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Dear Sir/Madam,
A SMSF would like to sell up assets and rollover to an industry fund.
Both members (Mr 67 years old & Mrs 63 years old ) are currently in the accumulation phase.
Can they convert to pension phase effective 01/02/2023, sell up assets tax free by 31/03/2023?, then convert back to accumulation phase effective 01/04/2023 and process the rollover?
And if so, would they only need to take the pension on a pro rata basis ie. 2 mths that they would be in the pension phase?
Can you please give me ideas the reason for members can do or can not do as above?
Many thanks
Hi Phoung
Thanks, yes, it is possible to sell assets whilst in retirement pension mode and not pay any capital gains tax and then convert to accumulation mode and then rollover benefits to another Fund. It does depend on the exact circumstances of the Fund and making sure the pension / tax rules have been complied with.
The trustees should receive professional tax / superannuation advice to ensure that the issues that are relevant have been considered.
As a starting point the maximum that a person can commence a retirement pension with is $1,700,000.
You refer to a member being under 65 years of age (being 63) so for her to be able to commence a retirement pension she would need to have met a condition of release.
To access benefits the 3 key tests to access super by benefits going from preserved to non-preserved (i.e. met a condition of release) are:
1) Reached preservation age and have permanently retired, or
2) Between age 60 and 64 and have left an employer or permanently retired, or
3) Reached age 65.
If the pension is to be commuted part way through the year the required pro rata minimum pension must have been paid.
Given the issues noted above professional advice should be received so the trustees follow the correct steps.
Thanks
SMSF AAA