Setting up a self managed super fund, things to remember.
Super funds are investment products very much like any other investment fund you have used or heard about. The principles are simple; money is deposited in the fund where it is invested in different stocks, businesses or other investment funds. The exact nature of the investment depends on the trustees of the fund that choose what investment plan is followed. The only real difference between super funds and general investment funds is the accessibility of your money. When it is deposited in a super fund you can only access it in very specific circumstances, when you are 60 or over, are dying or your beneficiaries can access it if you are dead. Other funds also tend to have some kind of limitation on when, how often or how much you can take out from your fund but these limitations are rarely as strict as super funds.
Now if you have decided to manage your own super fund you must understand that along with the freedom of choosing in what and when to invest your super fund comes increased responsibility. Managing a super fund is not a simple task but requires specialized knowledge in law and finance.
Although there are real benefits from managing your own super fund, like more control of your fund and savings in commissions and fees, it is still a serious decision you must think carefully about before making up your mind.
This article seeks to provide a simple checklist of things you must remember before you setup your managed super fund.
These are some pointers you must not forget:
1) You need to inform your members of any relevant information to the super fund.
2) The money in the super fund must be kept separate from your personal funds.
3) You must keep your members interests in first place and must not enter into contracts that override their personal right to exercise functions or powers.
4) You cannot allow members to access their funds early.
5) You must carry out a yearly audit of your super.
These are just a few of the responsibilities you must comply with if you manage your own super fund. If you are seriously considering managing your own fund you should download all the documentation and guides offered by the tax office at www.ato.com.au .
Complying with the rules of super funds is a serious matter. Failing to do so could have serious consequences, including paying back any money that is linked to your breach in responsibilities, your super fund being declared non-complying with the loss of tax concessions and ultimately prosecution for breaking the law.
Although self management can be a good move for some it is not something to be carried out without solid backing and a good understanding of the rules and requirements involved.