A self-managed super fund (SMSF) can pay benefits in the form of a lump sum, an income stream (pension) or a combination of both, provided the payment is allowed under super law and the fund's trust deed.
When you pay a benefit, you need to decide what type of payment it is (lump sum or pension) and the account it will be paid from (if applicable). You need to document this at the time the payment is requested. You can record it in trustee minutes.
You have to withhold tax from benefit payments to members who are:
- under 60 years old
- under 60 years old and your member receives a reversionary capped defined benefit income stream, where the deceased was 60 years or over when they died
- 60 years old or over if the benefit is from a capped defined benefit income stream.
Watch:
Duration 2:27. A transcript of Planning for retirement is also available.
See also:
- Schedule 13 – Tax table for superannuation income streams for more information on when to withhold.