Don’t let terminology slow down your retirement planning; financial jargon rolls off the tongues of advisers and experts, but it can be hard to understand what they mean. Here are some of the super terms that you may encounter as you plan ahead for your super fund:
Self-managed super fund. The official name for the most popular type of DIY super fund. A SMSF can have no more than four members, and, ordinarily, all members must be trustees, and all trustees must be members.
Concessional contributions. Super contributions that you (or your employer or your spouse) make from before-tax income. Your employer, or you if you’re self-employed or otherwise eligible, can claim a tax deduction for such contributions.
Non-concessional contributions. Super contributions that you make from your after-tax income. You may hear this type of contribution called an after-tax contribution or even an undeducted contribution.
Tax-free component. This part of a super benefit is tax-free.
Taxable component. This part of a benefit is taxable when taken under the age of 60, and tax-free when taken on or after the age of 60 (except when you receive an untaxed benefit).
Taxed benefit. Taxed benefits are tax-free when received on or after the age of 60. Most super benefits, including benefits paid from SMSFs, are taxed benefits. Some benefits paid from certain public sector funds are untaxed benefits.
Untaxed benefit. A benefit that hasn’t been subject to super taxes, which means the benefit is subject to a higher rate of tax, when withdrawn, than are taxed benefits. A life insurance payout within a SMSF may be considered an untaxed benefit.
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Source:http://www.dummies.com/how-to/content/unlocking-the-language-of-superannuation.html
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