- Rolling your super from an SMSF to an industry fund is possible, but the process is highly regulated and must be done correctly to ensure compliance.
- How demanding the process is will depend on whether one or multiple members are rolling over, what the SMSF is invested in, and whether the fund is being wound down at the same time.
- People may choose to roll out of an SMSF due to complexity, declining health, trustee disputes, or simply wanting a more hands-off approach to their retirement savings.
If you've tired of running an SMSF or it's becoming too much to manage, you can hand the responsibility of growing and overseeing your retirement savings over to a larger industry player. However, as with most things related to SMSFs, rolling your super out of your fund and into an industry or retail fund involves significant regulation, and certain processes must be followed for the SMSF to remain compliant - even in its final days.
Savings.com.au's two cents
If you haven't noticed already, SMSFs are incredibly complex and it's recommended you engage an expert to manage the process of rolling money in or out of an SMSF for you, or at least provide financial advice.
It's also worth bearing in mind that you can split your super into multiple pots, if you'd prefer. There's no strict limit on how many super accounts you can hold, but beware that holding too likely means being charged unnecessary fees. You may decide you want to keep your SMSF open because other trustees still need it or you have an asset in there that you want your super to remain invested in.
How to roll your SMSF over to an industry fund
The process of rolling your SMSF over to an industry superfund will likely look different for you than it does someone else in a similar circumstance.
The steps taken will vary based on whether:
- Your SMSF is a single-member fund needing to be wound down
- You're removing your super from an SMSF that will continue to exist without you
- All SMSF members are in agreeance to wind down the fund and move their super elsewhere
- Your individual SMSF's trust deed and the exit plan kept within it
If you're looking to roll your SMSF over to an industry fund, here's a simplified run through of how the process may look:
1. Review the trust deed
A trust deed guides how an SMSF should be run and what it invests in. Often extensive documents, the deed may have provisions in it outlining how the SMSF is wound down (exit plan) or balances rolled over to an industry fund. Ensure the trust deed has been reviewed before starting the rollover process to avoid inadvertently breaching conditions set out in the deed and becoming non-compliant.
1.5 If you're winding down an SMSF, meet with trustees, sell assets, and tie all loose ends
Those shutting down an SMSF will also need written agreement from all SMSF members, even if that's just one.
Then, trustees must start the process of disposing of the fund's assets to ensure it holds cash balances to rollover and meeting all its obligations, like Capital Gains Tax (CGT) from selling assets, before it's shut down.
These obligations are numerous and include distributing member benefits and completing a final audit. The cost of rolling over the fund will also need to be accounted for.
2. Request and action a rollover
To roll your super from an SMSF to an industry or retail fund, you’ll generally begin the rollover through the industry or retail fund (often online), which will then request the rollover from your SMSF via SuperStream. In some cases you may also make a written request directly to the SMSF trustee.
As a trustee, once you receive a rollover request, you must ensure the fund has the cash to action the request (this is a process in itself and the ATO has a thorough walk-through detailing all trustees need to know).
3. Enjoy your new superfund
Well, it likely won't be that simple (unless, perhaps, your SMSF has significant liquidity and isn't being wound down on your exit). There will probably be many more steps involved and there's the chance that an SMSF won't simply be able to rollover an individual's superannuation without selling assets - which can be a time consuming process.
How long does it take to roll your SMSF over to an industry fund?
There's no concrete timeline on how long it takes to roll your SMSF over to an industry fund. It's typically dependent on the make-up of your fund, what it's invested in, and your own situation.
For example, if you you're the only member of a multi-member SMSF leaving, and your fund's investments were made up solely of cash or highly liquid assets, your super balance could probably be rolled over fairly quickly, dependent on ATO approvals.
However, if you had an SMSF with a large amount and variety of assets, you'd have to take the time to sell these. Selling property can often be a long and arduous process, between finding a buyer and settlement time. This is compounded by having to operate on an 'arm's length basis', and compounded further the more properties your SMSF has.
It's also recommended you don't rush through the process as it is rife with regulations and necessary compliance. Trying to speed it all up could mean you make an error which could result in penalties.
SMSF rollovers and CGT
Capital gains tax is paid on the profit made when you sell an investment like property or shares. When you're SMSF is disposing of assets to roll over your super to an industry fund it will probably incur CGT.
It's important to take this into account for a number of reasons. Firstly, as previously noted, you'll need to meet this cost before rolling over any balance.
Secondly, the timing of the asset sale is incredibly important. Super funds may receive a CGT discount based on whether it's held the asset for more or less than 12 months. As a result, you may want to time the roll over of your SMSF to an industry fund.
Why roll your SMSF over to an industry fund?
SMSFs can be a fantastic tool to grow superannuation and they typically offer the greatest amount of control over how to invest your retirement wealth. But they're also complicated, time consuming, and because fees are typically flat, they often don't make sense for individuals with smaller super balances.
Considering those pros and cons, there's little surprise there are a number of reasons a person may want to roll their super from an SMSF over to an industry fund, like:
Simplicity
SMSFs can require a significant amount of work; they're not called 'self-managed' for nothing. While you can outsource a lot of this work to accountants and other finance professionals, members still need some degree of oversight and an understanding of how their fund is being run.
Often, when people get to retirement age, they simply want a steady income and don't see as much value in controlling their fund's investments.
An industry fund allows an almost hands-off approach to super, which may suit people looking for greater simplicity.
Mental health and cognition
Deteriorating health is, unfortunately, a common part of getting older. A trustee of an SMSF must legally have the mental capacity to hold the role, and if they don't, they can no longer continue to do so.
There are no legal restrictions around a person's mental state if their super is in an industry fund, so rolling over a super balance can be a necessary legal requirement.
Death
If a trustee dies, there may no longer be a need or a want for the SMSF, particularly if overseeing the fund was a passion of the deceased and remaining members don't want the responsibility.
In such cases, remaining trustees, may choose to roll over their balances to an industry fund. In the event the deceased trustee was the sole trustee, the fund would be wound up.
Divorce
SMSFs can be difficult things to manage, even when all the trustees are working in unison and on good terms, while divorces are often awkward and messy affairs.
Throw the two together and you have an incredibly complex and difficult environment. It may be the best decision for your lifestyle and super to distance yourself from your former partner, which may require you to move your retirement wealth to an industry fund.
Compliance
If a trustee is found to have been convicted of a financial crime, like fraud, or is declared bankrupt, they can't legally be a trustee of an SMSF.
However, they can be a member of an industry fund, which they will have to roll over to, otherwise, the SMSF will be non-compliant, and face penalties.
What is SuperStream?
SuperStream is a data and payment standard used for digital transactions within the super industry. Rolling over any super will likely require trustees to use SuperStream. The ATO states rollovers can be processed faster, more efficiently, and with fewer errors using the system.
To use the system, you'll need the following:
An electronic service address (ESA)
An Australian business number (ABN)
You'll also need to ensure your SMSF details are up to date.
Looking to take control of your retirement? This table below features SMSF loans with some of the most competitive interest rates on the market.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.89% p.a. | 6.91% p.a. | $3,290 | Principal & Interest | Variable | $0 | $230 | 60% |
| Promoted | Disclosure | ||||||||||
7.14% p.a. | 7.19% p.a. | $3,374 | Principal & Interest | Variable | $0 | $220 | 70% | Disclosure | ||||||||||||
7.24% p.a. | 7.26% p.a. | $3,407 | Principal & Interest | Variable | $0 | $230 | 80% | Disclosure |
