If you exceed the cap, you are liable to pay tax on the excess transfer balance earnings (excess transfer balance tax). You also need to transfer any excess to a super accumulation account or withdraw it as a lump sum.
If you transfer more than $1.9 million, you'll generally be liable to pay 15% tax (or up to 30% tax if you've gone over before) from the day you go over the transfer balance cap. You'll have to take the excess money out of your pension account; your options for doing this depend on the type of account you have.
After you retire any amounts over the cap need to be transferred into an accumulation account or withdrawn taken out as a lump sum. Earnings on any excess amount in your retirement account are taxed at 15%. This rises to 30% if you have previously had to pay the excess transfer balance tax.
On 30 June of the previous financial year, your spouse must have a total super balance less than the general transfer balance cap ($1.6 million from 2017–18 to 2020–21; $1.7 million from 2021–22 to 2022–23; $1.9 million from 2023–24) for that financial year.
If you exceed the cap, you may be required to pay extra tax and transfer the excess money out of your retirement accounts. If you need help to set up your accounts so you don't exceed the transfer balance cap, we can help.
Concessional contributions cap
There is a limit to the amount you can contribute to super from your before-tax income in order to benefit from the concessional tax rate. The cap – which includes contributions made by your employer under the Super Guarantee scheme – is set at $27,500 p.a. (2023/24 figure).
Understand how much you can contribute
There are limits on how much you can pay into your super fund each financial year without having to pay extra tax. These limits are called 'contribution caps'. You can contribute up to $110,000 each year in non-concessional contributions.
Is $1.5 million enough to retire at 60? Yes, you can retire at 60 with $1.5 million. At age 60, an annuity will provide a guaranteed income of $91,500 annually, starting immediately for the rest of the insured's lifetime.
Retiring at 50: The Basics
To retire at 50 with $1.5 million, your savings must produce sufficient income to cover your living expenses for several decades. As a result, it's essential to consider your lifestyle, expenses and investment income.
Retiring in comfort at 45 with $1.5 million is likely doable as long as your retirement living expenses are no more than average, your investments generate a typical return and you have good health. Challenges include waiting 17 years for Social Security and 20 years for Medicare.
Withdrawing $60,000 annually from a $1.5 million portfolio kept in cash would cause you to run out of money in 18 years. While $1.5 million divided by $60,000 is 25 years, the inflation rate means that you would need to progressively withdraw more every year to have the same buying power and run out of money faster.
For many people, yes, $2 million would be ample. Although for those who are accustomed to a more luxurious lifestyle, this amount may not be sufficient to achieve or maintain the quality of life they desire.
The balance in your superannuation account generally rises over time as you accumulate contributions from your employer. However, super fees and changing investment performance can lead to dips in your super balance.
You may be able to seek an extension from the ATO. How much can I contribute? The maximum you can contribute is $300,000 or the sale price of your home, whichever is less. You may make more than one contribution, but the total must not exceed this maximum.
More than 210,000 people have more than $1 million in superannuation, the majority (140,000) of whom are self-managed superannuation fund (SMSF) account holders. The remainder (70,000) are in APRA-regulated funds.
Generally, you can take money out of your super when you're 65. If you're a bit younger than this, but you've reached what's called 'preservation age', you can also access it. Your preservation age is between 55 and 60, depending on the year you were born. See what your preservation age is.
A $1.5 million nest egg can be more than enough to retire on, but it depends entirely on how much money you plan on spending. The more income you expect to replace, the more you will need to draw down from your retirement account and the larger it will have to be.
You can certainly retire comfortably at age 65 on a $1.5 million, but your ability to do so relies on how you want to live in retirement, how much you plan to spend, when you plan to claim Social Security and how your portfolio is structured.
This very much depends on your individual circumstances. To use extreme examples, if you spend £100,000 a year now and plan to carry that on in retirement, then your pot won't last very long. But if you only spend £10,000 then yes a million should be plenty!
If a couple has $1.5 million in retirement funds, they can take out $60,000 per year. Added to their Social Security ($2,739 per month or $32,868 per year) and pensions, these sums can provide them with enough income to live comfortably.
Can I retire at 60 with 500k in the UK? Yes, you can retire at 60 with 500K in the UK. However, it depends on the kind of monthly income you want in retirement because your lifestyle and individual circumstances will impact your quality of life.
This Is What Your Lifestyle Could Look Like if You Retire at 55 With $2.5 Million Bucks. It probably is possible for most people to retire at age 55 if they have $2.5 million in savings. The ultimate answer, though, will depend on the interplay between various factors.
If you decide you want to put money from an inheritance into your super, you usually can, by making a voluntary contribution or a spouse contribution. There are limits on how much you can contribute to your super per year, so make sure the amount you contribute to your super is within these limits.
The only way to avoid paying super contributions tax is to make a non-concessional contribution instead of a concessional contribution. Sure, you don't get to claim a tax deduction for non-concessional contributions, but you won't need to pay contributions tax either.