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I am writing to you in regards to your last article, 7 super actions to take before the end of the financial year – point 6 – Pensions – have you paid enough?
My wife & I are 52 years old and established our SMSF about four years ago. We had about $300,000.00 and we decided to purchase a unit for about $700,000.00.
We have about $30,000 worth of shares in the fund.
After reading your article I am concerned I may have to sell our property upon retirement to satisfy government regulations that I have to draw down 4% of my SMSF if I’m under 65, 5% if I’m between 65-74 and so on.
Can you shed some light on this issue if your SMSF is mainly comprised of real estate?
A: This is the law – so yes, if you start a pension and only have one asset – then you will need to sell it so that you can take the minimum pension.
You don’t have to start a pension – ever! If you don’t, your fund will continue to pay tax at 15% on earnings – rather than 0% if it is in pension phase.
So, bottom line, if you are planning to start a pension (potentially, you will be eligible at circa 58 – assume you were born between 1 July 62 and 30 June 63) – then you should be planning to get some other assets into your fund.
