TTR

If I have allocated certain amounts to TTR pension streams for me and my wife and also maintain accumulation accounts that I do not want in pension phase yet, is the min & max amounts that need to be paid based on the total balance of the SMSF or just the balance of the pension accounts.

I have received advice from SMSF specialist that it is the total fund assets but from reading, and from logic (if that counts) that it is based on the balance of the pension accounts.

 

If you are between 55 and 65 years old the minimum is 4%* of you opening balance (1st of July) of your TTR accounts only.

*This amount has been reduced to 2% for the 2009 and 2010 financial years.

Maybe your adviser assumed you would commute your TTR accounts back to accumulation phase and then re-commence with a higher balance for the new financial year.

Do you use a segregated or pooled investment strategy? If you don't need the income you may be able to tweak your investment strategies (if segregated) to keep you fund pretty much tax free (except for tax on contributions).

I hope this answers your question.

SM

 

Thanks for the advice it is as I thought. I use pooled investments and my (ex)advisor knew I was not going to commute and recommence.

 

The Real TTR strategy

In reality it is important to firstly determine the amount of income that you desire in the coming year. Hopefully your adviser has established your TTR with primarily tax free component ensuring that most of the income from the TTR is tax free. Once you have determined the amount you desire the next step is to work out how to deliver this most effectively. With segregated assets the amount in the tax free pension side is key as is the determination of the underlying valuation of assets in the pension side.

 

Thanks Grantabbott for the info. The assets are pooled not segregated. I will need to review the structure for a better outcome but at the moment I prefer to leave it and I only need the minimum amount to live on.

The issue was that I was told the 2% minimum, as it is for 2010, was based on the entire fund assets not the TTR account balances. Needed clarification just on this issue.