Saturday 19 May 2007

Transferring Funds into our new SMSF

After completing the 100-point identity check for DW and myself at the ANZ bank nearest my workplace, I checked with our payroll department on what paperwork was needed to start making the employer SGL payments into our new SMSF. I was advised that it would be best to get the new details entered into the pay system now, but my employer would prefer to not commence payments into the SMSF until the new financial year (ie. after 1 July) so that it was easy to reconcile this years payments. This is fine by me, it just means that we can't send in the paperwork to exit DW from the old BT Superannuation fund until after all this years payments have been processed. As I'm going to leave some money in the old fund in order to retain my life insurance policy, I can still send in the form for making my partial fund transfer next week. Meanwhile I did a $200 direct payment into the new SMSF bank account from my credit union account, just so they'd be some financial details reported for the SMSF this financial year. I want to check out what the member reporting looks like.

I was a bit interested in how various payments made into our SMSF through the one ANZ bank account could be identified by eSuperFund - ie. which member the contribution belonged to, and whether the payment was a deducted or undeducted contribution, employer SGL payment or salary sacrifice. I rang the eSuperFund help line and they advised that the deposit should note which member the deposit was from in the lodgement reference, and that employer contributions should be identifiable because they would be regular deposits from the same source. Anyhow, at the end of the year eSuperFund will send us a contributions summary for the trustees (DW and I) to check for accuracy before it is finalised. They also mentioned that it would be possible to check these details online in future, but that this was still "in development". This is another risk with moving from the BT fund into our own SMSF managed by eSuperFund - if eSuperFund ever went out of business we may find that the required record keeping hasn't been up to scratch. Hopefully tha annual compliance checks by the ATO will ensure that everything is meeting the required minimum standards.

The next step is to check what investment mix DW and I currently have in our BT superannuation accounts, and decide on what combined asset allocation we want in the SMSF, and how to meet this allocation - eg. direct share investments or CFDs, ETFs, actively managed mutual funds, index funds or whatever. One drawback of using the SMSF for DW and myself is that the assets are all managed in a "pool", and just split into member balances pro-rata the contributions into the SMSF. This means that we have to decide on the investment mix jointly as trustees, rather than being able to choose our individual investment mix as we do in our existing BT funds. This isn't a big problem as we have similar risk tolerance and investment time-frame. In practice, the SMSF balance will comprise around 80% or more my contributions, and I enjoy doing paperwork more than DW, so I'll probably make the investment selections and just get my choices approved by DW.

Enough Wealth

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