If you feel like you’ve missed the boat when it comes to building your retirement savings, it could be time to use an often-overlooked contribution opportunity.
Prior to 1 July 2018, it was the case of ‘use it or lose it’ – if for any reason you couldn’t contribute the maximum annual concessional (before-tax) contribution amount to your superannuation, the opportunity was lost. That meant many people, especially women, had a lower super balance for their retirement because they worked in casual or part-time jobs, or their working life had been interrupted by things like looking after family members or studying.
Now, from July 1, 2018, eligible individuals can start to accumulate unused concessional contributions and carry them forward. From July 1, 2019, you can start paying extra to cover those carried-forward amounts.
So, what is a carry-forward contribution?
Carry-forward contributions are not a special type of super contribution; they simply apply rules allowing super fund members to use any of their unused concessional contributions cap (or limit) on a rolling basis for five years.
This means if you don’t use the full amount of your concessional contribution cap ($25,000 in 2019/20 and 2020/21), you can carry forward the unused amount and take advantage of it up to five years later. After five years, any unused amounts expire.
Are you eligible to make one?
So, you have an unused amount that you’ve carried forward from an earlier year, and you want to make a ‘top-up’ carry-forward contribution. What now?
You’ll need to look at your ‘total super balance’ (TSB). Your TSB on the previous June 30 must be less than $500,000 for you to be eligible for concessional catch-up contributions.
Please consider the above to be general information only. Should you require information specifically tailored to you, please contact us for assistance.