i What this calculator does
Works out the SARS tax on a lump sum taken from a pension, provident or retirement annuity fund, using the two tables that apply in South Africa. At retirement, death or retrenchment the retirement table applies: the first R550,000 is tax free across your lifetime, then 18%, 27% and 36%. On resignation or dismissal before retirement the withdrawal table applies: only the first R27,500 is tax free, then the same rates on much lower thresholds. Both tables aggregate every lump sum you have ever taken, so a withdrawal at 35 uses up tax-free capacity you would otherwise have at 65.
The calculator shows both routes side by side because the choice between cashing out on resignation and preserving to retirement is usually a six-figure tax decision. Two-pot savings component withdrawals are different again, taxed at your marginal rate, and have their own calculator.
Uses the SARS retirement and withdrawal lump sum tables and the lifetime aggregation rule. Two-pot savings component withdrawals are taxed at your marginal rate instead and are covered by the Two-Pot Withdrawal Tax Calculator. Your fund applies for a tax directive; the final figure may differ. Not tax advice.
Frequently asked questions
How much of my retirement lump sum is tax free?
R550,000 over your lifetime under the retirement table, applied to lump sums taken at retirement, on death or on retrenchment. Earlier retirement, severance and withdrawal lump sums reduce what is left of it.
Why is a resignation withdrawal taxed so much more?
Because the withdrawal table's tax-free band is R27,500, not R550,000, and its brackets start lower. The policy intent is to discourage cashing out before retirement.
Do previous lump sums really count?
Yes. SARS calculates the tax on the total of all lump sums you have ever received and subtracts the tax already calculated on the earlier ones. A R300,000 withdrawal at 35 means R300,000 less of the tax-free R550,000 at retirement.
How are two-pot savings withdrawals taxed?
At your marginal income tax rate as ordinary income, not on these tables, and they do not use up the R550,000. The Two-Pot Withdrawal Tax Calculator on this site handles them.
Is a retrenchment package taxed on this table?
Severance benefits share the retirement table and the R550,000 lifetime portion, which is why a retrenchment package and a later retirement lump sum affect each other. Leave pay and notice pay are taxed as normal income.
Can I take my whole fund as a lump sum at retirement?
From a pension fund or RA, generally only one third; the rest must buy an annuity unless the total is R165,000 or less. Provident fund balances accrued before March 2021 can be taken in full. The two-thirds that becomes an annuity is taxed as income when paid.
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