The transfer balance cap is increasing to $1.7 million!
The superannuation transfer balance cap was introduced in 2016 and took effect from 1 July 2017. Apart from changes to concessional and non-concessional contribution amounts, the legislation limited the lifetime amount which could be transferred from accumulation mode to pension mode to $1.6m. However, indexation is increasing this to $1.7m on 1 July 2021.
The legislation also precluded further non-concessional contributions where your superannuation balance exceeded $1.6m.
While you are unable to transfer more than the prescribed transfer balance cap amount into pension mode, the pension account may continue to grow and exceed $1.6m.
Any monies you are unable to transfer into pension mode may remain in the accumulation mode within the fund.
Essentially, there would be two accounts within the fund, one being the tax free pension account and the other the accumulation account, subject to the 15% income tax ordinarily applied in the superannuation environment!
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