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What Happens When You Don’t Transfer Your PF Account After Changing/Quitting Job?

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Employees' Provident Fund (EPF), also classified as PF, is a retirement fund that ensures financial security and stability after retirement. That being said, there are a few guidelines to follow in order to get the most out of your EPF account. As a result, you must exercise caution while leaving an employment or retiring before the age of 58. Employees sometimes forget to transfer their EPF account after changing their job. They also believe that if they leave their job before the age of 58, their EPF balance will earn tax-free interest. To begin with, salaried employees must have a few points in mind in order to keep their EPF accounts active. The Employees' Provident Fund Organisation (EPFO), has established a few conditions in which a PF account can become inactive which are as follows:

 

What Happens When You Don’t Transfer PF Account After Changing/Quitting Job?

  • In case a salaried employee retires after 55 years of employment and does not withdraw the money from his or her account within three years of retirement.
  • In case the EPF account holder relocates permanently to another country.
  • In case the PF account holder expires.
  • If an EPF account holder does not file an application for account settlement or request for withdrawal within 36 months of leaving a job, the account will be terminated.

What happens to your EPF account after leaving the job?

  • Your EPF account is eligible for interest even though you leave your job, according to the current rules. If no fresh contributions are made, the regulation stands the same. That being said, the advantage is only available up to the age of 58 years of old.
  • It should be remembered that accumulated balance is not taxable until the age of 58 or the termination of the job. That being said, if your EPF account earns interest after you quit your employment, or retire, the interest earned during that time period is subject to taxation.
  • If you withdraw any money from your EPF account before completing five years of "continuous service," interest on your account becomes taxable, according to the Income Tax guidelines.
  • If an employee works for multiple employers in the first five years, service provided to those companies will be deemed "continuous" if the EPF account is transferred to the next employer.

What you need to keep in mind?

  • You must transfer your EPF account to your new employer as soon as possible after transferring your job in order to avail full benefits of your EPF account.
  • Make sure that all your EPF accounts are linked to the same UAN number, in case you have multiple accounts.
  • If you retire before reaching the age of 58, you must withdraw your PF corpus within 36 months of retirement.

Story first published: Friday, April 16, 2021, 16:03 [IST]
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