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A member of a retirement fund becomes entitled to a lump sum benefit when his or her membership of that retirement fund terminates.\u00a0 The taxable portion of the lump sum benefit is included in the taxpayer\u2019s gross income and is subject to the rates of tax applicable to lump sum benefits.<\/p>\n
A lump sum benefit is any amount payable by a retirement fund to a member or former member in consequence of his or her membership or past membership in that specific retirement fund. Types of lump sum benefits payable by a retirement fund are:<\/p>\n
A \u201cseverance benefit<\/strong>\u201d, is not a lump sum benefit as it is an amount payable by an employer to an employee and not an amount payable by a retirement fund to a member or former member of that retirement fund.<\/p>\n SARS use different tax rates when an employee has a Withdrawal of Retirement benefit.\u00a0 Please click on the applicable link to see the tax rate applicable to your scenario:<\/p>\n