Transition strategy
A lower concessional contribution limit for people age 50 and over is now in place, which those in a transition to retirement strategy should keep in mind.
From 1 July 2009, super fund members age 50 to 74 can only contribute up to $50,000 of concessional contributions per annum at the low tax rate of 15% – which includes Superannuation Guarantee (SG) contributions as well as salary sacrifice.
The new limit is half the previous limit of $100,000 per annum. Excess amounts will be taxed at the highest marginal tax rate plus Medicare levy – which is an extra 31.5% – and will also be counted under an individual’s non-concessional contribution limit. This limit is for super contributions made from after-tax money, and is set at $150,000 per annum, or $450,000 over three years if under age 65.
All contribution limits apply per individual across all super funds. Your limit therefore applies across all VicSuper accounts you hold, if more than one.
Also keep in mind that the current concessional contribution limit of $50,000 per annum for people age 50 and over is a transitional limit in place until 30 June 2012. The current limit of $25,000 per annum for people under age 50 will then apply.
What action can I take?
If salary sacrificing a large amount of before-tax income into a VicSuper Scheme or VicSuper Beneficiary Account each year, it’s worth checking the Annual Benefit Statement of that account to see if the amount of concessional contributions in 2008/09 would, if continued this year, exceed the new limit.
I’d like help with my situation
In light of the lower transitional contribution limit, you may wish to discuss your situation with your VicSuper superannuation adviser. To book an appointment, call us on toll free 1300 366 216, or use VicSuper’s online request.