Question:
Paid-up Master Adapter Managed Linked RA Illustration of maturity value: Growth - 4%, R59 712 Growth - 10%, R 68 016 Current fund value - R 55 691 Death claim value - R 55 691 Ill-health retirement value - R 53 446 Is it prudent to take the allowed 1/3 as a cash lump sum and transfer the balance of this policy to a 10X RA, and continue contributing to the new RA, extending retirement age to beyond 65 years, if possible? Thanks very much Kind regards
Answer:
Mr(s) Maxwell,
You can only take the one-third cash if you have reached age 55; otherwise, if you wish to transfer, you must transfer the whole RA to the new provider. It would not be prudent to take one-third as cash if you are not retiring at present as you will need this money when you do retire.
Generally, even if you have reached age 55 it would not be possible to transfer two-thirds of the balance to 10X. The reason is that once you withdraw from your RA, you are required to use at least two-thirds to purchase an annuity (living or guaranteed). However, because your RA value is below R75 000, you would be able to claim the whole amount as cash (tax-free). You would then be able to re-invest all or a portion of your RA proceeds with 10X. The minimum lump sum investment with 10X is R25 000. It would pay you to do so if your fees would be lower with 10X and if you are looking for a sensible, age-appropriate investment strategy. You can contribute to your RA (10X or otherwise) for as long as you wish (ie to 65 and beyond).
