Question:
My husband has two Momentum RAs which are paid-up (he is over 55). He wants to take out the 1/3 retirement annuity tax free portion, BUT he also has two Liberty RAs. Can he do that? Or are the ones at Liberty aggregated with the one's at Momentum? I have a Sanlam RA in my name at which matures in May 2014 (then I will also be over 55). Even though it is in my name, can I still take out the 1/3 portion tax-free without affecting my husband's retirement annuities?
Answer:
Theresa,
There is no one-third tax-free portion. You are allowed to take one-third of each retirement annuity as a cash lump sum. All cash lump sums are taxed (in aggregate) per the retirement cash lump sum tax table. This provides that you can get the first R315 000 of all your retirement annuity tax free, the next R315 000 is taxed at 18%, the next at 27%, and all amounts above R945 000 at 36%. The retirement annuities in your name are taxed separately from your husband's retirement annuity (i.e you qualify for your own tax-free portion of R315 000).
