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What are the tax implications of withdrawing from my Retirement Annuity when I resign?

  • You can withdraw from your Retirement Fund, which includes your Retirement Annuity, Company Pension Fund and Preservation Fund when you resign.
  • Since 1 September 2024, things have gotten a bit more complicated. The two pot system has been introduced. Pot 1: Savings pot. Pot 2: Retirement pot.
  • If you have been contributing to a retirement annuity before 1 September 2024, you will have a third pot. Pot 3: The Vested Pot.
  • You are only allowed to withdraw from the Savings pot and the Vested pot, when you resign.
  • The tax implications of withdrawing from the Savings pot and the Vested pot are different.
  • Withdrawing from the Savings pot is taxed at your marginal tax rate.
  • Withdrawing from the Vested pot is taxed using the SARS withdrawal benefit tax tables.

Here are the steps and a calculator to help you calculate the tax implications of withdrawing from your Retirement Fund when you resign.

Master Yoda

Hmmmm... Disturbing this is. Your retirement funds, in danger they may be, if withdraw you do.

CALCULATOR: What are your tax implications of withdrawing from your Retirement Fund? (2024/25)

Step 1. Enter the amounts in your Retirement Fund

Get the Rand amount from your Retirement fund provider
R
Get the Rand amount from your Retirement fund provider
R
Get the Rand amount from your Retirement fund provider
R

Step 2. Enter your monthly salary

R

Step 3. Enter the amount you want to withdraw

How much do you want to withdraw?
R
You can withdaw up to R35,000 from your Retirement Fund. (Pot 1 + Pot 3)
Results
Withdrawal amount after tax
R 0

Withdrawals from the savings component (pot 1) are taxed at your marginal income tax rate. Withdrawals from your vested component (pot 3) are taxed according to the SARS Withdrawal Benefits 2025 tax table .

Here are the steps to calculate the tax implications of withdrawing from your Retirement Fund.

  • 1
    Calculate tax on savings pot withdrawal
    Multiply the withdrawal amount from your savings pot by your marginal income tax rate. Given a monthly salary of R25,000, your marginal tax rate according to the 2024/25 SARS tax table is .
    Calculation. The amount of tax payable on the savings pot is R. This is done by multiplying the withdrawal amount from your savings pot by your marginal income tax rate. R35,000 * = R.
  • 2
    Calculate tax on vested pot withdrawal
    Calculate the tax payable on the withdrawal amount from your vested pot using the 2025 SARS Withdrawal Benefits tax table. The withdrawal amount from your vested pot is R35,000.
    Example. The amount of tax payable on the vested pot is R.
    AmountTax
    R1 - R27,5000% of taxable income
    R27,501 - R726,00018% of taxable income above 27 500
    R726,001 - R1,089,000125 730 + 27% of taxable income above 726 000
    R1,089,001 and above223 740 + 36% of taxable income above 1 089 000
  • 3
    Calculate withdrawal amount after tax
    Sum the tax payable on the savings pot and the vested pot. R + R = R. Subtract this from the withdrawal amount to get the after tax amount.
    Calculation. The amount of tax payable on the withdrawal is R. The after tax amount is R.

FAQ

Do these withdrawals count towards my tax free lump sum withdrawal? No. These withdrawals will not reduce the tax-free withdrawal allowance available to you when you retire.

Sources:

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