For some clients, Dawson said, it’s just a matter of asking if they are going to withdraw the benefits, cash them as a lump sum or a pension payment. For others it could be choosing to roll them over.
“It really comes down to the fact as to whether or not clients have a choice, whether they have met a condition of release that allows them to take those benefits from the fund, and if they have they can make that choice, and it could be a combination of the two,” Dawson said.
“It also depends on if they’re moving their super to another vehicle outside of the SMSF, or whether or not they’re just looking to exit the super system altogether. If we have death benefits in the fund, we do need to be careful with those because we’ve got an additional requirement to keep those monies separate from the other benefits that the member might have in the fund.
“We also need to make sure that, if we’re rolling them, that we cash them immediately in receipt of the new fund, and again, that we keep that separate as well.”
She continued that with a death benefit as part of the rollover process it is important to indicate what it is so the trustee receiving the benefits will know to keep that separate and to cash immediately.
“They’ll get instructions from the member at the other end around that, but just remember, we need to keep that separate, we can’t just roll it back and leave it in accumulation,” she said.
“If it’s not getting lump summed out, it’s getting rolled over, we need to follow that process for clients who can’t cash because they haven’t met a condition of release.”
Dawson said the SuperStream system rules must be used to facilitate the rollovers which is often where the most difficulty is encountered when winding up funds as clients can “jump the gun” and begin transferring cash without speaking to the adviser first.
“As part of your education piece, when clients start talking about the possibility of winding up, you should be immediately flagging with them that they have to come and chat with you first before they do anything, so you can assist them to meet these requirements to use the SuperStream system,” she said.
Sean Johnston, SMSF specialist for Heffron, said giving clients a reading guide about SuperStream and its role in the winding up process is also beneficial.
“The wind-up process is quite complex in and of itself. If you put the layer of SuperStream over that at the same time, I find that gets to be a lot for clients to go through,” he said.
“What I like to do is walk them through the wind up process, what that will look like, and show them the SuperStream rules to follow. When they get to that step I tell them to come back and talk to me because there are specific rules they have to follow.”
