Ask Paul: Can I transfer $330k from my super to my wife's?

Dear Paul,

I am 64 and my partner is 59. I have too much in my super and she has too little (we will be turning 65 and 60 respectively next calendar year). 

We have a self-managed fund. I was thinking of taking a $330,000 lump sum from my super and adding it to hers - forgotten what that is called, but it's legitimate. 

My question is, if all that happens in the 2022-23 financial year, can we also both retire that year, or do we need to wait until the following year? And, of course, if you don't think this is a good idea, could you please explain why. Best wishes. - Mel

Mel, this is going to get complicated. The facts behind transferring super to your spouse are not too bad. The primary ways for a working couple, under the age of retirement, to add to a partner's super are through spouse contributions and contribution splitting.

What you are suggesting is indeed technically legitimate. In the financial year 2022-23, you could withdraw $330,000 from your super, but there is a very big catch. The rules say if you are aged between 60 and 64, your super is preserved until your retirement.

But if you are "retired", your super can be accessed as a pension or a lump sum. Then we need to look at the non-concessional cap, which by the sounds of things may be okay, as your wife would need to have a super balance under $1.48 million

Exactly what benefit you would get by pulling money out of your fund and making a concessional contribution to your wife, I simply cannot tell with the information you have provided.

Super is an area where angels fear to tread. A lot can go wrong and you need serious advice from your super fund or a professional adviser before you do anything. All I can do is to give you the most basic information.

The key issue here is not the rules we all need to follow, it is your personal situation, the situation of your wife and a very clear understanding of the pros and cons of what you propose, including any exit or entry fees.

Sorry to duck out, but it is critical you get advice before you do anything. Most super funds offer advice to members, so I'd start there.

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