Two SMSF Accounts May Benefit you More in your Retirement

To save on fees, superannuation members are advised to consolidate their accounts. However, doubling up may sometimes be advantageous.

Utilising two or more funds could benefit some in relation to tax, estate planning and insurance. And there is no rule saying that it is not legal to have more than one fund.

A number of super strategies centre on two kinds of contributions that members make: concessional contributions like salary sacrifice that provide deductions and are taxed; and non-concessional contributions paid from after-tax money.

Pre-retirees can avoid a death benefits tax of a minimum of 15% being applied on SMSF willed to their adult children by splitting these kinds of contributions, because just the taxable part is taxed.

Estate planning is currently the primary driver, however, a future-proofing element is definitely present now. The reason is that both sides of government can’t help but get involved in super, and individuals who split their SMSFs may be able to act quicker when adjustments are made to the guidelines again.

If health problems are hindering you from obtaining adequate insurance to cover your family, an option available to you is to sign up with a number of funds, which automatically provides basic insurance to new members. For example, if the man of the house dies unexpectedly, he could leave his family with a $1 million life insurance payout, if he has not consolidated several funds that provide life insurance.

It is rather common for people who set up an SMSF to leave a balance in whatever fund they have joined before to keep the insurance intact.

Any of these strategies are great on paper, but when it’s time to put it into practice, there’s nothing better than seeking advice.

Some people benefit from being creative with their super, but it is largely smart to keep super as uncomplicated as possible. Carefully consider the pluses and minuses before messing around with your super.

Expect more additional fees and administration responsibilities when you set up or join a second fund.

In some cases, there are potential benefits to joining two super funds. Generally, this strategy is ideal for holders of SMSF, those individuals in their mid-50s and beyond, aiming to split concessional and non-concessional contributions to secure longer term tax savings.

PJS Accountants works with clients to open and manage a SMSF. Contact PJS Accountants if you’d like to talk to us about your retirement goals and help you strategize to get the most out of your super fund.