Withdrawing Your Super Series 1 - Conditions of Release

I want to withdraw my superannuation. What do I need to consider?

This is the first of a 6-part series on the topic of withdrawals from superannuation. This applies regardless of whether you have a self managed superannuation fund, an industry fund or a retail or public offer fund.

Over the next few articles, we will explain the considerations  in determining whether you are  eligible to withdraw money from super, how much you  can withdraw, and the best ways to withdraw it.

Summary:

1: Do you meet a condition of release

2: How much can you withdraw

3: What is your age at the date of payment

4: Lump sum versus Pension

5: How much tax will you pay?

6: Case Study & Handy Tips

This first article will give a summary of the things to consider, and look at our first consideration - "Meeting a condition of release". As always, if you would like to make  a withdrawal from super, please contact a qualified professional to discuss your particular circumstances and provide you with personalised advice.

1: Do you meet a condition of release?

Before you withdraw anything from your superannuation fund, you must first determine if you meet a condition of release in order to be able to legally withdraw the funds.

Conditions of release include:

• Attainment of age 65
• Attainment of preservation age and retiring. (This is currently 55 for those born before 1 July 1960). Retiring means having no intention to ever return to work.
• Permanent incapacity ("any occupation" definition)
• Ceasing an employment relationship while over the age of 60
• Compassionate grounds (application to DHS is required), limits apply
• Severe financial hardship (conditions apply) limits may apply depending on your age
• Temporary incapacity (income stream only up to income foregone)
• Death or terminal medical condition (diagnosis conditions apply)
• Temporary Residents leaving Australia (30% withholding tax applies)

(Sources: SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994 - SCHEDULE 1 - <http://www.austlii.edu.au/au/legis/cth/consol_reg/sir1994582/sch1.html>. Accessed 2013 Jan 14. and SMSF Technical education & strategies. When can you get your money out of your SMSF?.<http://www.thesmsfreview.com.au/o-preservation.html> Accessed 2013 Jan 14.)

If don't meet one of the above conditions of release, then you most likely cannot access to your superannuation without significant consequences including being taxed at your marginal tax rates regardless of your age. If you operate a self managed superannuation fund there may be other consequences, such as the fund may be deemed non-complying and you may be disqualified as trustee.

Stay tuned for our next article: How much can you withdraw

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