Question:
I have three retirement annuities with different companies. Can I take a third in cash from each one without incurring tax on the cash payout?

Answer:
The accessibility of retirement annuities and, more importantly, the taxation of any commutations continue to cause some uncertainty amongst investors. The simple fact is that accessibility and taxation of these funds operate independently of each other and with very specific rules applying.

Accessibility

Essentially, accessibility can be split into two broad areas:

1. Before the age of 55, how you can access your retirement annuity (RA) is limited to:

   • Death (to beneficiaries)

   • Permanent disability (mental or physical)

   • If the full fund benefit is less than R7000

   • Upon formal emigration

   In the above instances, the entire amount (i.e. 100 percent) becomes accessible.

2. After the age of 55, you are entitled to a 'retirement' benefit where the commutation (amount available to 'cash' in) is limited to a third of the benefit amount. You're required to transfer the balance (2/3rds) to a Conventional Life Annuity or Living Annuity to provide an income.

With this said, how does the taxation then work?

Taxation

As of late last year the taxation of any and all commutations are also split into two areas where two tables dictate the taxation thereof:

1. Withdrawal ? in the case of formal emigration and/or the full fund benefit being below R7000, the 100 percent commutation would be taxed as follows:

   • Less than R22 500 = zero percent

   • R22 500 - R600 000 = R0 + 18 percent on amount exceeding R22 500

   • R600 001 ? R900 000 = R103 950 + 27 percent of amount exceeding R600 000

   • R900 001 plus = R184 950 + 36 percent of amount exceeding R900 000

2. Retirement/Death ? upon attaining the age of 55 (where the a third becomes accessible) or death/disability (where 100 percent is available for beneficiaries), the following tax table would apply:

   • Less than R300 000 = zero percent

   • R300 001 ? R600 000 = R0 + 18% on amount exceeding R300 000

   • R600 001 ? R900 000 = R54 000 + 27% of amount exceeding R600 000

   • R900 001 plus = R135 000 + 36% of amount exceeding R900 000

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