I am 45 years old and resigning from my job to start my own business. I have the following queries:

1. I want to ensure that my EPF account is operative till 58 years old so that I keep getting the high interest that EPF provides. How should this be done?

2. At the same time I want the interest earned yearly to be withdrawn. Can this be done by requesting for partial withdrawal every year in EPFO site?

3. Is it mandatory to fully withdraw within 36 months post resignation in which case the above 2 is not applicable? 

Request you to clarify as none of the websites clearly states if a partial withdrawal is possible post resignation.

Ans: Yes, you can withdraw all of your EPF money after 2 months of your last day in the company, even if you are less than 58 years old since you will be unemployed. However, your EPF withdrawal will be taxable if you have not completed 5 continuous years of service.

To withdraw your EPF money, you can follow these steps:

1. Go to the EPFO website and login into your account.
2. Click on the "Online Services" tab.
3. Click on the "Claim (Form-19)" link.
4. Fill in the required details and submit the form.
5. You will receive a notification once your claim is processed.
6. Once your claim is processed, you can withdraw the money from your EPF account.

You can withdraw the money directly to your bank account or you can request a cheque from the EPFO.

Here are some additional things to keep in mind:

• You will need to submit Form 10C to the EPFO if you have not completed 5 continuous years of service. This form will help you to get tax exemption on your EPF withdrawal.
• If you are withdrawing your EPF money before retirement, you will not be eligible for the pension benefits under the Employees' Pension Scheme (EPS).
• You can also transfer your EPF balance to your new employer's EPF account if you start a new job within 1 month of leaving your previous job. This will help you to avoid any tax liability on your EPF withdrawal.

Ans: The interest on your EPF account is calculated on a monthly basis and is credited to your account at the end of each financial year.

However, the EPFO usually credits the interest amount 8-9 months late. This means that if you apply for final withdrawal of your EPF amount after completing another 2-3 years, the interest for the last financial year will not be credited to your account until 8-9 months after you withdraw the money.
The EPFO calculates the interest on your EPF account using the following formula:
Interest = (EPF balance at the beginning of the year) * (interest rate) * (number of months in the year) / 12.

Ans: Congratulations on your new opportunity abroad. It's great to see you're planning your EPF withdrawal wisely. Let's address your queries in detail.

When Can You Withdraw Your Full EPF?
You can withdraw your EPF under certain conditions:

Retirement: Full EPF withdrawal is allowed at the age of 58.

Unemployment: If you are unemployed for more than two months, you can withdraw your EPF.

Early Withdrawals
Partial Withdrawal: You can partially withdraw for specific reasons like home purchase, marriage, or education.

After 50: Since you are 50, you can withdraw up to 90% of your EPF one year before your retirement.

Upto What Age Can You Earn Interest on Your EPF?
Your EPF account earns interest until you withdraw the amount. However, there are important points to consider:

Active Accounts: As long as you are contributing, your EPF account remains active and earns interest.

Inactive Accounts: If there are no contributions for three years, your account becomes inactive.

Interest on Inactive Accounts
Interest Continuation: Even if your account is inactive, it continues to earn interest until the age of 58.

Post 58: After 58, interest is credited only if you have not withdrawn the EPF balance.

Tax on EPF Interest
Understanding the tax implications on EPF interest is crucial:

Exempted Interest: Interest earned on EPF is tax-free if you complete five continuous years of service.

Pre-Mature Withdrawal: If you withdraw before completing five years, interest is taxable.

Taxation on Withdrawals
After 5 Years: Withdrawals after five years are tax-free.

Before 5 Years: Taxable as per your income slab, and TDS is deducted if the amount exceeds Rs 50,000.

Analytical Insights
Full EPF Withdrawal at Retirement
Withdrawing EPF at 58 ensures you benefit from tax-free interest. Your funds continue to grow, providing a substantial retirement corpus.

Managing Inactive EPF Accounts
It's wise to keep track of your EPF account even if it's inactive. Ensure your KYC details are updated to avoid any complications during withdrawal.

Tax Planning
Consider tax implications before withdrawing your EPF. Plan withdrawals strategically to minimise tax liability.

Benefits of Regular Monitoring
Regularly monitor your EPF account to ensure it's earning interest. Update your bank details and KYC to avoid any issues during withdrawal.

Conclusion
By understanding when to withdraw your EPF, the interest it earns, and the tax implications, you can make informed decisions. Regular monitoring and strategic planning will help you maximise your EPF benefits.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

Ans: We always maintained that EPF account becomes inactive after 36 months of continuous non contribution and doesn't draw interest after that so it is advisable for complete withdrawal before the same.
Thanks for the update though!