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Anonymous
What's the best way to go about doing this?
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Loh Tat Tian
20 Apr 2020
Founder at PolicyWoke (We Buy Insurance Policies)
Depends on whether you need the tax relief.
(1) If you max SA first, it can grow beyond FRS faster (since SA interest stay in SA).
(2) If you max MA first, the tax relief is slightly reduced (since interest overflow to SA).
It depends on what you want. People max MA first so that the overflow interest from MA goes to OA (once both FRS and BHS is reached).
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The interest that was earned on your MA for the year will be credited on 31st Dec. On 1st Jan, that interest amount is deducted from your MA and moved to the SA. This is what I see on my CPF statement.
For myself, I chose to max out my MA first as it can be used for medical purposes if required. For SA, it is for either investment or retirement. And the BHS was within reach so clearer line of sight.
Either way, SA and MA earns the same interest rate and qualifies for tax relief for cash top ups (up to the applicable limits).