How​‍​‌‍​‍‌​‍​‌‍​‍‌ to Withdraw Money from NPS

This question might come to your mind if you have been saving in the National Pension System (NPS), "How do I withdraw money from my NPS account?" It is very important to know the withdrawal process if it is a milestone like retirement or just an urgent need so that your money can come to you without any hassle. This manual presents the breakdown of the procedure in the form of friendly and easily understandable steps just like a talk with a friendly helper.

What is NPS Withdrawal?

NPS withdrawal is the action of taking money out of the fund set aside for your retirement. It is unlike a normal savings account, where you can withdraw money at any time, the NPS has regulations to ensure that your retirement savings will benefit you in the future. The types of withdrawals vary according to the condition of the person: partial, early, at retirement, or in case of sad events like death.

Types of NPS Withdrawments You Should Know

• Partial Withdrawal: What if you had some money set aside for your wedding, education, medical emergencies, or making your dream home come true? You are allowed to take out a portion of the money, but only after 3 years with NPS and only for some certain purposes. It is limited to 25% of your contributions and can be done only 3 times throughout your whole NPS journey.
• Premature Withdrawal: If you decide to quit NPS before retirement (before the age of 60) you can get up to 20% of your total savings as a withdrawal if you've been with NPS for at least 10 years. The rest is used to purchase an annuity, hence, providing some income to your future.
• Withdrawal at Retirement: The big moment is here! At the age of 60, a person is allowed to take back up to 60% of the entire corpus as a one-time payment - the part is tax-exempt! The remaining 40% has to be converted to an annuity which gives a fixed pension every month.

• Nominee Withdrawal: If a subscriber dies, his/her nominee can withdraw the entire amount without any restrictions, in a very unfortunate way.

   

How to Withdraw Money from NPS Online (Step-by-Step)

1. Access the Real Portal: Go to the NSDL CRA website or Protean eGov Technologies portal. PRAN (Permanent Retirement Account Number) and password will be required.
2. Select Withdrawal Option: In the transaction section, choose the withdrawal type that you want - partial, premature, or retirement.
3. Confirm Info & Obtain Forms: Verify your information, complete the withdrawal form online, and get it from the local office.
4. Attach Support Docs: Along with the form, you need to upload or send Aadhaar and PAN copies.
5. Sending the Form: Doing it online, or dropping it at your nearest nodal office or PoP (Point of Presence) are the ways to submitting the form.
6. The waiting time: The time frame for the withdrawal from Tier 1 accounts is usually within a period of 10 days, and the money is directly credited to the registered bank account electronically.

Offline Withdrawal: How It Works

• You can also opt for the offline method if you want a face-to-face transaction or if internet connectivity is an issue in your area.
• Go to the NSDL website and download the proper withdrawal form (Form 101 for lump sum, Form 601 for partial withdrawal).
• Fill in the details correctly, and attach your Aadhaar, PAN, and a recently clicked photograph.
• Submit it at your Pop or nodal offic.
• Make sure to take a copy for your references and wait for the money to be credited to your bank.

Important Things to Remember

• Updating your nominee details should always be a priority. This makes sure that your dear ones do not face any difficulties when accessing the money if the need arises.
• If you apply for a partial withdrawal, be honest with yourself about the reason. The only places for which it is permitted are specific ones.
• The regulations and tax benefits for NPS withdrawal are only applicable to Tier 1 accounts. Tier 2 accounts are more flexible but have no tax advantages.
• Withdrawals may have a time limit attached to them: Partial withdrawal is possible after 3 years, premature after 10 years and retirement at 60 years.
• Be prepared with all your papers and double-check the form details to ensure that there are no delays.

Tax Implications on NPS Withdrawal

• The partial withdrawals (up to 25%) are free of tax.
• Also, the lump sum retirement withdrawal (up to 60% of corpus) is tax-exempt.
• The rest of the sum that is being used for the purchase of an annuity should be accounted for as pension income and be taxed accordingly.
•  

Conclusion

NPS is your retirement friend—think of it in that way. It is there to support you later in life. Planning your withdrawals wisely will help you to not run out of money earlier than expected. If you happen to be in doubt, get some assistance from your PoP or financial advisor.

Don’t forget that withdrawing money from NPS is not complicated after you have figured out the steps and gathered your documents. Take it slow, follow the steps and you will have your money with you ​‍​‌‍​‍‌​‍​‌‍​‍‌shortly.