What happens if I have more than 1.9 million in super?
There is no cap on the amount of money that a person can have in super.
A lot of articles are rattling around the internet talking about $1.9million in super gong up to 2mil from 2026 FY. What does this mean and what is it?
Don’t get confused between $1.9million in relation to the general transfer balance cap (GTBC) which is a cap on the amount of super which can be transferred to a retirement phased pension and the amount of money an individual has in super which is their total superannuation balance (TSB).
These concepts are often confused as the value of a SMSF member’s TSB is used to assess the eligibility to access such strategies as bringing forward non concessional contributions which compares the member’s TSB to the GTBC.
Hint – a retirement phase pension relates to a pension which is in the retirement phase of an individual’s life and is generally an account-based pension but is not a transition to retirement income stream (TRIS). A TRIS is a pension which can be started by a member over 60 but not yet reached 65 or otherwise retired. A TRIS is not measured against a member’s transfer balance cap and the earnings are not tax exempt. In fact, there is no cap on the amount an individual can have as a TRIS. Retirement phase pensions can also include older style pensions such as lifetime pensions, term allocated pensions and flexi pensions.
Transfer Balance Cap (TBC)
Under taxation laws, an individual can have up to their personal transfer balance cap (PTBC) in retirement phase pensions as part of their superannuation across all superannuation balances. However, this does not mean that is all they can have in superannuation. It simply indicates that there is a cap on the amount of superannuation an individual can have in pension mode.
The government initially introduced the concept of TBC from 1 July 2017 when the cap was $1.6million. The cap has now increased to $1.9million from 1 July 2023. However, this is a GTBC. Each individual has their own PTBC based on what the GTBC was when they first commenced a pension and any entitlement to the indexation of any future increase to the GTBC.
Importantly, the pension is measured at commencement and is not based on the growth of the pension balance. The ATO measures pensions when they start and when they are partially or fully commuted (lump sums or capital withdrawals of the pension capital), excluding regular pension withdrawals.
A member’s transfer balance account (TBA) reflects those movements. Movements in your TBA are reported to the ATO in a quarterly report.
The ATO use the balance in your TBA to determine if you:
- have exceeded your PTBC
- have any available space in your TBA enabling you to commence a new pension
- have any entitlement to proportional indexation
Excess Transfer Balance
Any excess in your TBA plus a notional earnings amount has to be rolled back into accumulation account or alternatively cashed out. If it is a death benefit pension the excess must be commuted as a lump sum payment as it cannot be rolled back into accumulation mode.
Notional earnings are based on the general interest charge (GIC) which is 11.42% p.a. for the January to March 2025 quarter and continues to apply until the TBA is no longer in excess.
A 15% tax applies to notional earnings. For repeat offences, the tax rises to 30%. The member bears personal responsibility for this tax. Additionally, failure to remove excess amounts within the allowed timeframe will result in losing the tax exemption on affected pension earnings.
Example: consequences of excess transfer balance (per the ATO Website)
On 1 July 2018, Bec started a superannuation income stream of $1 million from the superannuation fund her employer contributed to (Master Superannuation Fund). On 1 October 2018, Bec also started a $1 million superannuation income stream in her SMSF, Bec’s Super Fund.
On 1 July 2018, Bec’s transfer balance account was $1 million. On 1 October 2018, Bec’s transfer balance account was credited with a further $1 million bringing her transfer balance account to $2 million. This means that Bec had exceeded her personal transfer balance cap of $1.6 million by $400,000.
Bec’s SMSF reported the second superannuation income stream to us on 28 January 2019.
On 30 January 2019, the ATO issued an excess transfer balance determination to Bec setting out her excess transfer balance amount (which will be made up of the $400,000 plus earnings that accrued from 1 October 2018 to when we made the determination).
Included with the determination was a default commutation authority notice which lets Bec know that, if she doesn’t commute the full amount voluntarily or make an election by the due date on the determination, the ATO would issue a commutation authority to Master Superannuation Fund requiring the trustee to commute the excess transfer balance amount from her superannuation income stream.
To check your PTBC and TBA space, log into your MyGov account. Note that balances may be affected by late or incorrect reporting. For a review, please contact your SMSF Specialist.
Total Super Balance (TSB)
An individual can have more than $1.9million in super benefits. However, there are limits on the amounts that can be contributed into super which can affect the member’s TSB. A member’s TSB includes super balances across all super interests including accumulation and retirement phase pensions and a proportionate amount of a limited recourse borrowing arrangement if it is a related party loan or the member has reached the age of 65 or otherwise retired.
Specifically, the member’s TSB as at the 30th June in the prior year is measured against the GTBC which is currently $1.9million to determine if a SMSF member or the fund is eligible:
- to bring forward non-concessional contributions
- for a government co-contribution
- for a spouse tax offset
- to use the segregated asset method when calculating exempt current pension income (ECPI)
Hint– in relation to the bring forward rule the member’s TSB will determine the amount of non-concessional contributions that can be brought forward and over what timeframe.
Your TSB can be accessed through your MyGov account. The ATO receives updates from external reporting, and your balance may be influenced by late or incorrect reporting. For a review, please contact your SMSF Specialist.