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CFL Financial location Level 9, 360 Queen Street Brisbane, QLD 4000
fax CFL Financial 07 3328 8999
phone CFL Financial 07 3328 8988
Email CFL Financial mail@cflfinancial.com.au

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Transitioning to retirement pension in an SMSF

Posted on Sep 4, 2015 by CFL Financial

The transition to retirement income pension is quite straight forward, however whether there are clear benefits depends on an individual’s personal circumstances.

When an individual starts the transition to retirement income pension (TRIP) once they reach preservation age and are still working, they receive an income stream from their SMSF.

Their existing account balance in their SMSF simply becomes a pension account, and any future contributions will go to a new accumulation fund in the same SMSF.

The minimum income an individual is required to receive each year is 4 per cent of the balance of their pension account. The maximum income stream they can receive is 10 per cent of the balance of their pension account.

When an individual starts their TRIP, they must instruct their employer to reduce the amount of salary received, and instead salary sacrifice this amount into their SMSF. The maximum salary sacrifice that can be made is $35,000 a year. This includes any employer contributions, such as the compulsory 9.5 per cent employer contribution.

The main benefit of a TRIP is to do with reducing tax. Reducing take home salary means reducing assessable income (which is taxed at an individual’s marginal tax rate). Converting to a TRIP and changing your SMSF to a pension account also means tax on any income your pension account earns, including CGT, will be reduced to zero.

In a lot of cases, implementing a TRIP can mean a significantly higher retirement balance, so it is something everyone should investigate.

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Retirement-in style

Retire in style checklist™

There are a few reasons why Business Owners need a Retire In Style Checklist

If you’re a successful and Motivated business owner, and want to set yourself up for retirement, this guide would be perfect for you. My clients who follow these 3 simple steps live with comfort, security and the peace of mind that financial success brings.

Retirement-prosperity-thumbnail

The Retirement Prosperity Guide™

Make sure you don’t miss out on the Retirement Prosperity Guide

If you’re a busy Professional and you feel like you’re not building your wealth fast enough and you want smarter ways to utilise your cash flow, this guide is perfect for you. Clients who have used our strategies have the peace-of-mind knowing they have a ‘game plan’ for financial abundance.

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Phone: 07 3328 8988
Fax: 07 3328 8999

Office Location:
Level 9, 360 Queen Street
Brisbane
QLD 4000

Postal Address:
GPO Box 2468,
Brisbane,
QLD, 4001

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