Retirement annuity question

STORMERSFAN said:
So how does this situation work .let's say you have u have one RA and one pension fund..can you withdraw 1/3 from both of which the total amount withdrawn is tax free up to 500k upon retiring at 60?
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Yes, but I think the tax free amount might have been increased now from R500k
 
I sometimes ask myself why is everyone pushing RA’s? I know the perk for tax. Last year I started investing in a fund who’s growth was 400% in 2023

(Non RA related). All I am saying, dont put all your eggs into 1 basket

Have fixed investments like RA’s, but non fixed as unit trusts, etf’s, endowments, interest bearing accounts
 
STORMERSFAN said:
Another question..so let's say for argument sake..the RA is worth 500k and the the pension is 600k..can I take the full 500k on the Ra and then close it and take a living annuity on the pension(not take out any funds
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No, you can take out up to 1/3 of the RA and up to 1/3 of the pension, thus R366 666. You could transfer the pension into the RA (not the other way around) but the sum would still be the same.
 
Looking at these two in particular difficult to ignore the growth and ZAR shield

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supersunbird said:
No, you can take out up to 1/3 of the RA and up to 1/3 of the pension, thus R366 666. You could transfer the pension into the RA (not the other way around) but the sum would still be the same.
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Eish getting contrasting info here..lol..on the second point..so you saying I could transfer the balance of 400k from pension(then close pension fund)to to the Ra and have one annuity?
 
zerocool2009 said:
The 1/3 cash rule is for all combined. (Thats how I see it)
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It's per fund. If you have 3 x R1mil different RAs, you can take out R1 mil with each one when you "retire" from the relevant fund, the rest has to buy a Life or Living annuity.

Sure, you can combine them into 1 x R3mil RA but then you cannot spread things out, if you were so inclined, you have to take one decision and be stuck with it.
 
STORMERSFAN said:
Eish getting contrasting info here..lol..on the second point..so you saying I could transfer the balance of 400k from pension(then close pension fund)to to the Ra and have one annuity?
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No, you would need to transfer the R600k into the RA before retiring if that is your intention. As explained in my post above this, it can have an effect of limiting flexibility if that is done.
 
supersunbird said:
It's per fund. If you have 3 x R1mil different RAs, you can take out R1 mil with each one when you "retire" from the relevant fund, the rest has to buy a Life or Living annuity.

Sure, you can combine them into 1 x R3mil RA but then you cannot spread things out, if you were so inclined, you have to take one decision and be stuck with it.
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Huh?

3 x R 1000 000… and the investor can take out R1 000 000 with each?

No, you can take a total of R1 000 000 (from the combined sums). That is the 1/3 rule. The first R550 000 is tax free. With the rest of R450 000 you pay tax

And the remaining R2kk, buy into a life or living annuity
 
supersunbird said:
No, you would need to transfer the R600k into the RA before retiring if that is your intention. As explained in my post above this, it can have an effect of limiting flexibility if that is done.
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Do workplaces allow you to do that before retirement or would u have to do it in the last month of your working life
 
STORMERSFAN said:
Do workplaces allow you to do that before retirement or would u have to do it in the last month of your working life
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You can do it at 65, 70… the rule is: not before 55.

The long you dont touch, the better

I am looking carefully at the new 2 pot system
 
supersunbird said:
No, you would need to transfer the R600k into the RA before retiring if that is your intention. As explained in my post above this, it can have an effect of limiting flexibility if that is done.
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Another question I have..what would be the better option over a ten year period..a tax free saving or a RA?
 
STORMERSFAN said:
Another question I have..what would be the better option over a ten year period..a tax free saving or a RA?
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My advise, max at least your tfsa.

As stats shown, a R300k tfsa grew to R900k over the last 8 years if the correct funds was selected
 
STORMERSFAN said:
Another question I have..what would be the better option over a ten year period..a tax free saving or a RA?
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The quicker you jump onto the tfsa wagon, the better. I am in it from inception. And sadly, you cant rewind time. So plan according from this year onwards
 
STORMERSFAN said:
Another question I have..what would be the better option over a ten year period..a tax free saving or a RA?
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No one can predict the future to answer that conclusively, but there are benefits and negatives to each, and someone else would say get crypto only, and also depends on your goal.

With a TFSA, one would be limited to R36 000 per year contributions (1 March to 28/29 Feb). Any overcontributions get taxed at 40%, so putting in R37 000 will result in only having R36600 in the TFSA. The benefit of the TFSA is that you can have it all in overseas funds like a S&P 500 ETF. No tax on dividends, interest and capital gains. You can withdraw everything. No protection against being scammed or whatever and withdrawing and losing it all.

With a RA, you can contribute up to 27.5% or R350 000 to it in a year, any overcontributions (wish I had this problem) are carried over to the next year/s. No tax on dividends, interest and capital gains. Limited to Regulation 28, whose main limit is 55% local equity/bonds/cash and 45% foreign equity/bonds/cash. The higher your tax rate is the more you actually benefit from retirement contributions tax benefit wise. You are taxed on income - retirement contributions = taxable income. Can take out only 1/3 cash after age 55 and the rest must by a Life or Living Annuity (you will pay income tax on that monthly income). Protection against being scammed or whatever and withdrawing and losing it all if retired or if in an RA, as you cannot access it all (you can by resigning job and getting pension and provident fund and people have been scammed that way). New laws from 1 Sept 2024 will also not allow all new contributions to be accessed by resigning after that day, only up to a third.
 
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yogidabear said:
You cant take money from the RA and put in to a TFSA >36k without the penalties? So you turn 55 and transfer 360k to the TFSA?
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No, only 36000 a year.

You can transfer from one TFSA to another though. Eg from Satrix to OM.
 
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