Question:
It it correct that when a client goes overseas he may withdraw his retirement annuity as lump sum? What does legislation say?
Answer:
Anna-Marie,
A retirement annuity member who formally emigrates (ie officially signs off with the Receiver of Revenue) may cash in their entire retirement annuity as a lump sum and take it overseas. They may however incur termination penalties for cashing in early (in the event that this is a life company retirement annuity, and subject to the rules and agreed investment term). Also, the lump sum will be taxed as a withdrawal, ie the first R22 500 will be tax exempt, the balance to R600 000 will be taxed at 18%, the balance to R900 000 at 27%, and the rest at 36%. The lump sum tax rates on withdrawal are less favourable than those on retirement.
