Two-Pot Retirement Withdrawals and Tax in South Africa

South Africa’s two-pot retirement system lets members access a savings component while preserving a retirement component for later. The tax treatment surprises people: savings withdrawals are generally taxed at your marginal income tax rate, not under the retirement lump-sum tables.

Informational only. Fund rules, minima, and allowed frequency can vary — confirm with your fund administrator and SARS.

The Savings Component vs Retirement Component

In broad terms (effective from September 2024 onward for most funds):

• A portion of contributions feeds a savings pot that may be accessible before retirement (subject to fund and legal limits)
• A larger portion feeds a retirement pot designed for later-life income
• A vested component reflects amounts seeded or carried from the pre-two-pot era

This post focuses on savings-component withdrawals during membership — the hot Filing Season issue.

How the Withdrawal Is Taxed

Per SARS Budget 2026 FAQ themes:

• Taxed at the member’s marginal rate
• Not taxed on the retirement lump-sum tax tables
• The fund typically applies for a tax directive; PAYE-style withholding is an estimate
• If you have other income, the directive may under-withhold — the shortfall appears on your annual assessment

IRP5 Source Code 3926

Savings-component withdrawals commonly appear with IRP5 source code 3926. When you read your certificate or auto-assessment, match this amount to what you actually withdrew and what tax was withheld.

See our How to Read Your IRP5 guide.

Directives vs Final Assessment

1. Fund pays you net of directive tax.
2. SARS assesses your full-year taxable income later.
3. If withholding was too low, you owe the balance by the date on your notice (Budget FAQ text has referenced payment timing such as around 20 October 2026 for certain shortfall scenarios — check your own assessment notice).

Filing Season 2026 auto-assessments are officially issued 1–12 July 2026 on the SARS Filing Season page. Some FAQ narrative also mentions assessment timing around mid/late July for specific cases. Use your eFiling notice date as authoritative for your refund or debt.

Practical Checks for Tax Season 2026

• List every two-pot withdrawal in the YOA ending 28 February 2026
• Locate code 3926 (and related tax) on IRP5 / fund documents
• Compare directive tax to what a full marginal calculation would suggest
• Do not ignore an auto-assessment that includes 3926 income but feels “already taxed in full”
• Keep fund statements five years

Common Mistakes

• Assuming the withdrawal is “tax-free because it came from retirement savings”
• Confusing savings-pot tax with lump-sum withdrawal tables
• Taking a withdrawal then being surprised by an assessment top-up
• Forgetting multiple income streams when estimating the marginal rate

How Refund AI Can Help

Refund AI can help you explore two-pot tax themes and what to verify on IRP5/assessments. It cannot obtain directives or pay SARS for you. Confirm with your fund and a practitioner for large withdrawals.

Conclusion

Treat two-pot savings withdrawals as ordinary taxable income at your marginal rate, tracked on 3926, with directive withholding only an estimate. Review Season 2026 assessments carefully so a cash withdrawal does not become an October surprise.

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Key Citations:

• SARS Budget 2026 FAQs — two-pot withdrawal tax
• SARS Filing Season 2026 dates
• IRP5 source code materials (3926)
• Fund administrator two-pot member guides