Finally! You’ve got to the point where you can withdraw some of your superannuation and you want to know how much super you can withdraw and, more importantly, how to withdraw your super.

It’s important to understand the impact your age and type of super withdrawal will have on the amount you can withdraw and any tax that might be payable.

How To Withdraw Super

The process of withdrawing your superannuation is quite a simple one.

You will need to go to your super fund’s website and under a menu heading such as ‘forms and documents’ (or similar), you should be able to find a withdrawal form or payment request form (or similar).

You then need to complete this form, which will include:

• Personal details: standard information such as name, date of birth, address, email, tax file number (TFN), etc.
• Eligibility to access super: ticking the box as to why you are eligible to access your super, such as over age 65, ceased employment arrangement aged 60 or above, permanently retired after preservation age, rollover, etc.
• Proof of identification: Certified copies of driver’s license or passport (for example) or authority for documents to be electronically verified
• Withdrawal amount: Nominating the amount you would like to withdraw (partial withdrawal or full withdrawal)
• Payment details: Where you would like the withdrawal to be paid to, such as your personal bank account (if eligible) or to another superannuation fund.
• Signature: Approving that all of the information in the form is accurate and you agree to the terms.

This completed form will then need to be sent to your superannuation fund via email or post. Details of this will be included on the withdrawal form.

How Can I Withdraw My Superannuation?

If you would like to only transfer it to a different superannuation fund, known as a super fund rollover or transfer, then there is generally no restriction or conditions that need to be satisfied. The only restriction that may exist could be that your employment contract requires all employer contributions to be made to a specific super fund.

Full Access to your Super

If you would like full access to  your superannuation, so that you can withdraw your super via a lump sum withdrawal from a super accumulation account or by commencing a retirement income stream, such as an account-based pension, then you will generally need to meet a superannuation retirement condition of release.

What is a Superannuation Retirement Condition of Release?

The definition of retirement for superannuation purposes includes either:

1. Having an employment arrangement come to an end on or after attaining age 60; or
2. Having ceased gainful employment and being over your preservation age, with no intention of working 10 hours or more ever again.

Alternatively, simply being aged 65 or over is a condition of release in itself, regardless of your employment status.

Read more here: When Can I Access My Super?

Partial Access to your Super

If you have attained your superannuation preservation age, but not satisfied the superannuation definition of retirement or reached age 65, then you can usually still access some of your super each year via a transition to retirement pension.

A transition to retirement (TTR) pension is an income stream that allows you to withdraw between 4% and 10% of your account balance each financial year, even if you are still working.

Your superannuation preservation age is determined by your month and year of birth, as detailed in the table below:

Early Release of Super

If you have not yet reached your superannuation preservation age, then you can generally not access your superannuation, unless you are eligible to access some or all of your super under an early release definition.

There are very specific conditions that need to be met if you are applying to access your super early.

The ways in which you can access your super early include:

• Compassionate grounds
• Severe financial hardship
• Terminal medical illness
• Temporary incapacity
• Permanent incapacity
• Super balance below $200

The amount of access you have to your super will differ, depending on the early release condition that you satisfy.

Read more here: Early Access To Super

How Much Super Can I Withdraw At Preservation Age?

The amount of super you can withdraw once you have reached your superannuation preservation will be determined by whether you are still working, or have met one of the two superannuation retirement definitions, above.

Still Working?

If you have reached your preservation but continue to work, you can only access your super by using it to start a TTR pension. The TTR pension permits you to receive an income of between 4% and 10% of your account balance each year.

For example, if you reach your preservation age and start a TTR pension with $400,000 on 1st of July. You must receive an income of between $16,000 and $40,000 between 1st of July and 30th of June the following year.

Satisfied Definition of Retirement?

If you have met one of the superannuation definitions of retirement, you have full access to your super. This means you can make lump sum withdrawals or start an account based pension. An account based pension has no upper-income level threshold, so you can withdraw as much as you like in pension payments, up to your account balance.

Read more: Lump Sum Withdrawal Rules For Super Over 65

How Much Does it Cost to Withdraw Super?

There are generally no costs to withdraw your super. If you have a very old superannuation fund that you have had for a long time, you should confirm with your super fund any withdrawal costs. Most relatively new super funds will not have withdrawal fees.

It is, however, important to keep in mind that withdrawing your superannuation balance may mean that investments within your super account need to be sold down. If sold in accumulation phase, CGT may be payable, which can reduce your withdrawal balance. Also, transaction costs such as brokerage, buy/sell spreads, etc. need to be taken into account.

Tax on Super Withdrawals

If you are age 60 or over when you make a lump sum or pension income withdrawal from superannuation, there will not be any personal tax payable on the withdrawal.

If you make a lump sum withdrawal from super while under age 60, but over your preservation age, the withdrawal can be received tax free up to the lifetime low rate cap, plus any tax-free component portion of the withdrawal.

If you receive pension income while under age 60 but over your preservation age, the taxable component portion of each pension payment will be taxable at your marginal tax rate, minus a 15% tax offset.

Regardless on your age, there may be tax on super withdrawals if your balance includes an uncommon untaxed component. You should check this with your super fund provider.

Read more here: Tax on Super Withdrawals

Super Fund Withdrawal Risks

A few things to consider prior to withdrawing your super include:

• Insurances: closing down a super account or rolling the balance over to a new fund may result in any insurances within your super account being cancelled. You might consider reviewing your insurance needs and putting in place replacement cover prior to closing down your super account.
• Deductible contributions: if you made personal concessional contributions to your super account, you need to make sure you have notified your super fund of your intention to claim a tax deduction and received confirmation from them, prior to closing your account or making a withdrawal, otherwise you risk not being able to claim the deduction.

So, there you have it. That’s how you get your super out.

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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