If you exceed your concessional contributions caps, you may elect to withdraw up to 85% of your excess concessional contributions from your super fund to help pay your income tax liability.
If you choose to leave the excess concessional contributions in super, you need to pay any extra tax and the ECC charge out of your own money. Individuals who make contributions on or after 1 July 2021 that exceed their cap, will no longer be liable to pay the ECC charge.
You can contribute up to $110,000 each year. An after-tax contribution is also known as a 'non-concessional contribution'. These are made from your take-home pay. These are contributions where tax has already been paid.
If you have reached the eligible age, you may be able to contribute up to $300,000 from the proceeds of the sale (or part sale) of your home into your superannuation fund. The eligible age is as follows: From 1 January 2023, 55 years old or older.
Understand how much you can contribute
These limits are called 'contribution caps'. You can contribute up to $110,000 each year in non-concessional contributions. If you have more than one super fund, all your contributions are added up and count towards your caps.
How Much Can I Put into Super in a Lump Sum 2023? You can put a lump sum of at least $110,000 into superannuation, which is the general non-concessional contribution cap. However, you can often put in much more using the concessional contribution cap, bring-forward rule and carry-forward rule.
If you choose to leave the excess concessional contributions in super, you need to pay any extra tax and the ECC charge out of your own money. Individuals who make contributions on or after 1 July 2021 that exceed their cap, will no longer be liable to pay the ECC charge.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
If you transfer more than $1.7 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 pension 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.
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.
This means you could contribute up to $50,000 of before-tax contributions in 2022/23 tax year ($27,500 + $22,500 carry forward).
Super guarantee (SG) increase
From 1 July 2023, the super guarantee increases from 10.5% to 11%. Further increases of 0.5% are scheduled each financial year until 2025 when the rate reaches 12%.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
Generally, while you are working, all of your superannuation will be in accumulation phase. When you stop working, you can then convert your superannuation to pension phase and draw an income to assist in covering retirement expenses, provided you have reached your superannuation preservation age.
Withdrawing some of your super early is a big financial decision that you shouldn't make lightly. It could leave you with less money for your retirement and impact your insurance within super. So before applying, stop and think about the potential consequences of accessing your superannuation early.
There may be reasons for having more than one super account, but in general multiple super accounts could mean multiple fees, more paperwork and more of a chance of losing track of your money.
It showed there were about 300,000 Aussies with more than $1 million in superannuation in 2019, and about 100 with more than $50 million. But, according to the graph, one superannuation fund had accumulated a staggering balance of more than $544 million.
The amount needed for retirement will be different for everyone, but for most people $2 million will be more than adequate. Here's a simple example of how a person could utilise that $2 million dollar amount over a 30-year period (60 to 90 years-old):
If your superannuation balance is sitting somewhere around $200,000, you're very normal! Aussie males retiring between the ages of 60 and 64 typically finish work with $292,500 saved up, while women leave with $138,150.
According to the Association of Superannuation Funds of Australia's Retirement Standard, to have a 'comfortable' retirement, single people will need $595,000 in retirement savings, and couples will need $690,000.
ASFA estimates people who want a comfortable retirement need $640,000 for a couple, and $545,000 for a single person when they leave work, assuming they also receive a partial age pension from the federal government. For people who are happy to have a modest lifestyle, this figure is $70,000.
The reality is most Australians retire with far less in super. Indeed, the average super balance for Australians aged 60-64 is just over $300,000. That may be enough.
Lump sum withdrawals
If you're aged 60 or over and withdraw a lump sum: You don't pay any tax when you withdraw from a taxed super fund. You may pay tax if you withdraw from an untaxed super fund, such as a public sector fund.