By Westcourt Blogger
Starting a self-managed super fund (SMSF) may be a good idea for those after more control over investment choices and fund running costs.
However, those considering an SMSF need to ask themselves some key questions such as:
An SMSF can have no more than four members. All members must be trustees of the SMSF or directors of the trustee company (if a corporate trustee is in place).
Those who are an undischarged bankrupt or have been convicted of an offence involving dishonesty are considered disqualified persons. Such people cannot become an SMSF trustee.
SMSFs are regulated by the ATO, so those in charge need to meet compliance obligations such as lodging annual returns, storing fund documents, preparing paperwork and signing an SMSF trustee declaration.
Before trustees can arrange for their employer (or themselves) to make super contributions to the SMSF, the fund needs to be established. This includes:
Those in charge will also need to draft an investment strategy and invest their super in accordance with that plan.
Those wanting their employer’s superannuation guarantee contributions to be paid to the SMSF need to check if they have fund choice.
Those who have fund choice must complete a standard choice form (SCF) outlining the SMSF’s details and give this to their employer.
The SMSF must have an electronic service address (ESA) which enables it to receive an electronic contribution data message from an employer. SMSF members who are self-employed do not need an ESA.
SMSF trustees also have to decide what happens to their super benefits from their previous super fund. Trustees can arrange to transfer those benefits to their SMSF via the ATO or arrange partial transfer using a form available from the previous fund. Before transferring existing super benefits, it is important to consider the implications the transfer may have on any life insurance cover from the previous fund.