Superannuation Recontribution Strategy Explained (2026 Guide for Australians)

A superannuation recontribution strategy involves withdrawing money from super and contributing it back as a non concessional contribution to increase the tax free component of the account.

The strategy is commonly used in Australia as part of retirement and estate planning.

The goal is usually simple.

Reduce the taxable portion of super so that less tax may be paid when super is eventually passed to adult children or other non dependant beneficiaries.

Once you understand how super is structured internally, the logic becomes quite straightforward.

Key Takeaways

• A recontribution strategy involves withdrawing money from super and contributing it back as a non concessional contribution
• This increases the tax free component of your super balance
• The strategy is usually used to reduce death benefits tax for adult children
• Non concessional contributions are generally limited to $120000 per year
• Some people may contribute $240000 or $360000 using the bring forward rule
• If your total super balance is $2 million or more, you generally cannot make non concessional contributions

If you want to explore how the numbers might work in practice you can also use my
Recontribution Strategy Calculator.

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What Is a Superannuation Recontribution Strategy?

A recontribution strategy involves two simple steps.

First, you withdraw money from super.

Second, you contribute that money back into super as a non concessional contribution.

Because non concessional contributions are made from after tax money, they form part of the tax free component of super.

Over time this can increase the proportion of your super balance that is tax free.

Why does that matter?

The answer lies in how super is taxed when it is paid to beneficiaries.

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Why the Strategy Exists

Super balances are made up of two components.

Tax free component
Taxable component

You can read a full explanation here:
Tax Free vs Taxable Components of Super Explained

The tax free component is always paid out tax free.

The taxable component may be taxed when paid to someone who is not considered a tax dependant under Australian tax law.

Adult children often fall into this category.

In most super funds the taxable component is the taxed element.

This means adult children may pay:

15 percent tax plus the Medicare levy (currently 2 percent)

In other words roughly 17 percent tax.

If the super balance is large, that tax can be significant.

A recontribution strategy increases the tax free component of super and reduces the taxable component.

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Important Note About Spouses

It is important to understand that super paid to a spouse is generally tax free.

If one member of a couple dies, the surviving spouse can usually receive the super balance without tax.

Because of this, recontribution strategies are often more relevant for second death planning.

The tax issue typically arises when both spouses have passed away and the remaining super is paid to adult children or other non dependant beneficiaries.

For many couples this means the strategy may only matter if a meaningful balance is likely to remain at that point.

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How the Recontribution Strategy Works

At a high level the strategy follows four steps.

Step 1

Withdraw a lump sum from super.

You must have met a condition of release to access the money.

Common examples include:

• retiring after reaching preservation age
• leaving a job after age 60
• turning age 65

Step 2

The money is paid to you personally.

The funds must leave the super system and come under your control.

The transaction cannot simply occur as an internal transfer.

Step 3

You contribute the money back into super.

This contribution is normally treated as a non concessional contribution.

You can read the ATO explanation of concessional and non concessional contributions Here

Step 4

The tax free component increases.

Because the recontributed amount is after tax money, it forms part of the tax free component of your super balance.

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The Proportioning Rule

When money is withdrawn from super, it must come out in the same proportion of taxable and tax free components that exist in the account.

For example, if your super balance is:

80 percent taxable
20 percent tax free

Any withdrawal must follow the same proportions.

This rule means you cannot simply withdraw only the taxable component.

The recontribution strategy gradually changes these proportions over time.

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Example of the Strategy

A simplified example helps illustrate the concept.

Starting super balance

$900,000 total super

Taxable component
$600,000

Tax free component
$300,000

The member withdraws $360,000 and contributes the same amount back into super as a non concessional contribution.

The recontributed amount becomes tax free component.

Over time this increases the proportion of the account that is tax free.

You can see a more detailed walkthrough here:
Recontribution Strategy Example (How the Numbers Work)

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Contribution Caps and the Bring Forward Rule

Recontributions usually count toward the non concessional contribution cap.

The current cap is $120,000 per year.

However some people may contribute more using the bring forward rule.

This rule allows up to three years of contributions to be used in one year.

For example:

Standard cap
$120,000 per year

Two years using bring forward
$240,000

Three years using bring forward
$360,000

Your eligibility depends on your total super balance at the previous 30 June.

If your total super balance is $2 million or more, you generally cannot make non concessional contributions that year.

Contribution caps are indexed periodically so these limits may change in future years.

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What Happens If You Withdraw From Pension Phase

If you withdraw money from an account based pension, the recontributed amount will normally return to accumulation phase.

Investment earnings in accumulation phase may be taxed at up to 15 percent.

Some people address this by:

• starting a new pension with the recontributed amount
• refreshing the existing pension

A pension refresh generally involves commuting the pension, making the recontribution, and then starting a new pension.

The taxable and tax free proportions are then fixed when the new pension begins.

This is one reason recontribution strategies are often implemented gradually over several years.

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Using Separate Pension Accounts

Some retirees isolate recontributed amounts in a separate super account or pension.

This approach is common in SMSFs but can also occur in other super funds.

For example a person may end up with two pensions.

One pension containing a larger taxable component.

Another pension containing 100 percent tax free component.

This allows retirees to draw income primarily from the taxable pension while preserving the tax free pension for beneficiaries.

Over time this may reduce the taxable portion of the remaining super balance.

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Who Can Use a Recontribution Strategy?

To implement this strategy you must be able to:

Withdraw money from super
Contribute money back into super

In practice this usually means people are between age 60 and 74 and have met a condition of release.

After age 75 the rules become more restrictive although downsizer contributions may still be possible.

You can read more here:
Recontribution Strategy Age Limits (Under 60 Over 65 Over 75)

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When the Strategy Might Make Sense

Common situations include:

Estate planning for adult children
Managing super balances between spouses
Planning for Age Pension means testing in some situations

You can read more about death benefits tax here:
How Much Tax Do Adult Children Pay on Super

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When the Strategy May Not Matter

A recontribution strategy is often discussed in estate planning conversations.

But it is not always necessary.

If you expect to spend most of your super during retirement, the balance remaining at death may be small.

In that situation the tax impact on beneficiaries may not be significant.

It is also important to remember that super paid to a spouse is generally tax free.

For many couples the surviving spouse receives the super balance first.

The tax issue only arises later when the remaining assets eventually pass to adult children.

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FAQs

What is a recontribution strategy?

A recontribution strategy involves withdrawing money from super and contributing it back as a non concessional contribution. This increases the tax free component of super and can reduce tax on death benefits paid to adult children.

Does a recontribution strategy reduce death benefits tax?

It can. Increasing the tax free component of super may reduce the taxable component paid to beneficiaries who are not tax dependants such as adult children.

What are the contribution limits for a recontribution strategy?

Recontributions usually count as non concessional contributions. The standard cap is $120,000 per year although some people may contribute up to $360,000 using the bring forward rule depending on their age and total super balance.

Can you do a recontribution strategy after age 65?

Yes. People aged 65 to 74 can generally make non concessional contributions provided their total super balance allows it. After age 75 contributions are usually restricted except for downsizer contributions.

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If you want to test the strategy with your own numbers you can use my
Recontribution Strategy Calculator.