Don’t forget to transfer EPF after leaving job

April 17, 2021 Finance Talk Valli Sarvani No comments

It is mandatory to open Employees’ Provident Fund (EPF) accounts for employees by the employer if the organization has 20 or more employees. EPF is a retirement benefit scheme. Both the employee and employer shall contribute to this account.

All EPF members will be given a UAN (Universal Account Number). If you leave the present job or switch to a new job, don’t forget to transfer your EPF account or balance.

There are certain rules of EPF. Know them beforehand to utilize the funds in this account.

Many employees who retired before their superannuation or before they turn 58 years are in a notion that they should not use the EPF balance to get tax-free interest. But, this is not correct.

There are certain cases where your EPF account can become inoperative. Here are the instances:

If an EPF account holder does not make any claim for settlement of the account within 36 months of quitting the job
If the EPF account holder passes away or migrates abroad permanently
If a salaried employee retires after 55 years but does not withdraw money from the account within three years after the retirement

If you want to use the balance in the EPF account:

Withdraw the amount within 36 months of retirement or quitting of the job.
Transfer your existing EPF account to the next company or organization if you switch to a new job.
Make sure that all your PF accounts are linked to a single UAN number where you have multiple accounts.

You can earn interest on the balance in the EPF account even after leaving the job till you attain 58 years. However, the interest is taxable if you withdraw the money before the completion of five years of continuous service as per the income tax rules. But note that if an employee even works at different organizations in the initial five years, the service is considered as continuous when you transfer the EPF account to the next organization whenever you switch to a new job.

Image by Aniket Sadekar from Pixahive (Free for commercial use / CC0 Public Domain)