Superannuation: "Cash out and re-contribute to super"

Strategy Name: Cash out and re-contribute to super
Type of Strategy: ‘Variable’ Strategy
Impact on modelling: Withdrawing some (or all) of super balance and recontributing the amount as a non-concessional contribution back into super. Money is moved from the superannuation account to the Bank Balance and then recontributed to the Default Superannuation Account.
Default: Withdraw and recontribute up to cap limit of $235,000 (low rate cap applicable for 2023/24) 

Recommendation: In this example, we are recommending that the client withdraws $200,000 from their super accumulation account and re-contributes these funds back into their super accumulation account as a Non-Concessional Contribution.

As there are two parts to this transaction (1. Withdrawal from super to bank “Post Tax Accum Super Outflow (a)” and 2. Contribution of funds back into super “Post Tax Accum Super Inflow (a)”) there are two 

1. Increase/Decrease: For the purpose of this strategy, we would always recommend selecting Increase for both “Post Tax Accum Super Outflow (a)” and “Post Tax Accum Super Inflow (a)”
2. Amount: For a Cash out and re-contribute to super recommendation, you are typically going to recommend a Fixed amount. This will then allow you to enter a dollar amount for the funds you wish to withdraw and re-contribute. Enter the amount you with to withdraw in the first Amount field and the amount you wish to re-contribute back to super in the second Amount field. 
3. Repeats: Options available are; Monthly, Annually, Custom or Doesn't Repeat (i.e. one-off). For a Cash out and re-contribute to super recommendation, you are typically going to recommend the transaction happens once, so the frequency relevant to your advice, in our example is 'Doesn't repeat'. 
4. Starts: You have the option to recommend this 'immediately' or set a future date or client age. 
5. Ends: Only applicable if you have selected Monthly, Annually or Custom in the repeats field so n/a to this strategy where ‘Doesn’t repeat’ has been selected.

Considerations:

• The default amount to withdraw is based on the low cap rate available for the current financial year (23/24). The maximum amount a member is able to withdraw is based on the low cap rate available less previous taxable lump sum withdrawals. iff will not consider any previous taxable lump sums a member may have withdrawn in the past, so the onus is on the user to ensure that the client is eligible to make the recommended withdrawal. 
• The funds withdrawn will be withdrawn in proportion to the super components entered into the super section of the fact find. If this balance does not take into account contributions for the current financial year, then they will be excluded. 
• Where the strategy is implemented on a date in the future, the withdrawn in proportion to the super components entered into the super section of the fact find plus any contributions made from the start date of the projection.