· Updated · Built around the Two-pot withdrawal tax calculator
Photo: Karola G on Pexels (free licence)
Since September 2024 most South Africans with a pension, provident fund or retirement annuity can take money out of a "savings pot" once a tax year without resigning. It is your money and sometimes it is the right call. But it costs twice: SARS takes tax at your highest rate today, and the rands you take out stop growing for your retirement.
The rules in five lines
- One third of new contributions goes to the savings pot, two thirds to a retirement pot you cannot touch before retirement.
- Funds seeded the savings pot with 10% of your balance, up to R30 000, on 31 August 2024.
- At least R2 000, once per tax year - the next window after a withdrawal opens on 1 March.
- It is taxed as ordinary income at your marginal rate - not on the retirement lump sum table, and with no tax-free amount.
- SARS debt comes off first: the tax directive deducts any tax you owe, unless you have a payment arrangement. Once the fund has applied for the directive you cannot cancel.
Slide it: the tax now and the cost later
The tax is the difference between the tax on your year's income with and without the withdrawal, on the SARS 2026/27 tables (the same sum as the take-home pay calculator). The chart shows what the gross amount would have grown to if you had left it.
Before you withdraw
- Compare it with the cost of borrowing. If the withdrawal stops you taking a personal loan or running up a credit card, it can be the cheaper money - see escaping credit card debt.
- Check the timing. The withdrawal is added to that tax year's income. A year with less other income (a gap between jobs, say) means a lower marginal rate.
- Expect a top-up bill if you have more than one income. The directive estimates your rate; the final tax is settled on assessment - the tax refund calculator shows where your year lands.
- Rebuild a buffer instead of drawing every year. The savings goal calculator works out the monthly saving for an emergency fund.
Your withdrawal, live
The retirement savings calculator shows whether the rest of your fund is on track.
Sources
Calculators used in this post
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