The ATO has prepared a case study discussing outcomes for three individuals who are all 60 years old and who want to start receiving an income stream from their self-managed superannuation fund (SMSF).
Generally, a self-managed superannuation fund (SMSF) can only pay a member’s superannuation benefits when the member reaches their “preservation age” and meets one of the conditions of release, such as retirement. The payment may be an income stream (pension) or a lump sum, depending on the circumstances.
The ATO has prepared a case study discussing differing outcomes for three individuals (all 60 years old) old who want to start receiving an income stream from their SMSFs.
Chris, Rob and Jan are all aged 60 and want to start receiving an income stream from their SMSF.
- Chris retired from his job and never intends to work again.
- Rob has two jobs and will be leaving one job shortly but intends to keep working in the other job for many years.
- Jan has one job and intends to keep working until she is 65.
Individual superannuation fund members can receive an income stream when they meet a condition of release. According to the ATO:
- Chris has met a condition of release because he is over 60 and has retired from permanent employment. He can start an income stream and his fund must make the minimum annual payments required by law, which are based on his age. There is no maximum payment amount.
- Rob will meet a condition of release when he retires from one of his jobs because he is over 60. This means he can start an income stream and his fund must make the minimum annual payments required by law. There is no maximum payment amount. However, any future contributions received by the fund on Rob’s behalf, such as employer contributions or personal contributions, must be kept separate from the account used to pay his current income stream. These future contributions can’t be cashed until a new condition of release has been met.
- Jan is still working but she has reached her preservation age. This means she can apply for a transition to retirement income stream (TRIS). Her annual income stream payments must be within the minimum and maximum amounts required by the TRIS rules.