I have a query regarding PPF. I am 50 years old. I have a PPF account.

I started a PPF account in my daughter's name as well when she was minor. Her PPF account is under my guardianship.

My questions:

Can I invest 1.5 lakh each in both the accounts, or, I can only invest cumulatively 1.5 lakh?

Ans: Understanding PPF Withdrawal Rules
You have made wise decisions by investing in PPF accounts for yourself and your son. Let's explore the rules regarding complete and partial withdrawals from these accounts.

Complete Withdrawal upon Maturity
Your PPF Account

Your PPF account, started in 2000, will mature after 15 years, and you can extend it in blocks of 5 years.

Maturity Withdrawal Process

Timing: Upon maturity, you can withdraw the entire amount.

Check Issuance: The maturity proceeds will be given in your name.

Extension Option

Without Withdrawal: If you extend without withdrawal, the balance continues to earn interest.

With Withdrawal: You can withdraw once a year without closing the account.

Your Son’s PPF Account
Your son’s PPF account, started in 2010, follows similar rules. When it matures, the proceeds can be withdrawn fully.

Complete Withdrawal for Minor's Account

Timing: The account matures after 15 years from the start date, so in 2025.

Check Issuance: The maturity amount is payable to your son. If he is a minor, the cheque will be issued in the guardian’s name.

Partial Withdrawal Rules
Your PPF Account

Partial withdrawals are allowed from your PPF account after completing 5 financial years.

Rules for Partial Withdrawal

Timing: Allowed from the 7th year onward.

Amount: Up to 50% of the balance at the end of the 4th year or the immediate preceding year, whichever is lower.

Check Issuance: The cheque will be in your name.

Your Son’s PPF Account
Partial withdrawals from your son’s PPF account follow the same rules, but there are additional conditions for minors.

Partial Withdrawal for Minor’s Account

Timing: Allowed from the 7th year onward.

Amount: Up to 50% of the balance at the end of the 4th year or the immediate preceding year, whichever is lower.

Check Issuance: The cheque will be issued in the guardian’s name, operated by your wife.

Ensuring Smooth Withdrawals
Documentation

Ensure proper documentation for withdrawals. For your son’s account, you need proof of your wife being the guardian.

Planning

Plan withdrawals considering the tax implications and future needs. PPF interest is tax-free, making it beneficial for long-term savings.

Strategic Considerations
Maximizing Benefits

Continue maximizing investments in PPF for its tax-free interest and Section 80C benefits.

Monitoring Accounts

Regularly monitor both accounts to ensure they align with your financial goals. Utilize partial withdrawals wisely to avoid unnecessary tax burdens.

Managing Financial Goals
Long-Term Goals

Your PPF accounts are excellent for long-term goals, like your retirement and your son’s education or marriage.

Diversification

While PPF is safe and tax-efficient, consider diversifying with other investments to balance growth and risk.

Seeking Professional Guidance
Certified Financial Planner

Consult a Certified Financial Planner to tailor your investment strategy. Professional guidance ensures your financial plans are robust and aligned with your goals.

Regular Reviews

Regularly review your financial plan and adjust it as needed. Life changes and market conditions may require updates to your strategy.

Your commitment to securing your financial future and that of your son is commendable. PPF is a reliable and tax-efficient tool for this purpose.

Conclusion
In conclusion, understanding the withdrawal rules for your PPF accounts helps you make informed decisions. Proper planning and regular reviews ensure you maximize benefits from these investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Recent change of rules have made investing in PPF in the name of minor child redundant because it will only have 4% ROI as applicable to post office savings account.

If your kid is a daughter then SSY is a good option.

If your kid is a son then NPS Vatsalya or debt Mutual funds could be good options.