Superannuation Lump Sum Withdrawal Rules: Your Complete Guide

The superannuation lump sum withdrawal rules can seem complex. This article explains when you can make a lump sum withdrawal, how much you can withdraw and the super lump sum withdrawal tax.

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Superannuation Lump Sum Withdrawal Rules

The superannuation lump sum withdrawal rules are predominately based around the age you can access your superannuation, whether or not you are eligible to access your super as a lump sum and the tax associated with lump sum super withdrawals.

Let’s take a look at each of these items individually.

Lump Sum Withdrawal from Super Under 60

If you have reached your superannuation preservation age and retired with no intention of returning to work on a full-time or part-time basis ever again, then you are eligible to access your super in full. In such an instance, there is no restriction on how much of your super you can access.

However, you should be mindful of any lump sum withdrawal tax, as explained below.

There are some instances, depending on your employment history, where part of your super balance includes unrestricted non-preserved components. If so, you are eligible to access this portion of your super as a lump sum at any time, even if you are still working. Again, you will need to consider the tax implications of doing so, especially while under age 60.

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Lump Sum Withdrawal from Super After 60

Once you have attained age 60, you are able to make a lump sum withdrawal from super if you either:

Are retired with no intention of returning to part-time or full-time work ever again; or
Had an employment arrangement come to an end after age 60.

Having met either of the conditions above entitles you to unrestricted access to your superannuation and the ability to make lump sum withdrawals.

This video explains how you are able to access your super under various scenarios and in which instances you can return to work.

However, even if you haven’t met the conditions above, you can still withdraw any unrestricted non-preserved components. It is not common to have unrestricted non-preserved components prior to meeting one of the conditions above, but it is possible. Contact your super provider or check your latest statement for details.

Lump Sum Withdrawal from Super Over 65

Reaching age 65 is a full superannuation condition of release in itself. This means that you will have full access to your superannuation, allowing you to make lump sum withdrawals or commence an account-based pension income stream, regardless of your employment status.

Superannuation Lump Sum Withdrawal Tax

Superannuation lump sum withdrawal tax is determined by your age and the tax components that make up your super balance.

Your superannuation tax components consist of some or all of:

Tax-Free Components
Taxable (Taxed) Components
Taxable (Untaxed) Components

All lump sum withdrawals from super will be paid proportionally from each component.

Generally, if you are aged 60 or over and eligible to access your super in full, all lump sum withdrawals will be received tax-free.

If you are under age 60, you may be required to pay lump sum withdrawal tax, depending on the amount you withdraw and your superannuation tax components. The Low Rate Cap amount actually allows you to receive up to $235,000 of the taxable component tax-free. This is a lifetime (i.e. not annual) indexed cap.

The superannuation lump sum withdrawal tax rates are shown in the table below:

Age	Tax Rate on Tax-Free Component	Tax Rate on Taxable (Taxed) Component	Tax Rate on Untaxed Component
Under Preservation Age	0%	Lower of your MTR and 22%	Lower of your MTR and 32% up to $1.705M (over lifetime); then highest MTR
Above Preservation Age, but Under 60	0%	0% up to $235k (over lifetime); then lower of MTR and 17%	Lower of MTR and 17% up to $235k; then lower of MTR and 32% up to $1.705M; then highest MTR.
Age 60 or Over	0%	0%	Lower of MTR and 17% up to $1.705M; then highest MTR.

How Much Super Can I Withdraw as a Lump Sum?

The amount of super that you can withdraw as a lump sum will depend on whether or not you have satisfied a full superannuation condition of release.

The most common conditions of release for full access to your super include:

Being retired after reaching your preservation age and having no intention of ever working again on a part-time or full-time basis; or
Having an employment arrangement come to an end after attaining age 60; or
Reaching age 65.

There are strict rules around accessing super and, in limited situations, you may be eligible to withdraw some or all of your super by meeting other, less common, conditions of release. Read more here: When Can I Access My Super?

Can I Withdraw My Super in Full?

Yes, you can withdraw your super in full, provided you have met a superannuation condition of release. Once you have satisfied the definition of a full condition of release, you will have unrestricted access to your superannuation.

It is important to be mindful of any tax on a superannuation withdrawal prior to making the withdrawal

Refer to previous sections, above, for details on when you can access your super and the tax payable on lump sum super withdrawals.

How Much Super Can I Withdraw Tax Free

The amount of super you can withdraw tax free depends on your age and the tax components of your super balance. Generally, all withdrawal from super when aged 60 or over are received tax free.

Withdrawals from super while under age 60 may incur tax, but this will depend on the amount withdrawn, your age and tax components.

Refer to the table above for lump sum withdrawal tax, or read more here: When Can I Access My Super Tax Free?

Does a Lump Sum Super Withdrawal Affect the Pension?

A lump sum super withdrawal can affect your pension, but this will depend on your age and what you do with the withdrawal.

If you are under Age Pension age, any balance you have in a superannuation accumulation account is not assessed under the Centrelink Income Test or Assets Test, but any amount you have in a superannuation income stream (pension phase) is assessed. If you have reached Age Pension age, your total superannuation balance is assessed for Centrelink purposes, whether it is in accumulation or pension phase.

How Much Super Can I Withdraw After 60

The amount of super you can withdraw after 60 is based on whether you are still working or not. If you are retired with no intention of returning to work, or ceased an employment arrangement after age 60, then you can have full access to your super – you will need to notify your super fund as soon as either of these events occur.

Can I Withdraw My Super at 60 and Still Work?

If you are aged 60 or over and still working and have not met a full condition of release, you can access your superannuation via a transition to retirement (TTR) income stream. A TTR income stream allows you to receive an income of between 4% and 10% of your account balance each year.

Should I Withdraw My Super as a Lump Sum?

Your personal circumstances will determine whether or not you should withdraw your super as a lump sum. There are a number of things to consider about not only whether you should access your super, but also how much you should access and whether it should be withdrawn as a lump sum or income stream.

At Toro Wealth, we specialise in personal retirement planning advice. That’s all we do each and every day. If you would like us to assist you with preparing your retirement plan, book a complimentary 15-min phone appointment here.

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Superannuation Lump Sum Withdrawal Rules: Your Complete Guide