Retirement Contributions

Retirement Contributions – RA contributions qualify for a tax deduction.  Although you are free to contribute as much as you want, the retirement annuity tax relief is set to a maximum rate of 27,5% of the greater of your taxable income or remuneration into a retirement annuity investment.  This is subject to an annual limit of R350,000.

This 27.5% limit, includes the contributions made by your employer to a pension or provident fund. If you contribute over the limit, SARS keeps a record of the excess contributions and carries them forward to the following tax years.

On retirement, a portion may be taken as a lump sum (currently 1/3) of which R 500 000 is tax-free (cumulative across all retirement funds you may have), the balance of 2/3 must be used to buy an annuity or invest in a living annuity, the proceeds of which are taxable.

Retirement Lump Sum benefits

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