You share one love, one bed, one bathroom and one toothbrush (or is that just me?) – so, can you share your super? Can you combine super with your spouse?
Well, the answer is: sort of, but not really … but there are ways around it. Let me explain.
Can You Combine Super With Your Spouse?
There are a number of ways you can combine your super with your spouse, either through a SMSF, a recontribution strategy or spouse-splitting contributions. Your ability to combine your super with your spouse will depend on your circumstances.
When you have a superannuation account, you are a member of a particular superannuation fund. Each member of the super fund has their own super accumulation account, super pension account, or possibly both.
As a member of a superannuation fund, you also have your own contribution limits, withdrawal rules based on your age and situation and maybe even your own life insurance.
Because of all of these factors associated specifically with you and your superannuation account, it is not administratively practical, nor legally possible, to combine your super with your husband, wife, spouse or partner. Your superannuation member balance relates specifically to you and your retirement.
However, there are ways to effectively combine your super, or transfer your super to your spouse’s super account, as well as reasons why you would do so. Here’s how and why…
Couples Combining Super With a SMSF
If you have a Self Managed Superannuation Fund (SMSF), you and your spouse can hold your super within the SMSF.
While you will still each have your own member balances within the SMSF, your combined savings will generally be pooled together for investment purposes, rather than kept separately. A ledger, known as the SMSF financial/member statements, will be produced by an accountant each year to record how much of the SMSF balance is attributed to you and how much to your spouse.
Recontribution Strategy With Spouse
Another way of combining your super with your husband, wife or partner is to perform a recontribution strategy. A recontribution strategy is the act of withdrawing all or part of your super into your personal bank account and then re-contributing these funds back into your spouse’s super account.
In order to combine your superannuation using a recontribution strategy, the spouse withdrawing super first needs to be eligible to access their super by satisfying a superannuation condition of release (e.g. retirement) and the re-contributing spouse needs to be eligible and have sufficient contribution caps available to make the contribution. Tax on super withdrawals also needs to be taken into account prior to performing a recontribution strategy. This video explains when you can access your super tax-free.
Spouse-splitting super contributions is another way of transferring your super to your spouse. The amount you are able to give to your spouse through spouse-splitting is generally equal to 85% of the concessional contributions made throughout the year. Concessional contributions include employer contributions, salary sacrifice contributions and personal concessional (deductible) contributions.
If you are a member of a public sector super scheme, your super may be in receipt of untaxed splittable contributions. If so, you may be eligible to spouse-split 100% of these contributions, provided your super fund allows for spouse-splitting.
You are unable to spouse-split any other contributions to your spouse other than those mentioned above.
Why Would I Combine My Super With My Spouse?
There are a number of reasons why you might combine your super with your spouse. For instance, when it comes to the SMSF example above, pooling your superannuation savings can minimise fees associated with superannuation, allow you to invest in assets that are generally unavailable through ordinary superannuation accounts, or might provide you with the funds necessary to buy larger assets, such as an investment property or land.
When it comes to a recontribution strategy or a contribution-splitting strategy; using these methods to effectively reduce your super balance and increase your spouse’s balance may help make you eligible for higher Centrelink Age Pension entitlements, provide access to super sooner, or reduce your balance for transfer balance cap and total super balance purposes.
Should Couples Combine Superannuation?
As mentioned, you can’t technically combine your superannuation with your spouse into a joint account, but you can have it held within the same SMSF and you can transfer some of your super to your spouse’s super account using one of a few strategies.
There are a number of reasons why transferring your super to a spouse through one of these strategies can be beneficial. Your specific circumstances and objectives will determine which of these strategies are appropriate and beneficial.
Everyday, Australians are using these retirement planning strategies to increase their super, reduce tax and maximise Age Pension payments, because the benefits of doing so can drastically improve your retirement outcome.
If you or your spouse are nearing retirement and want to make sure you’re optimising your financial position and doing everything you should be doing before retirement, we would be happy to assist you with preparing your retirement plan. Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.
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