Krungsri Asset Management - Investment in LTF and RMF

How to choose the right Retirement Mutual Fund (RMF) for me?

Investors should spread their investment across various funds having different invesment policies to diversify risk backed with asset allocation suiting their acceptable risk levels. For example, those who are still young and have long investment period may invest in equity funds or allocate part of their money to invest in foreign equity fund or gold or funds investing in high-growth stock funds. These funds may contain high volatility but tend to give a higher yield.

On the contrary, if you belong in a middle-aged group or plan to retire soon, you may choose to invest in RMFs that have lower risk and tend to give consistent return, for example, fixed income funds or mixed funds investing partly in debt instruments to reduce risk .

How much can I invest in RMF and SSF?

For RMF

1. Invest up to 30% of taxable income, which must not exceed 500,000 Baht when combined with investment in other retirement savings funds, namely Social Security Fund (SSF), Provident Fund, Government Pension Fund, Annuity, Private School Teacher Welfare Fund (PSTWF), or National Savings Fund.

2. Investors must continue to purchase RMF at least once a year and must not pause to make such purchase more than one consecutive year. Investors must also continue to invest in RMF until they reach 55 years of age and must continuously invest for at least 5 years.

For SSF or Super Savings Fund, there is two minor categories as follows:

1. SSFX (Super Savings Fund Extra): Investment period during 1 Apr. - 3-Jun. 2020

- Invest up to 200,000 Baht with irrespective of investments in normal SSF and other types of retirement investments*

- Must hold investment units for 10 years from the date next to the investment date

2. SSF (Super Savings Fund):

- Invest not more than 30% of taxable income and not more than 200,000 Baht and when combined with other types of retirement investments* must not exceed 500,000 Baht per year.

- Must hold investment units for 10 years from the date next to the investment date

- Not required to continually invest every year

*Other types of retirement investments are SSF, RMF, Government Pension Fund, Provident Fund, Private School Teacher Welfare Fund (PSTWF), National Savings Fund, and Annuity Insurance Premium, which must not exceed 500,000 Baht/ year.

Can I buy RMF more than 30% of my income or the 500,000 Baht limit?

If you buy RMF more than the specified limit, when redeeming the units, the capital gain on the exceeding portion must be included in the annual income for income tax calculation. Such capital gain is classified as income under Section 40(8) of The Revenue Code.

Breaches of RMF/ SSF/ LTF Investment

RMF

In case of breach and investment for more than 5 years, investors must pay the amount of tax exemption for the past 5 years (included the year before the starting year of breach)
In case of breach and investment for less than 5 years, investors must pay the entire amount of tax exemption, while capital gain from incompliant redemption is deemed as taxable income in the year of redemption according to rules of the Revenue Department.

SSF & SSFX

In case of redemption before the required holding period, investors must return the tax privileges on the redeemed units, while the capital gain on redemption must be included in the annual income for tax calculation. Redemption is based on “First in First Out” (FIFO) basis.

LTF (Invest for tax deduction till 2019 only)

In case of sale of LTF units before 7 calendar years, investors must return the tax privileges on the redeemed units and pay 1.5% surcharge per month on the tax amount. The capital gain on redemption must be included in the annual income for tax calculation. Redemption is based on “First in First out” (FIFO) basis.

Provident Fund

Distance never matters

Investment in LTF and RMF

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