How do I withdraw my Super as a TRIS

1. What is a TRIS withdrawal
2. When & How Much can I withdraw or add to a TRIS
3. Can I Withdraw a TRIS as a Lump Sum or Stop it (UNPB)
4. Cherry Picking a UNPB to take a Lump Sum or Pension
5. What is the Tax on my Lump Sum/Pension/TRIS Withdrawal
6. What is the Paper Work to start a TRIS
7. How do I pay myself the TRIS
8. How do I convert from my TRIS to a Pension (ABP)
9. Can I commute my TRIS to a Accumulation Interest

What is a TRIS withdrawal

The Superannuation reforms on 1.7.07 introduced the Transition to Retirement income Stream (“TRIS”) to replace the previous NCP (Non Commutable pension). A TRIS is a continual cash withdrawal, otherwise know as a income stream. The Purpose of the TRIS is to enable people who wish to retire before 60 years of age and to access retirement savings.

When & How Much can I withdraw or add to a TRIS

A TRIS can start from a persons preservation age, and when a person has retired. Note that the definition for retirement is different for a person who is 60 and a peson less than 60. A person less than 60 has the additional restriction of satisfying the trustee of genuine retirement see <what retirement means>.
A Trustee cannot receive any additions to a TRIS, only withdrawals can be made. Additions can only be made to an Accumulation Interest.
A Trustee is restricted to paying a minimum and maximum amount per year. The minimum and maximum amount is determined by the formula in reg 1.06(9A) and Schedule 7 as follows;

Where the TRIS has started then instead of using the balance at 1.7, use the account balance amount at the start of the TRIS. The Minimum is pro-rated if it commences during the year so that the 4% amount see rates table for changes as calculated is reduced based on the number of days of the pension. Strategy Tip – The Maximum Amount does not need prorating therefore a member could access 10% when starting it on 29.06. and then with draw another 10% on 1.7. Warning – If the minimum annual pension requirement is not met, the payments to a 55-59 person made during the year will be fully assessable to the member, and the 15% tax offset will not be available. If the member was 60 or more the payment will not be tax free, ie it will be assessable at normal income tax rates.
There is no restriction on the number of payments made from the TRIS, provided the total of the payments meets the minimum and maximum amounts allowed by the above formulae.

Can I Withdraw a TRIS as a Lump Sum or Stop it (UNPB)

A TRIS cannot be converted to a LUMP SUM unless the person:

• meets a condition of release. The conditions of release include, (1) If the person reaches 60 and is retired then the TRIS can be withdrawn as a Lump Sum. (2) reaches 65. A restriction to Convert from a Pension to a Lump Sum is otherwise known as Non Commutable; or
• The person wishes to withdraw a UNPB.

A TRIS can however be stopped. It can be ‘rolled back’ into an accumulation account if the member is working. Strategy Tip – This may be done to create tax free and taxable interests before recommencing a pension such as using a re-contribution strategy.

Cherry Picking a UNPB to take a Lump Sum or Pension

Given that when a Pension is cashed, the first components to be cashed are UNPB’s.
The proportioning rule only prevents cherry picking to cashing in benefits, however Cherry picking to preserve UNPB amounts before a pension is commenced or lump sum withdrawn is possible.
For example, a strategy of only using half the Accumulation Interest to start a TRIS and not selecting the UNBP component (cherry picking the non UNBP components) to be included in the TRIS will enable the UNBP to be preserved in the Accumulation Interest. [Source ATO NTLG Superannuation Technical Subgroup minutes 16.06.09.] Accordingly ‘cherry picking’ is allowed to start a TRIS or Pension, but cherry picking is not allowed to withdraw from a TRIS, see the proportioning rule.

What is the Tax on my Lump Sum/Pension/TRIS Withdrawal

Tax is payable depending on the income tax threshold of the member, ability for the 15% rebate to be claimed and the components of the super being withdrawn. To understand more see the Super Tax Table that includes the components relevant to a TRIS click here.

What is the Paper Work to start a TRIS

To withdraw your super as a TRIS you / the trustee first needs to determine the components of the super balance, preserved, taxable/non taxable, etc, the amount of the super account, and the strategies to withdraw, you then have the information you will need to complete the documentation to withdraw as a LUMP SUM or PENSION/TRIS or both as follows:
The Paper work needed to pay the TRIS is as follows:

• a letter from the member to the trustee requesting a lump sum pre payment statement
• Trustee obtain and review the trust Deed to ensure nothing prevents you paying a TRIS.
• The trustee complete a ATO re payment statement – part A of the ATO statement (not compulsory but best practice) which details the components of the super benefit and affords the member to seek advice re the treatment of the payment.Trustee can also send a letter advising & requesting info from the member to assist the member making the TRIS request, details such as:
  

  Advice

  1. the member’s minimum pension amount based on the entire account balance
  2. the member’s maximum pension amount based on the entire account balance
  3. that in-specie payments cannot be made from a pension, only cash payments
  4. any other details not shown on Part A of the ATO statement.

  Request Info from the member by way of a letter:

  1. that the member wishes to be paid a TRIS
  2. Proof member has met a condition of release, age, (Proof of identity details), or letter from employer confirming employment has ceased.
  3. The expected commencement date
  4. how they wish to commence the TRIS, eg out of all or part of the accumulation account, if so what components will comprise, eg UNPB, RNPB, PB.
  5. whether the member wishes to nominate one or more reversionary beneficiary’s and their respective percentages.
  6. whether the member wishes to nominate a BDBN (if not already in place) if it is confirmation that the member wishes to continue with the BDBN.
• The member return ATO pre payment statement- Part B (which includes among other things their TFN) OR, a letter or both. The letter would contain such details as requested of the member by the trustee as disclosed above.
• The Trustee must also issue a PDS to the member. A PDS includes detailes such as Pension/TRIS features, benefits & risks, determination of pension payment methodology, tax, fees and charges.
• Trustee Minutes prepared and signed – detailing all details of the pension, such as:
  1. the commencement date of the TRIS,
  2. Account balance amount used to fund the TRIS
  3. Taxable component and Tax Free Component
  4. Components being used to commence the TRIS eg UNPB, RNPB, PB.
  5. minimum pension amount by 30 June __ of $____
  6. maximum pension amount by 30 June __ of $____
  7. Amount of the pension payment $____ and frequency ___ of payments, if stated
  8. Method used to determine the maximum and minimum amounts.
  9. Specify whether segregated or unsegregated assets are being used to fund the pension.
  10. Trustee to comply with regulatory lodgement, payment, record keeping requirements.
• Trustee can write to the member detailing the details of the pension as mentioned in the trustee minutes. However this is not necessary where the member is a trustee as signing the minutes to start the pension is effective notification by the trustee to the member.
• TFN Declaration signed by member
• ATO details, Forms, Lodgments:
  1. PAYG Withholding registration – if PAYG is required to be deducted
  2. PAYG pension payment summary – within 14 days of the end of the financial year.
  3. PAYG withholding annual report – as disclosed in the PAYG pension payment summary.
  4. PAYG payment summary superannuation (income stream) – not required unless there is a untaxed element which can arise if insurance proceeds are used to fund a pension.
• Accounting entries recorded to reflect the TRIS payments.

How do I pay myself the TRIS

The Actual payment can be made by way of cheque or EFT or any other means payable to the members personal bank account or other financial institution account.

How do I convert from my TRIS to a Pension (ABP)

If the deed is sufficiently drafted, and if the member has met a condition of release for an ABP, the trustee can simply note in trust minutes that an ABP has commenced and accordingly the TRIS restrictions including the maximum pension restriction no longer apply. If the deed isn’t sufficiently drafted then have it updated.

Can I commute my TRIS to a Accumulation Interest

If however the TRIS is decided to be converted to a ABP by commutation back into a accumulation interest then the minimum pension payment is required before the commutation. It is worth noting that a lump sum withdrawal counts towards the minimum pension payment. Therefore if a lumps sum was paid out under a re-contribution strategy for example, the lump sum would count as the minimum pension payment and allow the TRIS to be commuted to a accumulation interest. Of Course to roll back into the Accumulation Interest the persons would need to be under 65 (see changes to thresholds) to avoid work tests.

Here is what the ATO has to say on transitioning into retirement <ATO-Link>.