today is the last day for topping up CPF/SRS and Jan 1 is the first day to top up again

[malcontent]

I encourage all PR's to fully utilize CPF. It really is a world class scheme.

Yep, 4% is too good to pass up in this low rate environment!

[PNGMK]

for the records CPF balances as of tonight are:
OA 276,927
SA 4,739
MA 63,000
RA 290,281

I'll update once the interest hits. I encourage all PR's to fully utilize CPF. It really is a world class scheme.

Ok interest earned was $21,795. 12.5k from RA, 2.5 from MA and 6.6k from OA and balance from SA. Total balance now $657,143.

I've just done the max allowable inter CPF transfer of 9k from OA and SA to RA to maximise RA interest for 2022. The new CPF MA limit is 66k so I'll top up that by 3k this month once my payment from offshore comes in. It appears the contribution limit is still $37,740. Once again I'll top up all accounts later this month (you must do the MA top up separately as a member).

If I top up by $37,740 as I plan to my total will be ~$695,000. I'll be interested to see if I can hit my goal of 1MM by 62 (5 years left to raise 305k which is 60k p.a..... between interest at 22k and VC at 37k I should just make it).

I don't do these posts to boast but to encourage all PRs to reject the #returnourcpf BS. At 55+ I have full access to ALL of my CPF less the MA and ~95k of RA.

Note: my profile or use of CPF has changed to a bit as a now self employed international freelancer. Previously I saw CPF as a fringe benefit of working but as a self employed person I now see it as a core pillar of my financial independence as a free lancer who works anywhere in the world. In fact I see us continuing to contribute to CPF even once we have "left" Singapore.

[malcontent]

I don't do these posts to boast but to encourage all PRs to reject the #returnourcpf BS.

That is sage advice. CPF is now more valuable than ever due to the market beating yields. Many folks don’t appreciate it until they are up in their years. It’s also not something you can appreciate unless you really take the time to understand it. It wasn’t until my 40’s that I took the time to learn more about it, and although we only have one CPF account between my wife and I, it’s now being leveraged to the max.

Some younger folks may not appreciate it, I know that I didn’t back in the day. I first started working here at age 24, earning well under the CPF wage ceiling — the whopping 20% employee contribution was a key factor in my not pursuing PR. If I could have used it to pay for housing, that would have been different. But I was unmarried and didn’t have the benefit of living with my parents as many young locals do… I simply could not afford CPF and still make the rent! Interest rates were high back then too, renting was cheaper than paying just the interest, maintenance fees and property taxes. That was then… today the situation is night & day different.

[GSM8]

Ok interest earned was $21,795. 12.5k from RA, 2.5 from MA and 6.6k from OA and balance from SA. Total balance now $657,143.

Interest looks enticing (no pun there). The part the sucks for US citizens is that it'll all be taxed, so that's at least 1/3 out if one is above the exclusion/deduction limit. But still enough of a reason to maximize CPF (I'm only 5 years PR so far but hope to reach those figures some day in several years)

I've just done the max allowable inter CPF transfer of 9k from OA and SA to RA to maximise RA interest for 2022. The new CPF MA limit is 66k so I'll top up that by 3k this month once my payment from offshore comes in. It appears the contribution limit is still $37,740. Once again I'll top up all accounts later this month (you must do the MA top up separately as a member).

From how I see it, the $3k MA top up wont be relevant this time because the revised total SA+MA deduction limit is $8k. So it'll end up the same whether one puts all $8k into SA now, or splits it as $5k to SA + $3k to MA (in the former case monthly contribution split will bring MA upto $66k in a few months). Or am I missing something here?

[malcontent]

Ok interest earned was $21,795. 12.5k from RA, 2.5 from MA and 6.6k from OA and balance from SA. Total balance now $657,143.

Interest looks enticing (no pun there). The part the sucks for US citizens is that it'll all be taxed, so that's at least 1/3 out if one is above the exclusion/deduction limit. But still enough of a reason to maximize CPF (I'm only 5 years PR so far but hope to reach those figures some day in several years)

I've just done the max allowable inter CPF transfer of 9k from OA and SA to RA to maximise RA interest for 2022. The new CPF MA limit is 66k so I'll top up that by 3k this month once my payment from offshore comes in. It appears the contribution limit is still $37,740. Once again I'll top up all accounts later this month (you must do the MA top up separately as a member).

From how I see it, the $3k MA top up wont be relevant this time because the revised total SA+MA deduction limit is $8k. So it'll end up the same whether one puts all $8k into SA now, or splits it as $5k to SA + $3k to MA (in the former case monthly contribution split will bring MA upto $66k in a few months). Or am I missing something here?

From a US tax perspective, any employer and employee contributions are taxable income for the year, and any interest earned is also taxable for the year. However, that also means later if you renounce PR and withdraw in a lump sum, it all comes out tax free. Effectively, a withdrawal from your CPF account is like a bank account withdrawal.

CPF LIFE is where it gets more tricky. As long as the contributions were US taxable on the way in, you can count at least a portion of the LIF payment as non-taxable return of principle. I believe you’d need to use the annuity tables provided by the IRS to figure the taxable and non-taxable portion of the payments.

The bigger gotcha from a US tax perspective is for non-US persons who become US taxable later, after they enjoyed all those years of tax relief… for those folks, every CPF LIFE payment becomes taxable in full, much like an RMD. In such a case, you should to try and avoid CPF LIFE, either through some exemption or by renouncing and withdrawing in full before the age 70 deadline.

As for the revised top up in 2022, you are correct about the $8k max to either your MA, SA, or combination of the two. However, I also understand the new rules also allow you to enjoy additional $8k tax relief for topping up a loved ones account, so some pros/cons.

[PNGMK]

Post 55 folk cannot do a top up to their SA account as far as I can tell.

We are limited to MA and RA accounts for tax relief but up to limits which I am hitting already.

What I may do is start contracting via my PTE LTD and paying myself a salary and CPF as an employee ather than charging as a self employed sole proprietor. That will allow me to minimise tax within the PTE LTD and reduce my overall personal income. Or I may be too lazy to bother.

[malcontent]

Post 55 folk cannot do a top up to their SA account as far as I can tell.

We are limited to MA and RA accounts for tax relief but up to limits which I am hitting already.

That is true. I had assumed GSM8 was still under 55 since only SA was brought up. Wouldn’t it be great if you could keep topping up SA after 55? Once your RA is formed, the RSTU switches to RA and the limit is extended to ERS, which you can also do immediately in cash if you don’t care about the tax relief.

Some parents are even topping up their child’s CPF to the FRS maximum because the rates are so good. However despite the very attractive rates, children have the longest investment horizon, so they are almost certainly going to see better returns 20 years later in an index fund, and then they’ll have the flexibility to use it for a home or other life needs.

For your own account, it usually a good idea to shield all of your SA except the $40k just before age 55 so that OA money is used to form RA, and you can keep as many SA dollars earning 4% as possible. It’s even possible to shield OA and fund RA with outside cash, because even 2.5% is quite good in the current low rate environment. And, you can always take it out when you’re over 55, if rates change.

[PNGMK]

Well I'm bouncing off the limits pretty much every year and I don't think they are keeping up with inflation. The max cont cap should be around 50k I'd argue as that is only 20% of a 250k salary which is within many professionals reach.

[malcontent]

Well I'm bouncing off the limits pretty much every year and I don't think they are keeping up with inflation too. The max cont cap should be around 50k I'd argue as that is only 20% of a 250k salary which is within many professionals reach.

You are right, and the maximum wage that attracts CPF contributions should be indexed to inflation too. Only wages up to S$72k and bonus up to S$30k for a total S$102k are CPF-able, and that hasn’t changed in a very long time.

By comparison, the Social Security wage ceiling in the US adjusts with inflation each year, US$147k in 2022, up from $142,800 in 2021. Unfortunate or fortunately, I am subject to this even in Singapore because my company signed an agreement with the SSA and there is no way for them or me to get out of it, as long as I work for them. Hopefully it pays off in the end.

[PNGMK]

Yes Mal. There is a way of beating it but it's messy. That was revealed to me when I reviewed my yearly statement and that is that bonuses from your employer are CPF liable above that ceiling. As they are not "ordinary wages". As a result of that my total contributions exceeded the 37,740 cap by about 10k. I guess I could use my PTE LTD company to pay myself and pay CPF contributions and pay myself a bonus before year end. Pretty drawn out though.

[sunbox]

Yes Mal. There is a way of beating it but it's messy. That was revealed to me when I reviewed my yearly statement and that is that bonuses from your employer are CPF liable above that ceiling. As they are not "ordinary wages". As a result of that my total contributions exceeded the 37,740 cap by about 10k. I guess I could use my PTE LTD company to pay myself and pay CPF contributions and pay myself a bonus before year end. Pretty drawn out though.

Hi PNGMK - Employees can pay up to $1200 each month, for a total yearly contribution of $14,400. The maximum monthly payment for employers is $1020, bringing the annual contribution to $12,240. The total annual contribution is $26,640. Can a person top up an extra $10,000 in CPF if their bonus contributions are $11,000? If so, where does the additional top-up go and how do you top-up?

[PNGMK]

You can only top up via voluntary contributions as an EE to a total of 37740. However your bonuses are not considered ordinary wages and are liable for both EE and ER CPF at the prevailing rate for your age group. You either need to be self employed to beat this cap or come to an agreement with your employer to pay mors as a bonus rather than ordinary wages.

[PNGMK]

A useful summary.

https://endowus.com/insights/cpf-change ... t-you/amp/

[PNGMK]

We are about 5 weeks out now from the last day to top up SRS and CPF VC for 2022.

Also if you make tax deductible donations for institutions of public character the same deadline applies.

We also have a 1% rise in GST kicking in on Jan 1 so make your big ticket purchases ASAP and you're running out of shipping time for online purchases to beat the GST rise.

[PNGMK]

Current contribution limits:
CPF: $37,740
SRS (SC/PC) $15,300 (None SC/PR) $35,700

For tax deductions keep an eye on the overall cap of $80,000 (Which I think is BS).

The new 2023 CPF retirement limit for ERS is probably going to be $298,200 (more BS).