SMSF – transition to retirement income streams
This document provides information about issues you, as a trustee of a self-managed super fund (SMSF), need to consider when:
- commencing a transition to retirement income stream (TRIS) including information on
- preparing to offer a TRIS
- the features of a TRIS
- setting up a TRIS.
- running a TRIS, including information on
- record keeping
- paying the minimum annual pension payment amount
- priority of cashing benefits
- the tax implications for the fund when paying a TRIS
- satisfying a condition of release while paying a TRIS
- restrictions on withdrawals from a TRIS
- understanding the maximum annual pension payment limit of a TRIS.
- ceasing a TRIS, including information on
- failing to meet the standards in the SIS Regulations
- full commutation of a TRIS
- what happens when the pensioner in receipt of a TRIS dies.
This information applies to taxed, complying super funds that commence a TRIS in the form of a pension (but not an annuity).
In this document, references to SMSFs include former SMSFs unless otherwise indicated.
Transition to retirement
The transition to retirement measure allows people who have reached their preservation age to have access to their superannuation benefits without having to retire or leave their job. This measure allows people to access their super savings in the form of a specific kind of pension or income stream called a TRIS. Essentially, a TRIS is an account-based pension from which lump sum payments can only be made in limited circumstances.
Before you start paying a TRIS to a member, the member must have reached their preservation age (that is, the minimum age that a member can access their preserved super benefits without satisfying another condition of release). For those born before 1 July 1960, the preservation age is 55. The preservation age of those born on or after 1 July 1960 is higher.
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If a member has already met a condition of release with no cashing restrictions, they can access their superannuation benefits and don't need a TRIS. In these circumstances, as trustee, you can start paying the member a normal account-based pension or you can pay the member's benefits as a lump sum without having to go through the process and cost of setting up a TRIS.