Max out your Medisave account in Jan

Effective Jan 1, 2019 the Basic Healthcare Sum (BHS) has increased from S$54,500 to S$57,200. Funds in the Medisave Account (MA) and Special Account (SA) earns 4% p.a, while funds in the Ordinary Account (OA) earns 2.5% p.a.

Assuming you have hit the $54,500 limit in 2018, we can take the opportunity to top up $2700 to our Medisave Account by this month using cash to leverage on the following benefits:

Tax deductions if you use cash to top up your MA. Note the $7000 annual cap on CPF deductions, so the SA top up in FY2019 will be $4300.
When your MA has been maxed out, your monthly CPF contribution from your salary and employer will flow over to your SA. This account also earns you an interest of 5% p.a. Once your SA has met the met the Full Retirement Sum (FRS), the funds will flow over to your Ordinary Account, which earns you a 3.5% interest rate p.a.

In summary, whenever the government increases the Basic Healthcare Sum, quickly max out your MA in Jan, then the SA before the end of the year.

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