The Finance Bill (No. 2) 2013 that was recently passed in Dewan Rakyat on 5 December 2013 provided that pre-retirement withdrawals (in full or partial) from PRS made before reaching the age of 55 on the following grounds will be exempted from the 8% tax penalty:
i. In the event of Death;
ii. Permanent departure from Malaysia;
iii. Permanent total disablement; (new addition)
iv. Serious disease; (new addition) or
v. Mental disability (new addition)
As the objective of PRS is to encourage individuals to accumulate additional savings for retirement, any pre-retirement withdrawal made before the age of 55 will be imposed with an 8% tax penalty. Pre-retirement withdrawals are subject to the terms and conditions as prescribed under the existing PRS Guidelines. PRS members can only make pre-retirement withdrawals once a calendar year from account B, which comprises up to 30% of his/her PRS account balance.
The remaining 70% of an individual PRS account balance under account A can only be withdrawn when the individual reaches age 55, as prescribed under the current PRS Guidelines without tax penalties.
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