When should I rollover my super balance?

For many Aussies, the super system is a complex, difficult-to-navigate maze. They either choose or are allocated a super fund when they first start working and, each time they change jobs, they may get allocated a new super fund account.

As a result, many Aussies have accumulated multiple super accounts, which means they need to pay fees several times. One way of avoiding this scenario is to take that original super fund with you to your next job. Still, you may find a better performing fund or one with fewer fees.

Suppose you choose to open a new account. In that case, you can rollover your super balance and consolidate it into one super fund if both super funds allow rollovers. If you’re receiving super contributions from your employer, you may need to inform them to make contributions to the new super fund.

You may also need to rollover your super balance if you’re a member of a super fund meant for employees of a particular industry or corporation and are changing jobs. You could then choose to rollover your super benefits into the fund allocated by your new employer. Alternatively, you could move your super to an eligible rollover super fund. You should consider checking with your super fund provider if you need to pay any fees or taxes for the rollover. Also, find out if the new super fund offers similar or better benefits than your present super fund, including insurance.

When do I have to pay a superannuation rollover tax?

Typically, you don’t need to pay taxes on rolled-over super benefits or report a rollover of super benefits on your tax return. However, some of your super benefits like interest may be untaxed. When you request a rollover, your super fund provider may withhold tax on this untaxed part, but this should be reflected in your super benefits statement.

Furthermore, when you receive such untaxed super benefits in a new super fund, they are considered personal super contributions. You can usually make personal contributions of up to $100,000 if your super balance was less than $1.6 million at the end of the previous year. If the untaxed super benefits you receive exceed the $100,000 cap, you may have to pay tax at a non-concessional rate.

Your super fund provider may also withhold tax before rolling over your benefits under other circumstances. This includes if they find that the untaxed part of your super balance exceeds the untaxed plan cap amount. For the 2020–21 financial year, this cap is $1.565 million, while in 2019–20 it was $1.515 million. The tax withholding could also include a Medicare levy and a temporary budget repair levy. Given these somewhat complicated tax implications, you should consider consulting with your financial adviser before you initiate a super benefit rollover.

How do I rollover my super benefits?

Once you’re sure that you can rollover your super benefits from one fund to another you have multiple options to action the request. You can place a super rollover initiation request by logging into your myGov account or completing and filing a paper form. If you’re rolling over your super benefits to a self-managed super fund, you’ll have to complete a different form.

Initiating the request via your myGov account can simplify the process as you won’t need to submit your identity documents. You should remember that your entire super balance will be rolled over to the new super fund account. If you’re considering a partial rollover, you should check if your super fund provider allows such a rollover. Also, remember that you can’t withdraw any part of your super balance.

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