HARRY JOFFE: A retirement annuity is a very effective tax vehicle and estate duty shelter
You are probably aware that there is a tax advantage to using a retirement annuity, but you may not be aware of the restrictions on these products and just how these stack up against the many benefits. If so, take a look at this list of the advantages, the restrictions, and what they mean for you. Advantages Contributions to an RA are tax-deductible, subject to certain limits. The deduction is limited to 27.5% of your taxable income or remuneration, subject to an overall maximum cap of R350000 a year. This overall limit applies to contributions to all retirement funds together. There is no tax on any investment held inside an RA, as the RA is in a tax-free fund. This means that if you own investments in an RA, you avoid dividends tax, capital gains tax and any tax on interest on those investments. When you take your money out of the RA at retirement, you qualify for additional tax benefits. Although only a third of the fund can be taken in cash, that cash is taxed at lower than norm...
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