It Depends – Can I access my super because I have ‘retired’?

In this edition of ‘It depends’, partners Scott Hay-Bartlem and Clinton Jackson talk about whether someone can access their superannuation because they have ‘retired’.

There are some potentially nasty consequences if you access your superannuation without having satisfied one of the allowable conditions. Retirement is a common one that people will look at to access their super if they’re under 65. The rules are confusing, quite complicated and easy to get wrong.

Listen now on Spotify, Apple Podcasts or the CGW website.

Video transcript

Welcome to this edition of It depends where we’re talking about, can I access my superannuation because I have ‘retired’?

Why do we care?

We care about whether we’ve retired because it’s one of the conditions of release, and we need to satisfy a condition of release to be able to access our money from super without breaching the rules. Now, if we do breach the rules, there are potentially adverse tax consequences that apply for the member because the payments will be included in their tax return and their tax rates. Also, they could have some interest and penalties if they don’t correctly report it. But we also can end up with some nasty tax consequences in our self-managed fund as well, potentially if we’re made non-compliant. There are also the risks of admin penalties and other things, such as disqualification of the directors that we need to worry about as well.

Is there a magic age for retirement?

So yes, once you are 65, you can access your superannuation no matter how much you’re working, whether you’re not working, when you finished. 65 is the magic age.

What about 60?

It depends. If we’re not yet 65, but we have turned 60, there are two possible retirement definitions that we may be able to satisfy. The first one is, if we are over 60 and we never intend to work again. We had to previously cease a role of gainful employment, have now turned 60 and genuinely intend never to work again, and we therefore satisfy the retirement condition. And then our second one is that we’ve turned 60, and after we’ve turned 60, a condition of gainful employment has ended. So, we can keep doing other things, but we must have one legitimate gainful employment position actually finished completely. There are lots of tricky rules around gainful employment. A bit complicated to go into today, but you’ve got to be careful with that one.

What about a TRIS?

A TRIS is a Transition to Retirement Income Stream. It’s a way that we can actually access our super without actually properly retiring. The issues with a TRIS is that we actually no longer get the exempt current pension tax exemption in our SMSF anymore. And also, we’re limited to taking out a maximum of 10% each year. So, when it comes to retirement in our super, there’s quite a lot to get right. It’s quite confusing, bit counterintuitive. There are a few different ways, but they’re similar but different. We’ve covered far more about this in our recent podcast we’ve launched, SMSFs with CGW. It’s our second podcast in the series, so grab onto that if you want some more information. Otherwise, reach out to a member of our SMSF team. Thanks for watching this edition of It depends.