Two-Pot Withdrawal Tax South Africa: Complete 2026 Guide
How much tax SARS deducts, how to calculate your net payout, and what to check before you apply.
A two-pot withdrawal is taxed at your marginal income tax rate — SARS adds the withdrawal to your annual salary and taxes the total. On a R50,000 withdrawal with a R520,000 salary (36% bracket), SARS deducts R18,000 in tax — you receive R32,000 net. With a R420,000 salary (31% bracket), the same withdrawal costs only R15,500 in tax, leaving R34,500 net. Your fund deducts the tax upfront via a SARS tax directive. Use our Retirement Tax Calculator to calculate your exact net payout before applying.
What Is a Two-Pot Withdrawal and How Does It Work?
The two-pot retirement system fundamentally changed how South Africans access retirement savings. Before 1 September 2024, the only way to get money out of your retirement fund early was to resign from your job — a drastic step that left most people worse off. The new system creates a legal emergency fund inside your existing retirement account.
Every rand you contribute after 1 September 2024 is automatically split: one-third flows into your savings pot (accessible), and two-thirds flow into your retirement pot (locked until retirement). Existing savings — everything before that date — sit in a vested pot under the old rules.
The launch on 1 September 2024 also included a one-time seed transfer: up to 10% of each member’s vested pot — capped at R30,000 — was moved into the savings pot as an immediate starting balance. This gave existing fund members instant access without waiting for new contributions to accumulate.
How Is a Two-Pot Withdrawal Taxed by SARS?
Many South Africans assume the two-pot withdrawal is tax-free or taxed at a low flat rate. Both assumptions are wrong and costly. Every rand you withdraw from your savings pot is added to your total taxable income for that tax year and taxed at your marginal rate — the rate that applies to your highest band of income.
How the SARS Tax Directive Process Works
You do not deal directly with SARS when making a two-pot withdrawal. Your fund administrator handles the tax process:
Submit withdrawal request
Log into your fund administrator’s portal (Old Mutual, Sanlam, Allan Gray, Liberty, Momentum, etc.) and submit your withdrawal request with your banking details.
Fund applies to SARS for a tax directive
SARS calculates the tax at your current marginal rate based on your income profile and issues a directive — typically within 2–5 business days. Since 2026, SARS also delivers your ITA34 Notice of Assessment via WhatsApp.
Tax is deducted upfront
Your fund deducts the full tax amount specified in the directive before transferring money to your bank account. You receive the net payout — there is no bill to pay later, unless your marginal rate changes before year-end.
Withdrawal reported on IRP5
Your fund reports the gross withdrawal and tax deducted to SARS under source code 3926 on your IRP5/IT3(a) certificate. This flows automatically into your annual ITR12 tax return assessment.
Unlike the lump sum retirement tax table (which gives a R550,000 lifetime exemption for retirement withdrawals), savings pot withdrawals are taxed at the full marginal rate from rand one. This distinction is critical — use our Income Tax Calculator to estimate your marginal rate before applying.
How Much Tax Will You Pay on a Two-Pot Withdrawal?
2026/27 South Africa Tax Brackets (SARS Official)
| Annual Taxable Income (2026/27) | Marginal Rate | Base Tax |
|---|---|---|
| R0 – R237,100 | 18% | 18% of income |
| R237,101 – R370,500 | 26% | R42,678 + 26% above R237,100 |
| R370,501 – R512,800 | 31% | R77,362 + 31% above R370,500 |
| R512,801 – R673,000 | 36% | R121,475 + 36% above R512,800 |
| R673,001 – R857,900 | 39% | R179,147 + 39% above R673,000 |
| R857,901+ | 45% | R251,258 + 45% above R857,900 |
Source: SARS Budget 2026 Tax Tables (effective 1 March 2026). Primary rebate: R17,820 (under 65). Secondary rebate (65–74): R9,765. Tertiary rebate (75+): R3,249. Tax-free threshold: R99,000 (under 65).
Net Payout Table: What You Actually Receive After SARS Tax
Use this table to find your after-tax payout. Match your annual salary (row) with your planned withdrawal amount (column). The figure shown is your approximate net payout after SARS deduction.
| Annual Salary | Withdraw R10,000 | Withdraw R30,000 | Withdraw R50,000 | Withdraw R100,000 |
|---|---|---|---|---|
| R150,000 18% | R8,200 | R24,600 | R41,000 | R81,000 |
| R280,000 26% | R7,400 | R22,200 | R37,000 | R73,500 |
| R400,000 31% | R6,900 | R20,700 | R34,500 | R69,000 |
| R520,000 36% | R6,400 | R19,200 | R32,000 | R64,000 |
| R700,000 39% | R6,100 | R18,300 | R30,500 | R61,000 |
| R950,000 45% | R5,500 | R16,500 | R27,500 | R55,000 |
Approximate figures based on 2026/27 marginal rates. Does not account for medical tax credits or other deductions. Use our Income Tax Calculator for a precise calculation.
Worked Example: Step-by-Step Calculation
| Step | Detail | Amount |
|---|---|---|
| Annual salary | Gross taxable income before withdrawal | R420,000 |
| Planned withdrawal | From savings pot | R50,000 |
| Total taxable income | R420,000 + R50,000 | R470,000 |
| Applicable bracket | R370,501 – R512,800 = 31% marginal rate | 31% |
| Tax on withdrawal | 31% × R50,000 | R15,500 |
| Net payout received | R50,000 − R15,500 | R34,500 |
For precise figures tailored to your income, use our free Retirement Tax Calculator or our Income Tax Calculator.
What Are the Three Pots and How Are They Different?
The Savings Pot in Detail
One-third of every contribution you make after 1 September 2024 flows automatically into the savings pot. You can make one withdrawal per tax year, per fund. The minimum is R2,000. There is no maximum — you can take the entire savings pot balance in a single withdrawal. However, taking everything means losing all compound growth on those savings for the period they would have remained invested.
The Retirement Pot in Detail
Two-thirds of every contribution is locked in the retirement pot until you reach retirement age, become totally and permanently disabled, or formally emigrate from South Africa. At retirement, you must use the retirement pot to purchase a life or living annuity — it cannot be taken as a tax-free lump sum under the retirement lump sum table. See our guide to lump sum retirement benefits for how vested pot savings are taxed at retirement.
The Vested Pot and the R30,000 Seed
On 1 September 2024, each fund member received a one-time seed transfer: up to 10% of their vested pot balance, capped at R30,000, was moved into the new savings pot. For many members, this was the first amount available for a two-pot withdrawal. Remaining vested pot savings stay under pre-2024 rules and are only accessible at resignation, retirement, or in specific circumstances.
Who Qualifies for a Two-Pot Savings Pot Withdrawal?
| Fund Type | Two-Pot Applies? | Notes |
|---|---|---|
| Employer Pension Fund | ✓ Yes | Full two-pot rules apply since 1 Sep 2024 |
| Employer Provident Fund | ✓ Yes | Full two-pot rules apply since 1 Sep 2024 |
| Retirement Annuity (RA) | ✓ Yes | Old Mutual, Sanlam, Allan Gray, Liberty, Momentum, Ninety One |
| Pension Preservation Fund | ✓ Yes | Seeding applied; new rules active |
| Provident Preservation Fund | ✓ Yes | Seeding applied; new rules active |
| GEPF (Govt Employees) | ⚠ Excluded | Temporarily excluded — confirm with HR / GEPF |
| Foreign Retirement Funds | ✗ No | See SARS Foreign Retirement Funds guide |
To qualify for a withdrawal, your savings pot balance must be at least R2,000. Members who joined their fund after 1 September 2024 accumulate their savings pot from new contributions only — the R30,000 seed did not apply to them. If your savings pot is below R2,000, you must wait until the next contribution cycle.
How Do You Apply for a Two-Pot Withdrawal Step by Step?
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Log in to your fund administrator’s portal
Visit the website or mobile app of your retirement fund provider — Old Mutual, Sanlam, Allan Gray, Momentum, Liberty, Ninety One, or your employer’s fund administrator. Log in with your membership credentials. If you do not know your provider, check your payslip or ask your HR department.
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Check your savings pot balance
Navigate to the two-pot dashboard or retirement summary to see your current savings pot balance. Confirm it is at least R2,000. Also check if you have already made a withdrawal this tax year (1 March – 28/29 February) — you are only allowed one per year per fund.
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Calculate your after-tax net amount first
Use our Retirement Tax Calculator or the bracket table above to estimate how much SARS will deduct. Decide your withdrawal amount based on the net payout you actually need, not the gross amount. Many people request R30,000 expecting R30,000 and receive R20,700 after tax.
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Submit your withdrawal request
Complete the online withdrawal form. Enter your planned withdrawal amount (minimum R2,000), confirm your bank account details, and provide your ID number and any supporting documents the fund requires. Submit and save your reference number.
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SARS issues a tax directive
Your fund administrator submits the withdrawal to SARS, which calculates the tax at your marginal rate and issues a tax directive — typically within 2–5 business days. You do not need to contact SARS directly. In 2026, SARS can deliver your ITA34 Notice of Assessment via WhatsApp for faster notification.
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Receive your net payout
Your fund deducts the SARS-directed tax amount and transfers the net payout to your bank account. The full process — from application to payment — takes approximately 14–21 business days for most major providers. Some funds are faster; check your provider’s published timelines.
What Are the Most Costly Two-Pot Withdrawal Mistakes?
A R30,000 withdrawal at a 31% marginal rate delivers R20,700 — not R30,000. Always calculate your net payout using the tables above or our Income Tax Calculator before deciding your withdrawal amount.
The savings pot is a legal emergency fund — not a bonus. A R30,000 withdrawal at age 35 could cost you more than R300,000 at retirement due to lost compound growth. Once withdrawn, the pot cannot be accessed again until the next tax year.
If you receive a bonus after your withdrawal, both amounts combine in your total taxable income. A R300,000 salary + R50,000 bonus + R50,000 withdrawal = R400,000 total — potentially pushing part of your withdrawal from 26% into the 31% bracket. SARS will collect the difference at assessment.
Many members believe the two-pot system gives access to their full retirement savings. Only the savings pot (1/3 of new contributions since Sep 2024, plus the seed) is accessible. Old savings in the vested pot and the entire retirement pot are not accessible through a two-pot withdrawal.
If you withdraw in March (start of tax year) before your annual bonus is confirmed, the directive may underestimate your marginal rate. Withdrawing later in the tax year — once you know your full income picture — reduces the risk of a shortfall at annual assessment.
Your two-pot withdrawal appears on your IRP5 under source code 3926 and must be reconciled in your annual ITR12 return. If your fund reports incorrectly, or if your marginal rate changed after the directive, you may face a SARS penalty for underpayment. See our SARS Tax Season 2026 guide for return deadlines.
How Does a Two-Pot Withdrawal Affect Your Annual SARS Tax Return?
Every savings pot withdrawal is reported to SARS by your fund administrator via an IRP5 or IT3(a) certificate. When you submit your annual income tax return (ITR12) for the 2025/26 tax year, SARS automatically includes this withdrawal in your total taxable income for the assessment.
| Timeline Item | Date / Detail |
|---|---|
| Tax year covered | 1 March 2025 – 28 February 2026 |
| IRP5 with source code 3926 issued | By your fund, after each withdrawal |
| SARS auto-assessments open | 1 July 2026 |
| eFiling season opens | 13 July 2026 |
| Non-provisional taxpayer deadline | 23 October 2026 |
| Two-pot shortfall payment deadline | 20 October 2026 |
| Provisional taxpayer deadline | 22 January 2027 |
Source code 3926 on your IRP5 identifies the two-pot savings pot withdrawal. If SARS calculates that you owe additional tax (because your marginal rate was higher than the directive assumed), this shortfall appears in your auto-assessment or ITR12 assessment. You must pay any shortfall by 20 October 2026 to avoid interest at 10.25% per annum.
For full details on filing your 2026 tax return — including how to reconcile a two-pot withdrawal on your ITR12 — see our complete SARS Tax Season 2026 guide.
How Long Does a Two-Pot Withdrawal Take in 2026?
Two-Pot vs Old System — What Changed?
| Feature | Old System (pre-Sep 2024) | Two-Pot System (Sep 2024+) |
|---|---|---|
| Early access | Only by resigning | Savings pot anytime |
| Must resign to access cash | Yes | No — stay employed |
| Built-in emergency fund | None | Savings pot (1/3) |
| Tax on early withdrawal | Lump sum table (starts 0%) | Marginal rate (18%–45%) |
| Withdrawals per tax year | Once (at resignation) | Once per tax year per fund |
| Minimum withdrawal | No minimum | R2,000 |
| Retirement pot locked? | N/A | Yes — until retirement |
While the two-pot system provides more flexibility than the old system, it comes with significantly higher marginal tax rates on withdrawals compared to the old retirement lump sum table (which offered a R550,000 lifetime exemption). The old system was less flexible but more tax-efficient for early access. Understanding this trade-off is critical before applying.
For information on how your vested pot savings are taxed differently at retirement, see our Retirement Fund Lump Sum Tax guide.
Frequently Asked Questions About Two-Pot Withdrawals
Ready to Calculate Your Two-Pot Withdrawal Tax?
Use our free South African tax calculators to find your exact marginal rate, estimate your net payout, and check your refund status before applying.
