Setting up a SMSF is easy. If anything it can be done too easily with no real thought of consequences. It pays to get it done right, right from the outset. You need to step through a process on how to set up a Super fund correctly and there are decisions to be made as part of this process. Trustees, Members, Trust Deed, Rules just to name a few.
Is SMSF for You?
Like other super funds, SMSFs are a way of saving for your retirement. Generally, the main difference between an SMSF and other types of funds is that members of an SMSF are the trustees. This means the members of the SMSF run it for their own benefit.
SMSFs are not suitable for everyone, and you should think carefully before deciding to set one up. It is a major financial decision and you need to have the time and skills to do it. There may be other, better options for your super savings.
Establishing your SMSF
If you decide that an SMSF is the appropriate vehicle for your savings, you need to ensure the fund is set up and maintained correctly so that it is eligible for tax concessions, can pay benefits, and is as easy as possible to administer.
Once your SMSF is established you, as trustee, control the investment of the contributions and fund earnings. Your SMSF must have a trust deed that forms part of the governing rules for operating the fund. You must also prepare and implement an investment strategy and ensure it is reviewed regularly. There are rules and regulations that you must follow to ensure the fund’s assets are protected to provide benefits in retirement.
Your obligations as a trustee
Make sure you understand the responsibilities and obligations of trustees operating an SMSF.
When one or more members retire you, as a trustee need to understand and follow the law and regulations governing the payment of benefits. The payment standards contained in the legislation and regulations, the sole purpose test and the preservation rules ensure that money in the fund is paid to members in the appropriate manner.
You should continually reassess the circumstances of the fund and each individual member to determine whether an SMSF is still the most appropriate option for your retirement savings. In some cases, you may find that you no longer have the capacity to deal with the complexity or the time required to manage your SMSF.
You may decide that it is not cost-effective to continue to run your own fund. Depending on the circumstances, it may be necessary to transfer member benefits to another complying super fund.