I opened an NPS account in 2022 at the age of 68. Made investment of 50,000 each in the last two years to avail tax benefits. I no more require this tax benefit. Now I have completed 70 years. Can I withdraw the entire amount with accruals and close the account.
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Tax Implications: The entire withdrawn amount (including accrued interest) might be taxable as per your income tax slab.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