New Transfer Balance Caps

From 1 July the ATO is raising the transfer balance cap for superannuation to $2.1 million. This is the maximum amount of money that you can transfer into a tax-free pension account. There is a twist (as everything about superannuation is unnecessarily complicated). If you already started a tax-free pension, you only get a partial increase in your personal cap. ATO has already posted these new caps in MyGov. Mine is $2.023 million, up from $2 million. My total superannuation balance was already about $2k over that on 30 June. Despite that, I am contributing more money to superannuation. This is because the capital gains rate on the money that will have to remain in my "accumulation account" will be only 10% vs. a 32% minimum going forward outside superannuation. Even if my superannuation eventually exceeded $3 million, the capital gains rate will only be 20% on the returns attributed to the portion of the account above $3 million.

How much can I contribute? You can only make non-concessional contributions if your total superannuation balance is below the general transfer balance cap of $2.1 million. Your personal cap doesn't matter for this! If you have more than $1.97 million in super as of 30 June this year but less than $2.1 million, you can contribute up to $130k. But, if you already used the "bring forward rule" in the previous financial year, this is reduced to $120k. I already used $55k of that amount last year, so I can contribute $65k in non-concessional contributions plus $32.5k in concessional contributions this year. If my total balance is over $2.1 million at the end of this financial year (30 June 2027), I won't be able to make any non-concessional contributions after that.