Since the 1st September 2024, individuals have been able to withdraw from the savings pot of the two-pot retirement system. To make a withdrawal they must be registered for tax. If they are not yet registered, it is essential to do so as soon as possible to avoid any delays or complications with their application.
Key points to consider
- Tax registration: If you are not registered for tax, your fund’s request for a tax directive will be rejected by SARS. Registration can be done easily via SARS’s eFiling platform, the SARS MobiApp or the SARS Online Query System (SOQS) on their website.
- Tax deductions: Making a withdrawal will result in tax being deducted at your marginal tax rate. Ensure that all your tax returns are up to date and you do not owe SARS, as any outstanding debt and administrative penalties will be deducted from your withdrawal amount.
- Tax compliance: After you have registered and made your final decision to withdraw, your pension fund will apply to SARS for a tax directive. SARS aims to process and issue this directive within 48 hours, provided you are fully compliant. However, in practice we would not recommend relying on this timing as we expect there to e delays on both the SARS and fund sides.
- Digital channels: SARS encourages all pension fund members to use their digital platforms, such as eFiling, the SARS MobiApp, WhatsApp, SMS or USSD, to handle tax-related queries and actions. Visiting SARS branches should not in theory be necessary.
- Final tax settlement: Any under or over-deduction of tax from a withdrawal will be settled during the annual filing season.
Note: If you choose not to withdraw from your savings pot before retirement, the remaining funds will be taxed as a lump sum upon retirement, subject to a R550,000 exemption and typically at lower rates.
Contact us for any further queries.