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2.8 Years PF Inactive - What Are My Options?

Milind Vadjikar |598 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 09, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more

Asked by Anonymous - Aug 17, 2024Hindi

Money

This query for a Regional PF expert. I was having my PF contributed for more than 15+ years at a stretch, however 2.8 years ago I took a work sabbatical and since then no contribution nor any transaction is being made to my PF A/c. Since the PF investment is giving me a very attractive rate of 8.25% p.a. I wish to continue with the same as it is, and enjoy the benefits of this very safe investment tool. I read that the PF A/c cannot be inactive for more 3 years. Kindly advise the best way forward, as I am unclear on this 3 year rule.

Ans: If there are no contributions to an EPF account for three consecutive years, it will stop earning interest after that time and become inactive hence it is recommended that you withdraw it and invest in other avenues.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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My age 52,discontinued job since 8 yr(business) but kept PF &EPF intact so as to build compound inrest even if it is inactive active 1) Can I partially withraw PF 2) Is it any option for systemic withdral plan in PF ie every month 3) If I join new company ie at 52 age plus 8 yrs gap in PF contribution is it possible to continue PF contribution in old UAN for remaining 6 yrs 4) Is it possible to do PF contribution even after 58 yrs if I work part time/full time if emplyer has PF facility

Ans: Partial Withdrawal: Yes, you can partially withdraw from your PF for specific purposes like medical treatment, education, or marriage.

Systematic Withdrawal Plan: No, PF does not offer a monthly systematic withdrawal plan.

Continue PF with New Employer: Yes, you can continue contributing to the old UAN if you join a new company.

Contribution After 58 Years: Yes, you can continue PF contributions after 58 if you work full-time or part-time with an employer offering PF.

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Question by Rajesh - Jun 10, 2024Hindi

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I am retired from company last year at age of 62. I have not withdrawn my pf amount as i dont need it now.Plus I am getting good interest rate without tax. Till what time can i keep this amount in pf

Ans: After cessation of employment at 62, the account will be classified as an "inoperative account." While it will continue to earn interest, it will be taxable. It's advisable to consider withdrawing or transferring the amount to a safer investment option before the tax implications kick in.

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Insurance, Stocks, MF, PF Expert - Answered on Sep 22, 2024

Question by Vishwadeep - Sep 20, 2024Hindi

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Hello Sir, In one of your earlier answers, you have mentioned that " As per EPFO rule change as on April 2016, all inoperative accounts will be allowed to receive Interest till 58 years. So you can continue the account and not close the same". I can’t add the URL for the previous answer as Rediff is not allowing to add URLs in the response. The above statement seems to be outdated. As per FAQ page on EPF website - If no contribution is received into a PF account for 3 consecutive years the account shall not earn any interest after 3 years from the stopping of contribution. In the previous answer it was also mentioned that "It is not mandatory to withdraw within 36 months post resignation". But as per EPF website, the account will be inoperative after 3 years if no further PF contributions are made. So, if no further PF contribution after leaving job, it's better to apply for PF withdrawal before the end of the 36-month period from leaving the last job as no interest will be paid after 36 months and the account will become inoperative. Just wanted to bring this to your notice for public awareness. Thanks.

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!

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Question by Sriraman - Oct 18, 2024Hindi

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what is the period that we can keep the PF account after no contribution ? will it gain interest and be tax free ?

Ans: Hello;

After 36 consecutive months of NO contribution, except interest, the EPF account becomes inoperative.

Once it is inoperative it won't earn interest.

Withdrawals will be tax-free but the account will have to reactivated.

Best wishes;

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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