This post discusses how to get the maximum amount into super using the Bring Forward Rule. While this applies in any year, it is particularly relevant for the remainder of the 2014 financial year.
Suppose your client wants to get as much into super as quickly as possible. You might advise him/her to contribute $450,000 now. If so, your client will be missing a great opportunity. Let me share an alternative.
Your client will probably be better off contributing $150,000 now and then waiting until July to use the Bring Forward Rule. If the contribution caps weren't changing then they could get $600,000 into super within 2 months.
The good news is that the caps are increasing from 1 July 2014. The non-concessional cap will be $180,000, and the bring forward cap will be $540,000. So your client can contribute $150,000 now and then $540,000 in July. That makes $690,000 - an increase of more than 50% on the $450,000 that could be contributed now.
To quantify this benefit - they will probably be better off by $4,000-6,000 p.a. for the next 2-3 years. In a world where SMSF accounting is becoming increasingly commoditised, this is the type of advice that can differentiate you from the pack.
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THIS ARTICLE WAS CORRECT AT THE TIME OF WRITING. SMSF RULES CHANGE OVER TIME AND THE ARTICLE MAY BE LESS RELEVANT IN THE FUTURE.
Greg Einfeld has over 20 years’ experience in the Australian Superannuation and Financial Services industry. He has MEc and MBA degrees, is a licensed financial adviser, a qualified actuary, and specialises in Self Managed Super Funds (SMSF’s). He regularly presents on a variety of SMSF topics including investment, tax, estate planning, pensions, administration and strategies.