Most of the time when we talk about CPF contribution, we are usually thinking more of the Employer / Employee contributions. Let’s not forget, CPF contributions for freelancers or Self-Employed is equally important for retirement planning.
This interesting question just popped up today:
Can RSTU cash top-up to SA be withdrawn from age 55 onward after meeting FRS (or BRS with property pledge) in RA account?
There are 3 objectives of building up the firepower in your CPF account:
- Enjoy a larger sum of money at a higher interest-bearing account in your CPF
- Maximise tax reliefs by doing RSTU cash top-ups
- Increase the CPF LIFE monthly payouts in time to come, which is supported by annuity premium paid from your RA monies.
How much can I withdraw from age 55?
From age 55, you can withdraw up to $5,000 from your Special and Ordinary Accounts, or your CPF savings after you have set aside your Full Retirement Sum in your Retirement Account, whichever is higher.
Your Full Retirement Sum can be set aside fully with cash, or with cash (i.e. at least the Basic Retirement Sum) and property. For the latter, it will exclude interest earned, any government grants received and top-ups made under the Retirement Sum Topping-up Scheme.
If you were born in 1958 or after, you also have the option to withdraw up to 20% of your Retirement Account savings as at age 65. This includes the first $5,000 that can be withdrawn from age 55.
When you reach age 55, your RA account is created first with monies from your SA account, then OA account, up to FRS amount. MA monies remain status quo for medical related expenses, claims and hospitalisation insurance premiums.
The excess monies after meeting FRS (or BRS amount with property pledge) can be withdrawn at any time.
BUT… how much of this excess monies can be withdrawn actually?
By top-ups, i refer to:
- Voluntary Contribution to All 3 accounts (OA, SA and MA);
- RSTU cash top-up to SA;
- Top-up MA only
If you meet FRS amount in your RA however, it is a clear-cut that you can withdraw the excess from your SA/OA.
How about for people who intend to pledge property, to withdraw the gap between FRS and BRS from their RA. Can they withdraw ALL of it between? How much more can they withdraw?
Prevailing FRS amount for FY2020 is $181,000.
Scenario 1: Assuming that you had OA ($0) and SA (made up of $100,000 mandatory contribution and $100,000 RSTU cash top-up) on the day of age 55. Your RA is newly created with $181,000 monies, with excess $19,000 in SA account. You will be able to withdraw this $19,000 from your SA since you met FRS. If you further pledge property to meet FY2020 BRS amount ($90,500), you will be able to withdraw the excess, or $9,500 amount from your RA. Total amount withdrawn = $19,000 + $9,500 = $28,500
Scenario 2: Assuming that you had OA ($0) and SA (made up of $50,000 mandatory contribution and $150,000 RSTU cash top-up) on the day of age 55. Your RA is newly created with $181,000 monies, with excess $19,000 in SA account. You will be able to withdraw this $19,000 from your SA since you met FRS. If you further try to pledge property to meet FY2020 BRS amount ($90,500), you actually have no excess withdrawable from your RA. Total amount withdrawn = $19,000 + $0 = $19,000.
To end off, it is very clear as well from the CPF website on the use of top-up monies in the calculation and withdrawal of excess CPF monies after meeting BRS amount.
|How can top-up monies be used?|
Top-up monies are set aside specifically for retirement needs and can only be used for monthly payouts under the Retirement Sum Scheme, or CPF LIFE1. It cannot be withdrawn in cash or used for any other purposes such as education, investment, insurance premium payments, housing etc.
Top-up monies will form part of your retirement sum. However, top-up monies in the RA will not be taken into account in computing how much RA savings2 can be withdrawn in cash (for property owners), as well as how much RA savings2 can be used for housing purpose and CPF transfers to spouses.
1 Note that non top-up monies will be used first before top-up monies.
2 RA savings refers to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received and top-ups received under the Retirement Sum Topping-Up scheme).