1. What is the 2-Pot System Tax Calculator?

Definition: This calculator estimates the tax payable on withdrawals from retirement funds under South Africa's 2-pot system.

Purpose: It helps individuals understand the tax implications of accessing their retirement savings before retirement.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Withdrawal \) — Amount withdrawn from retirement fund (ZAR)
• \( TaxRate \) — Applicable tax rate (%)

Explanation: The withdrawal amount is multiplied by the tax rate to determine the tax liability.

3. Importance of Tax Calculation

Details: Understanding the tax implications helps with financial planning and making informed decisions about retirement fund withdrawals.

4. Using the Calculator

Tips: Enter the withdrawal amount in ZAR and the applicable tax rate (default 18%). The calculator will show both the tax amount and net amount after tax.

5. Frequently Asked Questions (FAQ)

Q1: What is the 2-pot system?
A: South Africa's retirement reform that splits retirement funds into accessible and preserved components.

Q2: What's the typical tax rate for withdrawals?
A: The first R25,000 is tax-free, then progressive rates from 18% to 36% apply based on annual withdrawal amounts.

Q3: Are all withdrawals taxed the same?
A: No, tax rates vary based on the withdrawal amount and your marginal tax rate.

Q4: How often can I make withdrawals?
A: Under the 2-pot system, once per tax year from the accessible portion.

Q5: Does this calculator include the R25,000 exemption?
A: No, this is a basic calculator. For precise calculations including exemptions, consult a tax professional.