When setting up an SMSF, Members can rollover their existing superannuation balances from Retail/Industry/Other SMSFs into their new SMSF. These existing balances can include Accumulation and Pension accounts.
Rollovers into an SMSF is typically from a Members Accumulation Account. To execute a rollover from your Retail or Industry Fund into your SMSF you will need to complete a Member Benefit Rollover Statement. Members will contact their existing Fund to arrange a rollover and deposit a cheque into their SMSF bank account. We give some guidance on the process involved on the rollover process:
You can also rollover your Pension balances into your SMSF. The most appropriate way to execute a Pension rollover is to commute your existing balance. The accumulation balance will be deposited into the SMSF and this will be used to start a new Pension account.
There is an alternative approach stating that Pension balances can be rolled over without a commutation, although this is quite a technical area. The ATO ruling is quite ambiguous and it is unclear if a Pension Account rollover will require a Commutation or not.
A Commutation is when an amount from a pension payable is exchanged for an immediate Lump Sum. This means that before rolling over a Pension Account, the existing balance will be paid out as a Lump Sum to the Trustee and rolled over into an Accumulation Account. We adopt the same procedure when rolling over a Pension Account for clients. Please see here for a review on the ATO ruling by an external lawyer firm:
The ATO is silent on if a commutation is required for a Pension Account to be rolled over. This silence by the ATO may be viewed as if a commutation is not required but, our view is that a commutation is required to ensure that the Pension Account is rolled over and calculated correctly. Please see the Taxation Ruling by the ATO on this matter below:
When you’re ready, we can assist with setting up an SMSF and rolling over an existing Pension Account. If you have an existing SMSF and wish to rollover a Pension Account, we can take on your Fund and assist with the process please see our take-on process here: