Everything you need to know about cashing out super
In most cases, you can only access your super if you satisfy a condition of release. Satisfying a condition of release means your preserved benefits can then be accessed, provided the rules of your fund also let you cash your super.
Any unrestricted non-preserved amounts – usually after-tax contributions made before 1 July 1999 – can be withdrawn at any time. And keep in mind under the super laws you don’t have to cash out your super just because you’ve reached a certain age, but the rules of your particular super fund may specify otherwise.
So when can you access your hard-earned super? The following are the key criteria you need to satisfy:
- When you reach preservation age and retire
- When you turn 65, or
- Under the transition to retirement rules (if you are eligible), while continuing to work.
It’s important to note that your preservation age is not the same as your pension age. Your preservation age depends on when you were born and is between the ages of 55 and 60.
Transition to retirement - Under the transition to retirement rules, you can access a portion of your benefit each year by starting a non-commutable income stream/pension without retiring, provided that you’re aged 55 or over and you withdraw no more than 10 per cent of your account balance as pension payments each year. Non-commutable means that you cannot convert your pension account to a lump sum.
How is it paid? - If you withdraw money from your superannuation, you can choose to receive this by lump sum or in the form of regular payments, like a pension. If the benefit is paid as a pension, your accumulated contributions are left in the fund, which uses it for reinvestment and the fund pays you regular pension-like payments.
How much tax will I pay? From July 1 2007 withdrawals from superannuation are tax-free for most people aged 60 or more.
There are also limited circumstances in which you may be able to access your super before you retire. Typical scenarios include:
- Permanently leaving Australia after being a temporary resident
- Becoming totally and permanently disabled
- Suffering from a terminal medical condition
- Experiencing severe financial hardship
- Qualifying on compassionate grounds
Ask your super fund about applicable circumstances. They will advise you if your funds can be accessed.