Getting even with super – Part 2

Withdrawal and Recontribution strategies

Author: Emma Partenza, Manager, TAG Financial Services

There can be a multitude of factors of why spouse’s benefits may vary, sometimes significantly – covered in Part 1. Strategies can be adopted to even up such imbalances.

This instalment focuses on evening up superannuation balances between spouses and maximising their combined superannuation with a withdrawal and recontribution strategy. The benefits of this strategy include:

    • Savings of death benefits tax (by converting taxable benefits into tax free).
    • Spouses with lower Total Super Balances (TSB), under $1,700,000, are able to utilise non-concessional contributions caps.
    • Maximising each spouse’s benefits in a tax-free retirement phase income stream, up to current Transfer Balance Cap (TBC) of $1,700,000.
    • Reducing superannuation benefits in accumulation phase attracting income tax at 15%.

A withdrawal and recontribution strategy has been bolstered from 1 July 2022, with the 2021 Federal budget announcements passing both houses of Parliament in early February:

    • Members over the age of 67 no longer need to meet the work test – creating greater potential to make non-concessional contributions to even up balances.
    • Members with Total Super Balances less than $1,700,000 will be entitled to bring-forward up to 3 years non-concessional contributions until the age of 75 (including just prior to their 75th birthday).


Take Scott (68) and Kathy (63), they have the following superannuation benefits:

 Benefits Benefits 30 June 2021Tax free %Benefit composition
Scott$1,068,00045%Pension ($900,000 against TBC)

Kathy is still working to maximise her retirement benefits. However, she has ceased an employment arrangement so has full access to her Unrestricted and Restricted Non-Preserved (URNP) benefits. Considering this, and the transfer balance cap of $1,700,000, Kathy will maximise the amount of benefits she can put into retirement phase upon her eventual retirement. A portion will remain in accumulation, paying tax on earnings at 15%.

Scott on the other hand, has already retired and has not maximised his transfer balance cap. He will have an indexed TBC of an amount between $1,600,000 and $1,700,000.Kathy and Scott should consider withdrawing benefits from Kathy’s accumulation interest and re-contributing them for Scott. Prior to 30 June 2022, Scott must satisfy the work test and does not have access to the bring forward non-concessional contributions cap. This is all removed from 1 July 2022 (Royal Assent now received).

By implementing this strategy from 1 July 2022 ($330,000), Kathy is reducing her total superannuation balance, thereby giving her the potential to also make non-concessional contributions, and Scott can commence a retirement phase income stream on the re-contributed amount within his TBC. The amount attributed towards his TBC is $1,230,000.

Savings of future income tax will be achieved once Kathy goes into the retirement phase as a greater amount of her benefits will be within her TBC.

Kathy is also converting a portion of her benefits ($330,000) that are currently 18% tax free into 100% tax free monies. This is providing her with a savings of approximately $46,000 on death benefits tax, upon the death of one spouse, when paid out through the SMSF to beneficiaries (presuming Scott and Kathy have estate planning matters in place directing benefits to each other on their death).

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2022. Please do not reproduce without the expressed written consent of the author.