Voluntary Top-Up to CPF Medisave account

 

I just contributed $300 to my CPF Medisave account.

This is after realising that MediShield premiums have been deducted from my Medisave account recently.

After the deduction, my Medisave account falls short of the Basic Healthcare Sum of $66k, which is the maximum amount of money anyone can have in their Medisave account for 2022.

To be convinced that I can perform voluntary top-up to my Medisave account, I did the following based on an FAQ on CPF website.

Unsurprisingly, the amount I could top up is exactly the premiums deducted for MediShield Life.

Then I proceed to make a voluntary top-up. There it goes.

This is an irreversible and tax deductible action.

The tax relief for Medisave voluntary Top-Up and Retirement Sum Top-Up (RSTU) have a combined cap at $8k.

As I have already contributed $8k to my Special Account under RSTU this year, I will not enjoy additional tax relief.

The only intangible benefit I enjoy is to allow my Medisave account to attain BHS again quicker after which contributions to it overflow to Special account when the next contributions from my salary are credited.

I should still be able to attain BHS for 2023 at $68,500 by doing nothing due to the 4% interests from Medisave account.

Indirectly, I am actually contributing to my Special Account without RSTU.

Once one has achieved Full Retirement Sum in Special account, it becomes difficult to grow the Special account due to low allocation ratio from employer/employee contributions and no more RSTU.

Thanks for reading. Stay focused and remain steadfast as always!

With love & peace, 

Qiongster