A SMSF reserve is simply an amount of money or assets inside your SMSF that is not part of any member’s account. That is, no one has any entitlement to it yet. Reserves do not make up part of any member’s account balance until they are actually credited or allocated to the member.
The main reason for maintaining a reserve in a SMSF is because it can provide better benefits to members and their dependants. However, before considering using this strategic tool, SMSF Trustees must review the SMSF’s governing rules to ensure that they don’t prohibit maintaining reserves.
The following article gives a clear insight into the issues to be considered and a case study which further clarifies how this strategic tool can be used and its’ effects.
February 2, 2017
January 30, 2017
January 27, 2017
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