Generally, withdrawal of money before maturity from retirement planning investment vehicles like EPF, PPF and NPS is discouraged. Nevertheless, withdrawal of funds is permitted in certain situations. There are some conditions for this
Long-term financial planning is essential to create a large corpus for retirement. Liquidity is a big issue in this. EPF, PPF and National Pension System help in creating a big corpus for retirement. Liquidity is a big issue among these three. However, withdrawal of money is allowed in certain circumstances. We are telling you about the provision of premature withdrawal of money in the National Pension System.
Withdrawal allowed from Tier 1 account
Two types of accounts are opened under the National Pension System (NPS). The first is Tier 1 account, while the second is Tier 2 account. The second is a savings account, which is not mandatory to open. There is no restriction on withdrawing money from it. Tier 1 is the main account. Therefore, it is important to understand the rules for withdrawing money from this account. Withdrawal of some money from this account is allowed under certain circumstances before retirement.
Withdrawal allowed after completion of three years
An NPS subscriber can withdraw 25 percent of his contribution from his Tier 1 account after completion of three years. This means that after three years you can only withdraw the money you have invested. You will not be able to withdraw the returns received on investment. Similarly, if your employer also contributes to your account, you will not be able to withdraw the employer’s contribution.
Withdrawal will happen in these situations
After three years, withdrawal of money is allowed only under certain circumstances. These include treatment of illness, disability, children’s education or marriage, buying property and starting a new venture. Withdrawals are allowed a maximum of three times in the total investment period.
You can withdraw full amount even before the age of 60 years
You can withdraw your entire money from NPS even before completing 60 years of age. There are some conditions for this also. First, you cannot withdraw the money before five years. But, if you have started investing in NPS after completing 60 years of age, then you can withdraw money after three years.
Only 20 percent lump sum withdrawal allowed
In case of withdrawal of money before the stipulated time, you will be able to withdraw only 20 percent of the fund in lump sum. You will have to use the remaining 80 percent money to buy annuity. However, if the total amount deposited in your fund is less than Rs 2.5 lakh then you will be allowed to withdraw the entire amount in lump sum.
Permission to withdraw full amount at the age of 60 years
If your age is 60 years, you will be allowed to withdraw the entire amount. You will be able to withdraw 60 percent of the money in lump sum, which will be tax-free. You will have to use the remaining 40 percent of the money to buy annuity. The pension received from this will be taxed as per your slab. If your fund is less than Rs 5 lakh then you will be able to withdraw the entire amount in lump sum.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at informalnewz@gmail.com
