Losing a loved one is never easy, and the financial decisions that follow can feel overwhelming. If you inherit your spouse’s superannuation as an income stream, it’s important to understand how the Transfer Balance Cap (TBC) may affect you.
Many people are surprised to learn that a death benefit pension can push them over their Transfer Balance Cap. As a result, they may need to restructure their retirement income.
What is the Transfer Balance Cap?
The Transfer Balance Cap limits the amount of superannuation you can transfer into the tax-free retirement phase.
If you receive a death benefit pension from your spouse, your Transfer Balance Account generally receives a credit. The timing of that credit depends on the type of pension you inherit.
Why Timing Matters
The rules vary depending on:
- Whether your spouse was in the accumulation phase.
- Whether the pension is reversionary or non-reversionary.
- Whether the pension is an account-based pension or a defined benefit pension.
Each situation has different timing rules. These rules can determine whether you exceed your personal Transfer Balance Cap.
Professional Advice Can Help
These rules are highly technical. Decisions made soon after a person’s death can have long-term financial consequences.
At Forman Financial Services, we work with your accountant and legal advisers to keep your retirement strategy compliant. We also help you preserve as much of your retirement savings as possible.
Speak With Forman Financial Services
If you’ve recently lost your spouse or are helping a family member manage inherited superannuation, obtaining advice early can help avoid costly mistakes and ensure you understand your available options.
Contact Forman Financial Services here to arrange a confidential consultation. We can help you understand how the Transfer Balance Cap applies to your circumstances, review your inherited superannuation benefits, and work with your professional advisers to develop an appropriate retirement income strategy.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.