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Malamute

Taking Out Your Ra - New Rules From 01 March 2016, Or So It Seems

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For some years now, it has been possible to cash out your RA before age 55. This required financial emigration through the Reserve Bank, opening of a blocked RAND account at a bank in SA etc.

 

I noticed on my latest RA statement the following information (verbatim) from Old Mutual, which seems to indicate that this will be easier in the future. I'm not sure what this means - and it seems unclear - e.g. will you still need to financially emigrate - or will it now be sufficient to no longer be resident in South Africa:

 

Change that will affect ex-patriate members of retirement annuity funds

· The Act indicates that with effect from 1 March 2016, members who cease to be resident in South Africa, as well as members who return to their country of residence on the expiry of a visa obtained for work or visiting purposes in South Africa, will be able to access their benefits prior to the age of 55. Such benefits will be taxed as a withdrawal benefit.

· Previously, members of retirement annuity funds could only claim an exit benefit before retirement from the fund when they emigrated from South Africa

 

Please note: The Fund is in the process of applying to the Registrar for a rule amendment to make provision for such transfers as this has previously not been catered for.

 

It would appear that Old Mutual are not yet changing anything - but waiting for a rule amendment.

 

So, just FYI that things may be changing.....or not.

Edited by Malamute

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Certainly sounds like you will just need to show you are "non resident" anymore. Would make life a bit easier probably though in practical terms there would still be paperwork - they'd still want some proof of non-resident status and you'd need to pay tax on withdrawal. You may not need SARB clearance anymore though like you do with emigration and that would take some paperwork out, though SARB were pretty quick for our emigration forms - SARS was where our hold up was. Still any reduction in paperwork would be welcome I'm sure!

 

If you have any other accounts I'd look into the implications - for example if you declare yourself non-resident to take your RA out they can still insist you'd need to change your bank accounts to non-resident ones too (that's not just for emigrants but any non-resident).

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Some info here -

 

"Non-residents: how to claim your South African RA fund

....

Until 31 December 2015, to access your money as a cash lump sum after leaving SA, you had to go through the formal financial emigration process with SARB/SARS. This is no longer necessary. Since January 2016, you can access your cash early, and as a cash lump sum, provided you are no longer resident in SA. This is in terms of the Tax Law Amendment Act, 2015.

 

Note that once you reach your RAs normal retirement age (defined either by the policy maturity date by the normal retirement age set in the fund rules) then you no longer have the option to withdraw the full amount as a cash lump sum, even as a non-resident you must annuitise at least two-thirds (subject to the R247,500 annuitisation threshold)...."

 

Note this bit is also pertinent- not just what I thought about a non-res account but also potential SARS issues:

 

"The downside of being classified a non-resident is that you can no longer transact through your old SA bank account. Instead, you have to open a non-resident (aka blocked rand) account. Your fund administrator will have to pay the proceeds into that account. From there you can take this money offshore. The main South African banks will all be able to help you with this.

 

But what if you left quietly, without saying goodbye to SARS? One issue (your issue) is that the administrator cannot pay out your RA without first obtaining a tax directive from SARS (the South African Revenue Service). So if you took French leave some years ago, SARS may no longer know who you are. This means you must first establish your identity with SARS, possibly by reviving you old tax or identity number. You may then have to resolve any outstanding matters on your file."

 

More detail: https://www.10x.co.za/blog/non-residents-how-to-claim-your-south-african-ra-fund/

Edited by SJ27

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In light of recent laws (either changes coming into effect, or being scrapped by Mar 2018) –

having financially emigrated, has anyone

  • taken a lump sum early, and was there a penalty?
  • let it mature, and be forced to annuitise two-thirds? (I believe you have to purchase another form of income? Could someone clarify what this means)

Thanks

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I am in the process of getting my Sanlam RA cashed.  Can be done, need docs from SARS and SARB.  Your SA bank needs to be blocked as well.  Will see how this plays out.  There is the early cash out penalty as well as tax from SARS.  Hope I can get it done and just be done with everything.

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Makes me mad how so many people got screwed over by the RA industry in SA. I’m thankful we just had provident funds so had tax implications but no penalties for early cashout.

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