ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Hi,

I'm hitting 30 soon and I've been starting to look into saving for retirement and reducing my taxable income. There are currently two options, the first is to use cash to top up my CPF SA and the second is to use cash to top up my CPF SRS.

Based on what I've found out, it seems that it makes more sense to top up my CPF SA over my CPF SRS because it gives me a guaranteed 4%. In addition, both reduces my tax by the same amount.

Am I getting my facts correct? What is your advice? Thanks!

I suggest you spend more time to understand both schemes to learn about the details. These two schemes while related to retirement, have different workings and limitations. There is a wealth of discussions in VB forum before about SRS.

As for me, I did both.

One good way to know more, is to tap on the collective wisdom of buddies here.

For the SRS topic, there are two relevant threads in VB, among other posts hidden in some personal finance threads.

Enjoy

Why SRS accounts are a good way to save
http://www.valuebuddies.com/thread-447-page-8.html

Who's contributing to their SRS account this year?
http://www.valuebuddies.com/thread-2544-page-3.html

thank you for your replies. I will spend some time reading through these threads.

The CPF MA ceiling was increased from $45,500 to $48,500 with effect from 1-Jul-2014. I top up my MA by $3,000 cash which is tax deductible as well. If your tax bracket is 20%, the saving is $600.

Anyone did this? I hope my understanding is correct.

You can do that provided u did not cross the annual CPF contribution cap which is $30,600
It is very easy to cross the cap if u received high bonuses.

http://mycpf.cpf.gov.sg/Employers/Employ..._Limit.htm

WolfT, you're right. I bust the limit.

@egghead, you can fill up a form to get your money back...
I've checked with CPF, they will not automatically refund you... but if they discover the excess contribution, they'll refund u the amount without the interests. So best to get it out yourself asap

One point to note in this is that you can withdraw your SRS amount, if you need it, while you cannot withdraw your SA

(31-07-2014, 03:01 PM)piggo Wrote: [ -> ]@egghead, you can fill up a form to get your money back...
I've checked with CPF, they will not automatically refund you... but if they discover the excess contribution, they'll refund u the amount without the interests. So best to get it out yourself asap

A correction... A discovery because I accidentally busted my limit as well.

- The form to get the money back is for companies that contributed too much
- CPF does not provide any mechanism for individuals to withdraw the excess contributions even if it exceeds the cap
- CPF does "random" checks for excess contribution and will initiate the refund process when they discover excess contributions
- No interests accrued for the excess money
- Btw they take a long time to do refunds

In short, better calculate properly if you want to max out the VC and only do it in Dec when your annual contribution is more or less confirmed.