Advisor Q&A: Understanding the other $1.6m super cap

The total superannuation balance cap is a limit that applies to all Australians in the accumulation phase of their superannuation. It runs alongside the $1.6 million pension transfer balance cap, which applies during the retirement phase.

If your total superannuation balance exceeds the cap, it may restrict your ability to make further concessional and non-concessional contributions to your super fund.

All working Australians in the accumulation phase of their superannuation should be aware of the total superannuation balance cap, as it affects their ability to contribute to their super fund.

The total superannuation balance is calculated by adding up all the amounts in your superannuation accounts, including any amounts in the accumulation phase and any amounts in the retirement phase.

If your super balance exceeds the $1.6 million cap, you may face restrictions on making further contributions and could potentially incur additional tax liabilities.

Exceeding the total superannuation balance cap may limit your ability to make non-concessional contributions, so it's important to monitor your balance closely.

The total superannuation balance cap is important because it helps ensure that superannuation tax concessions are targeted and sustainable, preventing excessive accumulation of super funds.

For more information about the total superannuation balance cap, you can watch the InvestSMART webcast hosted by Tony Kaye, featuring financial advisors Bruce Brammall and Max Newnham.