What should I do with the Provident Fund (PVD)? For those who are members, if one day we have to change jobs or resign from work to start our own business.
Changing jobs, leaving one job and starting another is a normal thing, a cycle that can happen to every working person. However, every time we change jobs, we should not make mistakes that we do not know or do not realize, which is the matter of the provident fund.
Regarding Provident Fund (PVD), it is good if the employer or company has a policy and benefits for us in this regard. Therefore, Provident Fund is considered an important financial tool that will help salaried employees like us achieve our goals of having money to use in retirement more easily.
But in this matter, many people still misunderstand, such as thinking that when we leave our jobs, we can sell our provident fund without having to file taxes (if we do this, we may be subject to additional taxes, or if we avoid paying taxes in this part, we may be fined).
Or not knowing how to do it if you have to leave your job, if you don’t want to sell your provident fund, what to do, etc.
When and how to issue Provident Funds without having to pay taxes?
Let’s understand the first important thing: How can we withdraw from the provident fund in the correct way and get a tax exemption? That is:
The first case is being a member of the provident fund for at least 5 years and being 55 years old or older, we will be able to withdraw all the money from the provident fund without having to pay taxes.
The second case is death or disability, only then can all the money be withdrawn from the provident fund without having to pay taxes.
Therefore, if our withdrawal from the provident fund is outside of these two cases, we will not receive tax benefits.
This means that if we decide to withdraw from the provident fund, we must also file and pay taxes on the contributions and benefits of the savings and contributions.
So if we are planning to resign, what are our options for “Provident Fund”?
Case 1 : Even if we resign, we can still collect the employer’s provident fund for another year.
But in this case, we will still receive the investment benefits, but there will be no contributions from our previous employer. Then, we can wait until we get a new job, then we can transfer our previous provident fund to the provident fund of our new employer (if the new employer has a provident fund), in which case we do not have to pay any taxes or fees.
Case 2 : Even if we resign, we can still transfer our provident fund to the RMF fund.
In this case, in addition to not paying taxes, it also allows our original investment to grow and yield interest for use in retirement. The transfer is free of any fees.
However, in this case, there are additional conditions, which are:
Once you move your Provident Fund (PVD) to an RMF fund, you will not be able to move it back to the Provident Fund. However, you can only move or switch within the same RMF fund.
Transferring Provident Funds to RMF Funds
It must be an RMF fund that is specified in the prospectus (Fact Sheet) as an RMF system that can only receive transfers from provident funds (RMF for PVD), which is a separate fund from normal RMF. The principle is the same as “keeping money” in a provident fund. Members do not have to buy additional investment units (unlike normal RMF funds that have to buy investment units continuously every year).
The withdrawal conditions are the same as the original provident fund, i.e. hold for at least 5 years, whereby
the member’s age will be counted continuously from the membership age in the transferred provident fund and the age of holding investment units in RMF, and must be 55 years old or older to be exempted from tax for the full amount.
At this point, we probably have the answer to what to do with the Provident Fund (PVD).
For those who are planning to change jobs, there will probably be an option for planning a retirement fund in the future. In addition, I would like to ask us to go back and study the rules and policies of our retirement fund in detail. So that we will be aware and choose the best way that meets our needs.
Finally, remember that all investments carry risks, but not investing or saving money now will be even riskier.
For other articles on Finance and Investment, please read more at:
Provident fund is an important tool in achieving the goal of having money to use in retirement.
Provident Fund – Why do we need a Provident Fund when we barely have enough money to live on?
What’s new in the 2020 RMF Fund? What are the conditions? Is it better than before?
