Comment RECONTRIBUTION and I will send you our strategy pack

Comment RECONTRIBUTION and I will send you our strategy pack.

If you are approaching retirement, it is a good time to understand a recontribution strategy.

For many people, access to super becomes available once they are 60 and retired, or once they reach 65. A recontribution strategy involves withdrawing an eligible amount from super, then contributing it back as an after tax, non concessional contribution.

It does not necessarily increase your super balance. The aim is to potentially reduce the taxable component and increase the tax free component.

For many people, the taxable component is significant because it is built through employer contributions, salary sacrifice and personal contributions where a tax deduction has been claimed.

A lump sum super death benefit paid to a spouse is generally tax free. However, if super is paid to an adult child or another beneficiary who is not a death benefit dependant for tax purposes, the taxable component may be taxed at up to 17%, including the Medicare levy.

As a simple illustration, $100,000 of taxable super could mean around $17,000 in tax before the benefit reaches an adult beneficiary.

A recontribution strategy may help reduce this future tax, but access to super, contribution caps, eligibility and beneficiary circumstances all need to be considered before making any changes.

Comment RECONTRIBUTION and I will send you our strategy pack.

General advice only. This information does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you and seek personal advice before acting. Superannuation and tax laws can change, and tax outcomes depend on individual circumstances.

Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).