Any amounts you withdraw from your savings pot (savings withdrawal benefits) while you are still a member of the fund and in employment will be added to your taxable income and taxed at your marginal tax rate.
You will be asked to declare your taxable income for the tax year in which you make the withdrawal and your retirement fund administrator will get guidance from the South African Revenue Service (SARS) on the marginal tax rate to apply to the amount you want to withdraw. The tax owing will be withheld by the fund administrator and paid to SARS.
The tax applied at your marginal rate will effectively cancel out the tax deduction you enjoyed when you contributed to your retirement fund.
You will not enjoy any tax-free withdrawals from the savings pot under the two-pot system unless you save money in that pot until retirement. 
At retirement, the first R550 000 of any cash lump sum you withdraw from the savings pot and one third of your savings before 1 September 2024 (vested pot) may be tax free. This is a significant benefit that you may lose or erode if you constantly raid your savings pot or make withdrawals from your vested pot when you change jobs.
This tax-free benefit is reduced by any withdrawals you have taken from your fund before the introduction of the two-pot system or that you have take from your vested pot when changing jobs after the 1 September 2024.
You should also remember that your savings in your retirement fund grow tax free.
If you withdraw money from your savings pot, you will not only pay tax on the withdrawal and potentially lose or reduce your tax-free benefit at retirement, but you will also lose out on tax-free growth on your savings.
Savings in your retirement fund grow free of tax on the interest income, dividends and capital gains.
Remember if you withdraw from your vested pot when you leave your job and your retirement fund, the tax on your withdrawal will be in line with tax rates in retirement fund withdrawal tax table.
This means you will enjoy a small tax-free amount before tax applies at rates of 18 percent, 27 percent and 36 percent.
This table applies to withdrawals over your life time – if you have already taken a withdrawal before 1 September 2024 or you take one from your vested savings after 1 September 2024, that withdrawal will be added to any subsequent withdrawal from your vested savings before the table is applied. This means you only get the tax-free amount once in your life time and higher tax rates may apply as you withdraw more over your lifetime.
