Options To Withdrawing Super To Pay Debt

Paying down debt with superannuation
Is it possible to use Super to pay off debt?
Learn about the 2 main options for accessing Super early
Other options for removing debt

When exploring options for debt relief, many Australian’s consider accessing Super to pay off debt. Whilst Superannuation is specific to retirement, under certain severe financial circumstances, some consider Super for relief.

Early Release of Super Options

There are a few options for accessing super early.

– Compassionate Grounds
– Severe Financial Hardship
– Terminal Illness
– Temporary or Permanent Incapacity

It is important to exhaust debt relief options before accessing your retirement

Be wary of services that encourage early access to Super by switching to a self managed fund. This is against the law and serious penalties apply for those who engage in this type of arrangement. Get a second opinion or contact the ATO if you have concerns.

Accessing Super Options

Compassionate Grounds

Below are examples of situations that are accepted under compassionate grounds.
– Payment for medical treatment(s) for a dependant or yourself.
– Taking care of expenses related to the death of a dependant (funeral, burial, cremation)
– Emergency payment to stop the loss of your house.
– Home improvements related to severe disability

Severe Financial Hardship

Classification for establishing financial hardship is based on receiving eligible government support for at least 26 weeks in a row and are still unable to cover general family living obligations/costs.

If eligible, you can only withdrawal funds once a year and the most that can be drawn out in any given year is $10,000. For more information on accessing funds due to financial hardship, contact your Super provider and request assistance for accessing funds early because of severe financial hardship.

Terminal Medical Condition

Below are examples of situations that are accepted for terminal conditions.
– Obtain certification from two medical practitioners that you have a condition that will result death within 24 months of the certification.
– Have at least one practitioner being a specialist in the area of the illness/condition

Contact your Super provider and request assistance for accessing funds early because of terminal illness.

Temporary or Permanent Incapacity

Temporary Assistance – If you have a mental or physical medical condition that requires less work in your job. You may be able to access insurance benefits from your fund. This allows you to receive a steady income stream throughout the time you are unable to work.

Permanent Assistance – Also known as the disability super benefit, this allows you to access your super and receive a lump sum or installment payments. General eligibility criteria includes:

– The fund must establish and be confident you have a permanent physical or mental condition and unable to work in the future (even if retrained).
– Two medical practitioners must certify that your condition makes you eligible for the concessional tax treatment.

Speak with your Super fund to learn more about the requirements.

To learn more about or get detailed information on accessing super early to pay down debt, visit the ATO website here.

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