Today, we would like to provide you with important information regarding accessing your retirement annuity (RA) after leaving South Africa. Understanding this information is crucial for ensuring a smooth and secure transition in managing your diligently saved retirement funds.
Formerly, accessing your RA post-departure was a straightforward process through financial emigration. However, the landscape has evolved with the introduction of a new law in March 2021, bringing about complexities that we believe are essential for you to be aware of.
Retirement Options:
Upon retirement, your available options are closely tied to the value of your RA. Here’s a simplified breakdown:
1. If your RA fund is less than R247,500, you have the option to cash out the full amount.
2. If your RA fund exceeds R247,500, you can cash out one-third of the amount, with the remainder invested in a pension fund (living annuity) to provide regular retirement income.
Exceptions to the Rule:
There are specific circumstances that allow for withdrawal before the age of 55:
– Total RA value less than R15,000
– Policyholder with permanent disability
– Individuals who have tax emigrated from South Africa, maintaining this status for three consecutive years
The last exception is particularly relevant for those who have immigrated and are seeking access to their retirement funds.
Three-Year Rule:
To transfer RAs abroad, the proof of three consecutive years of tax residency elsewhere, known as the three-year rule, is now required. This rule ensures that emigration intent is substantiated and permanent, preventing any exploitation for accessing retirement savings. While financial emigration was the primary route for RA withdrawal before March 2021, tax emigration—proving non-residency for tax purposes—now facilitates the process.
Qualifying for RA Withdrawal:
To qualify for RA withdrawal under the three-year rule, you must demonstrate three years of tax residency outside South Africa. This rule is retrospective, allowing you to apply upon reaching three years from March 2021.
Steps to Withdrawing Your RA:
To guide you through the process, here are eight essential steps:
1. Open a local South African bank account.
2. Notify the South African Revenue Service (SARS) of your non-resident status.
3. Submit to a SARS audit.
4. Apply for emigration Tax Clearance Status.
5. Adhere to the three-year rule.
6. Submit your RA withdrawal request.
7. Await SARS’ tax directive.
8. Withdraw your funds after approval.
We understand that navigating these processes may seem overwhelming, but rest assured, we are here to support you every step of the way. Our team of specialists can assist you with these steps, simplifying the paperwork and ensuring you get your funds. If you have any questions or concerns, please don’t hesitate to reach out to our team. Your financial well-being is our top priority.