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Monday, June 19, 2017

What should I do with my bonus?

Reader:
I received a bonus and I was wondering which of these should I do:

 1) voluntary top up my CPF SA

2) contribute to SRS

3) help my parents to buy hospitalization insurance

4) keep it as warchest

 I would be required to pay income taxes for this year of assessment. I would like to ask for your opinion.


AK:
You have to decide what is more important for you. No one can do this for you. 😉

 For me, having insurance is important. Bad things happen and could wipe us out.

 Having said this, your parents should be covered under Medishield Life. Check to be sure. If they are OK with staying in class C or B2 wards, there is no need to buy private shield plans.

 You might be interested in this:
http://singaporeanstocksinvestor.blogspot.sg/2015/03/should-i-top-up-my-cpf-sa-cpf-ma-or-srs.html

 Related post:
Enough H&S coverage for parents?
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6 comments:

  1. Sanye ◎ 三页June 21, 2017 at 9:10 AM

    Hi AK,

    Do you know if a person age above 55 can still do voluntary top up to his special account?

    ReplyDelete
  2. AK71June 21, 2017 at 10:03 AM

    Hi Sanye,

    If you are referring to a minimum sum top up to the SA, no. Above 55, you are only allowed to top up your retirement account if you have yet to hit the minimum sum.

    ReplyDelete
  3. Sanye ◎ 三页June 21, 2017 at 10:34 AM

    Hi AK,

    No, I am not referring to RA. I am above 55 and my employer still contribute to my SA till now.

    Very soon I am going into semi-retirement and the regular contribution to my CPF accounts will cease as I will be receiving a "service fee" instead of salary. I thought I could still do voluntary contribution to my SA, but a check with CPF board confirmed that this is not possible.

    Instead, as I will have to contribute to my MA as a self-employed person, but this money will flow into my OA as my MA has hit the maximum.

    ReplyDelete
  4. AK71June 22, 2017 at 9:41 AM

    Hi Sanye,

    Yes, you won't be allowed top top up your SA because you are above 55. Only top ups to RA is allowed and only if you have yet to hit the minimum sum.

    In my retirement, I am doing voluntary contribution to my CPF yearly. The money goes to my OA and SA only since my MA is maxed out. Of course, I am not allowed to do any top up to my SA because it has exceeded the minimum sum. :(

    ReplyDelete
  5. KJune 22, 2017 at 11:34 AM

    Hi AK,

    So even if your SA has exceeded the minimum sum, you can still contribute into SA by doing CPF voluntary contribution?

    Thanks.

    ReplyDelete
  6. AK71June 22, 2017 at 10:38 PM

    Hi K,

    A regular voluntary contribution would see the money going into OA, SA and MA. If the MA is maxed out, then, only the OA and SA (even if the SA has hit the MS/FRS).

    Note that voluntary contribution is only allowed if the mandatory contribution (if any) does not hit the annual contribution limit. Such a voluntary contribution also does not receive any income tax relief.

    You might be interested in this:
    CPF Annual Limit and voluntary contribution.

    ReplyDelete