I need major dental work done. I don't have health cover. Can I withdraw funds from my super to pay for this?
Yvette in Brisbane, QLD
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Dental work can be a very costly but necessary expense.
I assume you have considered all options to pay for this expense as drawing from super should be your last resort – the impact on your retirement savings can be very detrimental.
Do you have other savings you can dip into? Or a personal loan that you can repay over a short period of time? Any other assets you may be able to sell?
You haven’t mentioned your age, but I am assuming you are under retirement/preservation age?
Preservation age is when you are able to access superannuation for retirement and for most people will now be aged 60 (if you cease work) or 65 (even if still working).
If you have not yet met the retirement age requirements, there are some very limited circumstances in which you can access super.
One of these is compassionate grounds including funds required to pay for medical treatment.
There are several conditions you must meet to apply for this release and may also vary depending on your fund.
You must apply before the expense is paid as this condition will only release funds for unpaid expenses.
You must show that you can’t afford to pay the expense by any other means and you must be a citizen or permanent resident of Australia.
The other requirements for release on medical grounds is your treatment must be for a life-threatening illness (which I assume dental work is not) or acute or chronic pain (which dental work can certainly be!) and not available through the public health system.
Your dentist or medical practitioner will need to provide detailed information relating to your condition and treatment needed.
If you are successful in obtaining consent to draw super on medical grounds, there will be tax deducted from the withdrawal as it is treated as a super lump sum.
The tax rate depends on your age and the components of your super lump sum, with the maximum tax rate being 20% plus medicare levy.
Another consideration is the timing of your withdrawal request – given the recent market volatility due to Coronavirus, your superannuation may not have the same value it did 6 months ago.
If you have been impacted financially by Covid-19 there is a new condition of release to access funds from super up to $10,000 before 24 September 2020.
However, this is for the purpose of dealing with the adverse economic effects of Covid-19 such as unemployment, redundancy, loss of business income or working hours and not for dental expenses.
Getting professional advice and working with an experienced adviser can weigh up all of these options and considerations to help you make a well-informed decision.
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