Its not a bad idea to have both a RA and Unit Trusts - its all about spreading the risk!
What is the difference then between a RA and a Unit Trust?
Retirement Annuity - accumulation of net premiums and interest used to purchase a life annuity at the time annuitant reaches specified retirement date
Unit Trust - it is a form of collective investment constituted under a trust deed. Common types of investments undertaken by unit trusts are property, securities, mortgages and cash equivalents.
What is the difference then between tax treatment of a RA and a Unit Trust?
Retirement Annuity - Contributions are tax deductible (up to 15% non retirement funding income), not subject to Capital Gains Tax, at death they are free of Estate Duty, at retirement a lump sum can be withdrawn (R315,000 exempt from 1 April 2012, the remainder of the lump sum being taxed on a sliding scale), the remainder is transferred to a Living Annuity and a fixed amount is withdrawn according to an elective period (R110,889 exempt annually)
Unit Trust - Fully taxable in individuals tax bracket. Subject to Capital Gains Tax, Income Tax and Estate Duty.
What is the difference then between a RA and a Unit Trust?
Retirement Annuity - accumulation of net premiums and interest used to purchase a life annuity at the time annuitant reaches specified retirement date
Unit Trust - it is a form of collective investment constituted under a trust deed. Common types of investments undertaken by unit trusts are property, securities, mortgages and cash equivalents.
What is the difference then between tax treatment of a RA and a Unit Trust?
Retirement Annuity - Contributions are tax deductible (up to 15% non retirement funding income), not subject to Capital Gains Tax, at death they are free of Estate Duty, at retirement a lump sum can be withdrawn (R315,000 exempt from 1 April 2012, the remainder of the lump sum being taxed on a sliding scale), the remainder is transferred to a Living Annuity and a fixed amount is withdrawn according to an elective period (R110,889 exempt annually)
Unit Trust - Fully taxable in individuals tax bracket. Subject to Capital Gains Tax, Income Tax and Estate Duty.
http://www.investopedia.com/terms/
http://www.websters-online-dictionary.org/definitions/
http://www.websters-online-dictionary.org/definitions/
Attempts have certainly been made to limit the price increase but the deciding factor will still be dependent on the market.
ReplyDeleteWashington DC Financial Advisors