Why SRS accounts are a good way to save

[naro]

The reason that you got to sell your shares under SRS has got to do with taxes. After 62 if you still have taxable income the amount of money taken out of SRS will be lump into it and tax accordingly. However if you don't have anymore taxable income and withdrawal amt is below the taxable bracket then it will be tax free. Now if you want to transfer your shares from SRS to CDP, how is the tax man going to assess what's the worth of those shares. This is especially very complicating if your shares happen to be illiquid. So make things simple, you sell your shares in the open mkt and decide what you want to take out.

I think the logical process is to calculate the taxable income based on the market value of the shares at which the SRS is transferred to the CDP.

The bank already has to report the holdings and withdrawals of the SRS account holder, I do not see such a reporting is different.

[thor666]

SRS is designed for above the average citizens, but as what bran suggested, I have opened a SRS account with a mere S$10 savings to "lock-in the retirement age". Not sure if this works but no harm trying with just S$10.

I was thinking about this too!

Since it's stated that "withdrawal has to be made after the statutory retirement age at the time of your first SRS contribution" (currently the retirement age is 62), does it matter how much contribution we make for our first contribution? Can anyone verify? I would like to "lock-in" the retirement age too, but I don't intend to contribute too much at this stage of my life.

Thanks in advance.

I don't think u can lock the retirement age.

I put in $1 though and looking to put in more and invest the srs from there.


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[pantoo]

SRS is designed for above the average citizens, but as what bran suggested, I have opened a SRS account with a mere S$10 savings to "lock-in the retirement age". Not sure if this works but no harm trying with just S$10.

I was thinking about this too!

Since it's stated that "withdrawal has to be made after the statutory retirement age at the time of your first SRS contribution" (currently the retirement age is 62), does it matter how much contribution we make for our first contribution? Can anyone verify? I would like to "lock-in" the retirement age too, but I don't intend to contribute too much at this stage of my life.

Thanks in advance.

I don't think u can lock the retirement age.

I put in $1 though and looking to put in more and invest the srs from there.


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Quoted from MOF's FAQ:

How exactly is the withdrawal period determined at retirement?

The withdrawal period starts when you make your first withdrawal at or after the statutory retirement age that was prevailing when you made your first SRS contribution. It will end 10 years from this date.

[thor666]

Oh. Thanks pantoo for the clarification. I did not know this. Apologies.

This is a good thing to have.

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[Jacmar]

Quoted from MOF's FAQ:

How exactly is the withdrawal period determined at retirement?

The withdrawal period starts when you make your first withdrawal at or after the statutory retirement age that was prevailing when you made your first SRS contribution. It will end 10 years from this date.

I think you misunderstood what this means. I still believe you cannot lock in. What this statement means is that if you start your withdrawal at 65, then you last withdrawal will be 75 yrs. At the moment you can start withdrawal at 62. However if tomorrow the govt change it to 66, then that would be the start irrespective of when you start the SRS deposit.

[ghchua]

Hi Jacmar,

I think you misunderstood it. The withdrawal period is determined when you first make your SRS contribution and it will be locked in. This makes sense because the time you make your first contribution, you already plan ahead based on the official retirement ago at that time. Subsequently, the retirement age changes but that cannot be affecting me as I made my first contribution based on the retirement age at that time.

Of course, you have the flexibility to start your withdrawal period later but you need not follow the statutory retirement age at that time.

[pantoo]

Hi Jacmar,

I think you misunderstood it. The withdrawal period is determined when you first make your SRS contribution and it will be locked in. This makes sense because the time you make your first contribution, you already plan ahead based on the official retirement ago at that time. Subsequently, the retirement age changes but that cannot be affecting me as I made my first contribution based on the retirement age at that time.

Of course, you have the flexibility to start your withdrawal period later but you need not follow the statutory retirement age at that time.

thanks ghchua for the affirmation. In a way, everyone should just open an SRS account and make a minimal first contribution. the statutory retirement age will never decrease, but will definitely increase.

[ghchua]

Anyway, do not be put off by the so-called retirement age and withdrawal period. Remember one can withdraw their SRS funds at anytime, but of course subjected to the 5% early withdrawal penalty if it is done before retirement age. But that doesn't mean that you cannot withdraw.

[pantoo]

thanks for your sharing, ghchua. u have been extremely helpful in this forum.

[etan]

This statement is alarming:
Why is this so?

Note 2 : Under the Income Tax Act, where an SRS member dies, any sum standing in his SRS account shall be deemed to be withdrawn ('Deemed withdrawal' amount) on the date of his death even though no physical withdrawal may have been made on that day.

https://www.iras.gov.sg/irasHome/page04.aspx?id=166