Employees’ Provident Fund or EPF is a conventional manner to save up for retirement. It helps build a substantial retirement corpus by allowing employees to save money. Sometimes, employees may look for a change in jobs to avail better opportunities. In such cases, it would help to transfer your EPF account and not withdraw it until you retire.
If you are an EPF member, you’ll be provided with an EPF Passbook, and you can quickly get an EPF balance check online. You will get virtual access to your PF account through which you can perform tasks like fund withdrawal or doing an EPF balance check. All the activities related to your EPF account that you conduct are usually recorded. You can efficiently track them with your EPF Passbook.
Why Should You Transfer Your EPF Account?
If you change your job, you’ll be assigned a new EPFO member ID by your new employer. Thus, your employer will create a new account for you. As many employers contribute to EPF on your behalf, you will gain access to as many member IDs. Thus, here are some reasons why you shouldn’t withdraw your EPF account and instead transfer it.
- Two Separate EPF Accounts Can Be Cumbersome
You’ll end up with two independent EPF accounts if you don’t transfer your EPF account. In this situation, when you try to get an EPF balance check and withdraw a set amount from your account, the amount will only be withdrawn from the account of the employer you currently work for. You’ll need to visit your current employer, which could be lengthy and tedious.
If you transfer your EPF account and merge all of them, you can conveniently get your EPF balance check. To your last employer, you must submit one withdrawal request for all the EPF accounts. By transferring your EPF account, you can always track your financial activities through one EPF passbook.
- You Can Get Access to Retirement Benefits
As a retirement fund, EPF provides post-retirement financial security. If you withdraw your EPF account while switching jobs, you can lose access to many retirement funds. Completing ten years of contribution to your EPF account allows you access to retirement funds. Thus, if you have contributed to your PF account for around ten years, you are immediately eligible for pension benefits. You’ll be able to access your track record with the help of your EPF passbook.
However, suppose you were to withdraw your account before completing a decade of contribution. In that case, you won’t be eligible for a pension. Not only will you lose out on much money, but also on a protected future. You have to opt for riskier investments if you want to make up for this loss, which might incur extra costs.
- You’ll be Exempted From Taxes on Funds
Apart from certain exceptions, the EPF funds are generally tax-free. You can save tax and get many other tax benefits under Section 80C on Self Contribution. Before five years of contribution, if you withdraw your EPF account, you’ll be subject to taxation. You won’t get any tax benefits or tax exemptions. In such situations, the interest accumulated on your contribution to your EPF account can be taxed as other income.
Taxation on your EPF funds will result in the unwanted loss of money and will considerably reduce your savings. If you transfer your EPF account, you can easily save up on the tax. You can also avail various tax benefits by transferring your EPF accounts. You’ll be able to keep track of the benefits received by getting an EPF balance check and your EPF passbook.
Therefore, you should always opt for transferring your EPF account. It is best not to withdraw your EPF account before retirement. This will help you gain access to pension and tax benefits, among many other benefits. You can always check the status of your EPF account transfer through your EPF passbook. By transferring your EPF account, you’ll also be able to do keep track of your funds by doing an EPF balance check.
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