Another point that need to be touch on is that there is a personal income tax relief cap of $80K. Depending on individual income, especially for working mothers, this cap can be easily hit due to working mother child relief. In this case, contributing to SRS does not give any tax relief benefit at all.
High risk and high return is not the strategy for SRS savings because a humongeous final SRS sum will be problematic due to 50% tax on withdrawals. So the strategy is to grow the SRS savings via very safe (albeit also modest returns) investments.
so if I retire before 62 and I withdrawl before 62 and pay the 5% fee, I don't have to withdraw in 10 years time right? only once I turn 62 then they countdown the 10 years. because it says "Yes, if you withdraw your SRS savings at or after the statutory retirement age that was prevailing when you made your first SRS contribution or on medical grounds. The maximum period over which you can spread your withdrawals is 10 years"
Thanks for the sharing How does srs withdrawal work? Assuming a $600k srs balance at age 62 or 63, can the person withdraw $40k for 9 years and 10th year buy a $240k endownment insurance plan? Is this a wise way to reduce the tax payable?
As long as you contribute before the end of calendar year, you will be eligible for tax relief. The thing is you should invest your SRS as bank interest sucks..
Can you do a video with real rather than nominal value (assuming 2/2.5% disc rate)? I think the raw numbers are a little misleading when you explain savings/inv returns that are relatively long like this one (its 20 years apart, how can you say the save the 50% tax when we retire is better/worse/similar than the current tax that's saved?) And also tax relief capped at 80k for SRS which is 7%
Question: There seems a weird situation in penalty calculation. If year 2023 I contribute $15,000 to SRS and I save say 10% income tax (i know this depends on my total income bracket..), which is $1,500. Now 2024 I withdraw from SRS $15,000 if I have $0 income in 2024 so I straightaway "enjoy" (to compensate for whatever reason I get $0 income in 2024) $1,500 by just this strategy. Extending this logic means just before I turn 63 yo, I contribute $15,000 then I get $1,500. No bad for increasing the chance to make more money. My comment about the extra tax that a person has to pay if he has $400K in the SRS in the future. I think that might be a good problem and why not use that a chance to contribute to the society since not everyone can save (or get from investment) up to $400K alone in SRS! Good video!
There is a different computation of tax (24%] and penalty for PR and foreigner who contributes to SRS. And its even taxed even after reaching the statutory retirement age. I dont understand if its really worth contributing now if the tax is heavier in he future.
And if I understand correctly, for foreigners not residing in SG anymore the tax will be 15% or the resident tax rate, whichever is higher. so even at retirement age no matter how little they withdraw, the foreigner will pay at least 15% in taxes (not 0) on 50% of value of the SRS fund (contributions + earnings). Kelvin, is this correct?
I think SRS is a good saving for loss of income. Even if we need to pay 5% penalty, it is a small sum to pay if your tax bracket is higher than 5% since we already had the tax savings previously.
THe example of 800k in SRS is unrealistic. A typically employee probably contributes 20 years of 15,300 annually. With the limited options for SRS investment, how does the 800k come from? 400k is more realistic...which will not incur additional tax if the holder is not working by then.
@@lucasyeah7033 Besides majority lose money in using their CPF from what I read. This together with limited (conservative) options...made 800k impossible.
SRS is only good for salaryman whose income will cease by the time they turn 62-63. For businessman and self employed people then it doesn’t make sense. What’s more buying an annuity plan in Singapore isn’t subject to income tax unless it’s bought by an employer to replace a pension.
SRS basically makes your dollar get taxed 2 times.. first, when you earn it (eg from job).. second, when you withdraw from SRS.. you also face an almost guaranteed higher tax rate (cos income tax rates almost always only goes up) in the 20-30 years when you withdraw.. hence SRS is a No Go..
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Another point that need to be touch on is that there is a personal income tax relief cap of $80K. Depending on individual income, especially for working mothers, this cap can be easily hit due to working mother child relief. In this case, contributing to SRS does not give any tax relief benefit at all.
High risk and high return is not the strategy for SRS savings because a humongeous final SRS sum will be problematic due to 50% tax on withdrawals. So the strategy is to grow the SRS savings via very safe (albeit also modest returns) investments.
Kelvin, SRS shares can transfer to CDP account to avoid tax? Kindly advice and how to do it? Thanks 😊
so if I retire before 62 and I withdrawl before 62 and pay the 5% fee, I don't have to withdraw in 10 years time right? only once I turn 62 then they countdown the 10 years. because it says "Yes, if you withdraw your SRS savings at or after the statutory retirement age that was prevailing when you made your first SRS contribution or on medical grounds. The maximum period over which you can spread your withdrawals is 10 years"
Thanks for the sharing
How does srs withdrawal work?
Assuming a $600k srs balance at age 62 or 63, can the person withdraw $40k for 9 years and 10th year buy a $240k endownment insurance plan?
Is this a wise way to reduce the tax payable?
Thanks for making SRS so crystal clear🎉
hi Kelvin, may I know when is the best time to contribute to SRS? is it the Jan of every year?
As long as you contribute before the end of calendar year, you will be eligible for tax relief. The thing is you should invest your SRS as bank interest sucks..
@@tansongpor7026 So if I top up my SRS by 31 Dec 2023, does that mean my tax in 2024 will be less?
Ya, as the reply mentioned, doesn’t matter when top up, as long as u top up by 31dec, next year tax will be lower
okay thanks both!
Just curious, if I put in life annuities before the retirement age, will the payout goes to SRS?
Can you do a video with real rather than nominal value (assuming 2/2.5% disc rate)? I think the raw numbers are a little misleading when you explain savings/inv returns that are relatively long like this one (its 20 years apart, how can you say the save the 50% tax when we retire is better/worse/similar than the current tax that's saved?)
And also tax relief capped at 80k for SRS which is 7%
Question: There seems a weird situation in penalty calculation. If year 2023 I contribute $15,000 to SRS and I save say 10% income tax (i know this depends on my total income bracket..), which is $1,500. Now 2024 I withdraw from SRS $15,000 if I have $0 income in 2024 so I straightaway "enjoy" (to compensate for whatever reason I get $0 income in 2024) $1,500 by just this strategy. Extending this logic means just before I turn 63 yo, I contribute $15,000 then I get $1,500. No bad for increasing the chance to make more money.
My comment about the extra tax that a person has to pay if he has $400K in the SRS in the future. I think that might be a good problem and why not use that a chance to contribute to the society since not everyone can save (or get from investment) up to $400K alone in SRS!
Good video!
There is a different computation of tax (24%] and penalty for PR and foreigner who contributes to SRS. And its even taxed even after reaching the statutory retirement age. I dont understand if its really worth contributing now if the tax is heavier in he future.
And if I understand correctly, for foreigners not residing in SG anymore the tax will be 15% or the resident tax rate, whichever is higher. so even at retirement age no matter how little they withdraw, the foreigner will pay at least 15% in taxes (not 0) on 50% of value of the SRS fund (contributions + earnings). Kelvin, is this correct?
it will be good to do one on comparing different lockup accounts.
Early withdrawal penalty is 5% tax of whole yearly withdrawal amount, not half of yearly withdrawal amount
Hi Kelvin, capital gains is not taxable, does it apply to SRS investmemt?
Whatever you withdraw from srs counts towards chargeable income, regardless of where the money came from
@@KelvinLearnsInvesting this means capital gains from SRS investment is taxable?
Talk about foreigners working in SG as well boss. SRS completely ruin things for them. Coz they are not tax resident by age 63 ( unless get PR )
I think SRS is a good saving for loss of income. Even if we need to pay 5% penalty, it is a small sum to pay if your tax bracket is higher than 5% since we already had the tax savings previously.
I recall early withdrawal will not only pay 5% penalty but also need to pay back the tax you saved when you top up?
@@richardye5948 based on IRAS website, tax is at prevailing rate.
I believe early withdrawal penalties are 5% AND also back taxes. Please check again yah?
Yup, that's right
JSK best video on SRS
I think early withdrawal of srs before 55 have to pay back the tax u saved + the 5% penalty.
Not the tax saved, but its just counted toward that year chargeable income
Looks like you are paying good to video editor 😂, nice quality
if my SRS invest goes to moon...I'll gladly pay whatever tax there is.
THe example of 800k in SRS is unrealistic. A typically employee probably contributes 20 years of 15,300 annually. With the limited options for SRS investment, how does the 800k come from? 400k is more realistic...which will not incur additional tax if the holder is not working by then.
Investments going up
You are right, his 800k is not possible since 15.3k per year for 20 years will not exceeds 400k.
@@lucasyeah7033 Besides majority lose money in using their CPF from what I read. This together with limited (conservative) options...made 800k impossible.
I think the 800k is estimated base on 6-8% yield in next 20 years
SRS is only good for salaryman whose income will cease by the time they turn 62-63. For businessman and self employed people then it doesn’t make sense. What’s more buying an annuity plan in Singapore isn’t subject to income tax unless it’s bought by an employer to replace a pension.
Can you elaborate more please? Doesnt the tax savings applies to self-employed too?
SRS basically makes your dollar get taxed 2 times.. first, when you earn it (eg from job).. second, when you withdraw from SRS..
you also face an almost guaranteed higher tax rate (cos income tax rates almost always only goes up) in the 20-30 years when you withdraw..
hence SRS is a No Go..
Fug it, top up to crypto wallet and 10x!!
U need to chill out man, you have more and more Grey hair.