Could you please confirm the age restrictions, working/retirement status, maximum "concession" dollar amount and cut-off date for an individual to contribute after-tax dollars to their super fund. If the maximum is $450,000, can one contribute this amount in one hit? What is the tax penalty for exceeding the age or contribution amount limit? R.S.

While you are under 65, you can contribute up to $50,000 as a concessional contribution (via salary sacrifice for employees, or personal deductible contributions if self-employed or not working), taxed at 15percent within a super fund. Excess amounts are taxed at 45percent and count towards the non-concessional contribution, or NCC, cap. People over 50, or turning 50, can contribute up to $100,000 a year until 2011-12. You can also contribute up to $150,000 a year as an NCC (undeducted in the old jargon and thus untaxed in the super fund) and can roll up to three years' worth, that is, $450,000, even if aged 64. A contribution in excess of $150,000 triggers the roll-up provision and the $450,000 cap is not indexed over the three-year period. Between ages 65 and 74, you need to have worked 40 hours in 30 days before contributing and cannot use the $450,000 NCC roll-up. (See next letter.) Contributions in excess of the NCC cap are taxed at 45percent and the person must withdraw the amount of this tax liability from their super fund.

Recontribution strategy

I turned 65 in March and work full-time. Is it a good idea to take out my super money as a lump sum and reinvest it again into my super fund? My reason for asking is to avoid capital gains tax if I take an allocated pension from a different fund in future and it will also make life easier for my family when I die. Is it practical to start a pension fund and still contribute to my industry fund? Presently I salary sacrifice $1468 a fortnight into HESTA (Health & Community Services Industry Fund) and my balance is $420,000. I also have $115,000 in Health Super. I receive a defined-benefit pension of $150 a fortnight from Health Super. A.R.

You refer to a withdrawal and recontribution strategy designed to convert your super benefits to a 100percent tax-free component. This eliminates tax should the money find its way to your estate, or that of your wife's, assuming you fall off the twig before her, as men usually do. As you were aged 64 at the start of the 2007-08 financial year, you can use the roll-up provisions to make non-concessional contributions of up to $450,000 during this financial year. But as you are now over 65, you will need to confirm to the fund's trustees that you worked more than 40 hours in 30 days in 2007-08; they will then only be able to accept individual contributions of up to $150,000. You will need to make three separate contributions totalling $450,000 before June 30 if you wish to use this provision. If you do, you cannot then make an NCC until the 2010-11 financial year and you miss any future indexation of the NCC cap. If, instead, you choose to withdraw and recontribute $150,000 a year, after meeting the same work test each year, it will take you five years or so to work your way through your super savings, which is a good incentive to keep working. Start a pension with the recontributed amounts, which maintains their components as 100percent tax free, and salary sacrifice down to the 15percent threshold of $34,000 in 2008-09.

Lending a hand to family

My husband and I are both 86 and semi-retired, and manage to earn just above the pension cut-off. We have a daughter and two grandsons who need help. We wonder, as we intend to sell our house and move into a retirement home, if we could manage our funds to help the family and enjoy some "benefits" of a frugal lifestyle now? J.B.

Under Centrelink rules, you can gift up to $10,000 each financial year, with a maximum of $30,000 every five years. Thus, you could gift $10,000 this June 30 and another $10,000 the next day, on July 1, without affecting your pension. However, you have probably been frugal all your life, so I don't see why you might wish to go back to being frugal while someone else spends your money. Tax-wise, often the best way to assist grandchildren is to leave them money in a will, as the income generated is then taxed in their hands as if they were adults, rather than at the very high children's tax rates.

If you have a question for George Cochrane send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: bank ombudsman 1300 780 808; pensions 132 800.