Unlocking tax benefits and maximizing your superannuation is easier with a superannuation re-contribution strategy. Let’s delve into how this simple yet powerful technique can enhance your financial future.
Understanding Superannuation Re-Contribution Strategy
You might have heard about something called a superannuation recontribution strategy. Let’s simplify it and see how it can help you.
What is it?
A recontribution strategy is like a money shuffle with your super. You take some money out and then put it back in, but in a different way.
Why do it?
It’s mainly about taxes. Superannuation has two parts: money that’s taxed and money that’s not. By using a recontribution strategy, you can change some of the taxed money into untaxed, potentially saving you, and your beneficiaries, money in the long run.
How does it work?
For example, let’s say you have $500,000 in your super. You take out $330,000 and then put it back in. Now, more of your super is untaxed.
Who can do it?
To use a recontribution strategy, you typically need to be eligible to take money out of your super and be able to put it back in. This usually means being at least 55 years old or meeting other conditions.
When might it not be a good idea?
Re-contributing can affect your taxes and there are limits to how much you can put back in. Plus, if you’re under 60, you might have to pay taxes on the money you take out.
Bonus Tip
Maximizing Age Pension If you’re part of a couple and one of you is older, you can use a recontribution strategy to reduce your super and get more Age Pension.
Key Points
A recontribution strategy can have benefits like saving on taxes and maximizing your Age Pension. But it’s important to get advice before doing it to make sure it’s right for you.
Get Advice
If you’re considering a recontribution strategy, talk to a financial advisor. We can help you determine whether it’s the right move for your situation, and importantly, understand the benefit it may provide.
Forrest Private Wealth
Forrest Private Wealth is a Perth based financial planning, retirement planning, and wealth management firm, with a focus on navigating super. Book a free 15-minute virtual coffee with our Perth team of financial planners to discuss your circumstances. We’ll guide you through the process of managing your super during divorce proceedings, ensuring you have the retirement you want through personalized financial guidance. Let’s make your financial life better together.