Transfer balance cap
Limits apply to the amount you can transfer into a retirement phase account.
What is the transfer balance cap?
The transfer balance cap limits how much you can transfer into a retirement phase income stream. The cap is currently $1.6 million and it applies to all retirement phase income streams, including:
- Account based pensions.
- Transition to retirement pensions that are in retirement phase, and
- Defined benefit pensions.
What counts towards the cap?
Your transfer balance amount is calculated using a credits and debits system. Super money transferred into a retirement phase account will increase your transfer balance amount. Conversely, any lump-sum withdrawals – known as commutations – you make from a retirement phase account will reduce your transfer balance amount.
Investment earnings you may receive won’t impact your transfer balance amount, even if they take your balance in retirement phase over $1.6 million. Also, pension payments won’t reduce your transfer balance amount.
What happens if you exceed the cap?
If you exceed your transfer balance cap, you may have to:
- remove the excess from one or more retirement phase income streams, and or
- pay additional tax.
What next?
For more information on the transfer balance cap please visit Australian Taxation Office (ATO).
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General advice and information only
Any advice and information on this website is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on any advice on this website you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.
Tax disclaimer
Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.
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