I was a PO at SBI for 1.5 years and then resigned. A Tier 1 NPS account was created for me and is still active. If I continue to invest in the account will I have any trouble withdrawing the accumulated funds when my age is 60?

Ans: Yes, the amount in a Tier-2 account of NPS can be withdrawn anytime like a savings bank account
Since Tier-2 accounts are voluntary accounts, there are no restrictions on NPS Tier-2 withdrawals. An investor or subscriber can withdraw any amount from Tier-2 accounts for any purpose they like.
However, it is important to note that a Tier-2 account does not enjoy any of the tax benefits of a NPS Tier-1 account

Ans: A Subscriber can claim 100% Withdrawal if the total accumulated corpus is less than or equal to Rs. 5 lakh at the time of Superannuation/attaining age of 60 years. However, please note that it is 'total accumulated corpus' including the returns accumulated and not only your invested amount.

Ans: Congratulations on reaching 70! It's great that you opened an NPS account for tax benefits. Let's discuss your situation and withdrawal options:

1. NPS Withdrawal Rules:

Lock-in Period: NPS has a lock-in period until you turn 60 or retire from your regular job (whichever is earlier).

Partial Withdrawal: After 60, you can withdraw 60% as a lump sum and invest the remaining 40% in an annuity that provides regular income.

Full Withdrawal with Conditions: At 70, you can withdraw the entire accumulated corpus (your contributions and earnings) if it's less than Rs. 5 lakh.

2. Understanding Your Situation:

Full Withdrawal Possible: Since your total contribution is Rs. 1 lakh (2 years * Rs. 50,000) and you're 70, you can likely withdraw the entire amount with accrued interest.

Tax Implications: The entire withdrawn amount (including accrued interest) might be taxable as per your income tax slab.

3. Considering Alternatives (Optional):

Annuity for Regular Income: If you need regular income, consider using a portion of the corpus to purchase an annuity. This might provide a steady stream of income post-retirement.
Here's the key takeaway: You can likely withdraw the entire NPS corpus since it's less than Rs. 5 lakh. However, the withdrawal will be taxable. Consider consulting a tax advisor for specific tax implications.

Remember, financial planning is an ongoing process. Consulting a Certified Financial Planner (CFP) can help you make informed decisions about your retirement income and tax strategies.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in