Retirement Annuity

What is the maximum I can contribute towards a retirement annuity?

Question:

Question on retirement annuities and tax I am contributing 5% of my gross income to a company pension fund with Momentum (compulsory min investment for an employee). Assuming I receive no other income and did not get a bonus, how much can I contribute to a retirement annuity (would it be the 10% of my gross income for a total of 15% towards retirement savings)? Please assume that I earn R500 000 gross income per year before deductions, and the only deduction being for the company pension fund. Thanks a lot Chris

Answer:

Retirement Annuity contributions are tax deductible under S11(k) of the income tax act. Contributions are deductible to a limit of 27.5% of taxable income, capped at an annual limit of R350 000. Contributions in excess of the annual limits will be rolled over to future years.

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