I have hit my Medisave cap and my SA has 60k. How Long more must I continue to do a voluntary SA top up to reach the FRS and let it compound?is it true that if I contribute in January it is better? - Seedly
 

CPF

Asked by Anonymous

Asked on 07 Nov 2018

I have hit my Medisave cap and my SA has 60k. How Long more must I continue to do a voluntary SA top up to reach the FRS and let it compound?is it true that if I contribute in January it is better?

How much more to hit FRS?

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You can only perform a voluntary top up to your special account as long as you have not reached the full retirement sum (FRS). How long more to contribute really depends how much you contribute to your special account each year. It is indeed better to contribute in January due to the compounding effects.

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Geraldo L.
Geraldo L.
Level 6. Master
Answered 23h ago

As long as your FRS has not hit the cap in the current year (e.g. 2020 FRS is $181k), you can still continue to contribute via SA topups. Making contribution as early as possible is better, not necessarily in January. However, if you are aiming to qualify for tax relief and have already utilized the $7k relief in the current year, then next year January would be the next best time to do your contributions.

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Yixiong Chang
Yixiong Chang
Level 7. Grand Master
Updated on 07 Jun 2019

How many more years before you turn 55?

Currently CPF have only stated basic sum at 2020 to be $90.5k, thus FRS will be x2 at $181k.

After age 55, u can top up to the ERS level which is 3x the basic.

The earlier u contribution, the more days it will start accruing interests. Interests are accrued daily but credited yearly.

Do add me on my facebook if you require further advice.

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Question Poster

09 Nov 2018

I am 29 this year.
Yixiong Chang
Yixiong Chang

09 Nov 2018

Ah, u are so young =). How did u hit your medisave cap so soon? You have been topping up medisave as a selfemployed ? You can just topup $7k to your SA to enjoy the max tax relief every year. Just contribute for as many years as possible. CPF will revise and publish the limit every few years. But I don't you need to bother about it. Since it is voluntary, just topup every year if you wish to save for retirement and receive the tax relief. If u ever hit the limit, it is just good news. Eg, your taxable income is $40k, for every dollar u earn above 40k is taxed at 7%. Therefore, if u topped up $1000 into your special account, u get $1000 tax relief, u saved 7% of $1000 = $70 tax money. Effectively have gotten 7% return on your money, in additional u will earn 4% interest yearly guaranteed.