about withdrawing from provident funds? Are they easier to withdraw from?
Click to expand...
Yes, if its a provident or pension fund through your employee you simply cash out at resignation and take the tax penalty.

If its a pension preservation or provident preservation fund you simply request a FULL withdrawal, this however is only available if you did not previously make a withdrawal from the mentioned fund, if you did then you will need to make use of financial emigration within the next 3 months to access the funds, after 28/02/2021 it will only be accessible after being declared a non-resident by SARS for 3 consecutive years, or the final option being retirement.
 
RVQ said:
Yes, if its a provident or pension fund through your employee you simply cash out at resignation and take the tax penalty.

If its a pension preservation or provident preservation fund you simply request a FULL withdrawal, this however is only available if you did not previously make a withdrawal from the mentioned fund, if you did then you will need to make use of financial emigration within the next 3 months to access the funds, after 28/02/2021 it will only be accessible after being declared a non-resident by SARS for 3 consecutive years, or the final option being retirement.
Click to expand...

Thank you. I imagine this is what some people do when they're short of cash.... then reapply for their jobs.

Desperate times.
 
maumau said:
Thank you. I imagine this is what some people do when they're short of cash.... then reapply for their jobs.

Desperate times.
Click to expand...
There's a block on this with companies though, not sure exactly what but they're was one restriction around rehiring people who did exactly this.
 
Question for op, are you wanting to withdraw the money and take it overseas or transfer it to a offshore preservation if there is such?
 
Thanks so much for all of the informative replies!

I will continue with a "minimal" monthly investment between now and the time we emigrate. Once we can prove that we have been out of the country for three years, I'll take the money offshore and put it into some sort of pension/RA fund - fortunately we've got tons of time to work out what that will be.
 
Have a look at your pension fund earnings. I noticed the old one I moved out was barely scoring 2% (which is less than the 6% standard bank offered as a fixed deposit).

Do note though, if you do get retrenched (not quit), then you are allowed to a once off amount of R500 000 tax free. You also can qualify for UIF. My one friend took retrenchment, then while prepping their overseas move claimed UIF for the 4 months till they left. Sure it's only R4500 but well its effectively theirs too.
 
Corelli said:
Have a look at your pension fund earnings. I noticed the old one I moved out was barely scoring 2% (which is less than the 6% standard bank offered as a fixed deposit).
Click to expand...
I'm pretty fortunate - the fund that my RA is in has averaged 10.8% p.a. since Sept 2018.

Corelli said:
Do note though, if you do get retrenched (not quit), then you are allowed to a once off amount of R500 000 tax free. You also can qualify for UIF. My one friend took retrenchment, then while prepping their overseas move claimed UIF for the 4 months till they left. Sure it's only R4500 but well its effectively theirs too.
Click to expand...
Hmmm. Good idea. I don't think it will be a possibility for me - fortunately and unfortunately.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X