Switching from tsumitate NISA and if it's worth it

[adamu]

This is point 2 discussed here https://retirewiki.jp/wiki/NISA#Rollover

I think it's worth rolling it over if you expect the price to recover. That way you can get the recovery of the gains tax free. If you sell it, you lock in the loss, and if you transfer it to a taxable account, you will have to pay CGT on the recovery.

[Bushiman]

This is point 2 discussed here https://retirewiki.jp/wiki/NISA#Rollover

I think it's worth rolling it over if you expect the price to recover. That way you can get the recovery of the gains tax free. If you sell it, you lock in the loss, and if you transfer it to a taxable account, you will have to pay CGT on the recovery.

This is what I was wondering...
I only invest in our favourite eMaxis Slim All-Country fund in my NISA, so I'd like to think the global economy would recover after a prolonged bear market or some other financial crash...
Do I rollover, like you say adamu, and add more funds and allow my losses to recover tax free... -But pay tax on the rest of my ¥1.2m budget that I have to put into a taxable account, or, do I not rollover and fill my entire NISA allowance with cheaper during/post crash prices? Would the benefits of tax-free gains in the NISA from post-crash growth outweigh the tax on my losses I'd moved into my taxable account?

Does this question make sense?
It's early, and I haven't quite woken up yet....

[Viralriver]

Lots of good discussion here. I can take the 1.2m hit in January, so I'm definitely considering switching to the lumpsum NISA and then continuing some more passive investment via the 特定口座 monthly. I saw on page 3 that it's possible to switch your following year's NISA type from October, so I assume this is possible now. I took a quick look on Rakuten and it seems the process is quite easy:

(I got to this via Rakuten -> NISA -> 管理・手続き　→　NISA口座区分を変更する button)

So just to reiterate, my 2020 T-NISA and 2021 T-NISA will remain in their respective accounts, and this 2022 NISA will be its own separate thing? I don't need to worry about any rollovers or anything in this case?

Thanks!

[zeroshiki]

Lots of good discussion here. I can take the 1.2m hit in January, so I'm definitely considering switching to the lumpsum NISA and then continuing some more passive investment via the 特定口座 monthly. I saw on page 3 that it's possible to switch your following year's NISA type from October, so I assume this is possible now. I took a quick look on Rakuten and it seems the process is quite easy:

Screen Shot 2021-11-09 at 17.05.27.png

(I got to this via Rakuten -> NISA -> 管理・手続き　→　NISA口座区分を変更する button)

So just to reiterate, my 2020 T-NISA and 2021 T-NISA will remain in their respective accounts, and this 2022 NISA will be its own separate thing? I don't need to worry about any rollovers or anything in this case?

Thanks!

Yes, nothing you do in 2022 will affect your 2020 and 2021 accounts. Since your 20/21 accounts are in T-NISA for 20 years, we don't even know if there's a rollover at this point!

[Viralriver]

Yes, nothing you do in 2022 will affect your 2020 and 2021 accounts. Since your 20/21 accounts are in T-NISA for 20 years, we don't even know if there's a rollover at this point!

Got it, thank you! Actually that makes me think I've misunderstood part of the system all this time. I assumed that the 20 years of tax free starts from day 1 of opening the account, but I guess it's actually 20 years after each individual 'account'? I.e. my T-NISA 2020 will be tax free until end of 2039, T-NISA 2021 will be tax free until 2040, and my lumpsum NISA in 2022 will be tax free until 2026?

[zeroshiki]

Yes, nothing you do in 2022 will affect your 2020 and 2021 accounts. Since your 20/21 accounts are in T-NISA for 20 years, we don't even know if there's a rollover at this point!

Got it, thank you! Actually that makes me think I've misunderstood part of the system all this time. I assumed that the 20 years of tax free starts from day 1 of opening the account, but I guess it's actually 20 years after each individual 'account'? I.e. my T-NISA 2020 will be tax free until end of 2039, T-NISA 2021 will be tax free until 2040, and my lumpsum NISA in 2022 will be tax free until 2026?

Yeah, its a common misconception (since its not intuitive!) and I only learned about the accounts existing as their own thing after reading this site. I was worried about opening the account too early and not getting my money's worth as well.

[Viralriver]

Yeah, its a common misconception (since its not intuitive!) and I only learned about the accounts existing as their own thing after reading this site. I was worried about opening the account too early and not getting my money's worth as well.

Yeah I read that too but it only just occurred to me what the implications were.

I had another question which kind of spans from this - since we are not limited to exactly 5 normal NISA years or 20 T-NISA years since we can mix & match, how does the limit work now?

For example if I have 5 normal NISA years, I assume I can then open 4 T-NISA years afterwards, to get the full 8m contribution? Or is there some other calculation to use for this limit?

[RetireJapan]

I had another question which kind of spans from this - since we are not limited to exactly 5 normal NISA years or 20 T-NISA years since we can mix & match, how does the limit work now?

For example if I have 5 normal NISA years, I assume I can then open 4 T-NISA years afterwards, to get the full 8m contribution? Or is there some other calculation to use for this limit?

Each year is treated separately. Each year you can open a NISA account (ordinary or tsumitate) and that account is then tax-free for five or twenty years. There is no limit as to how many 'year/accounts' you have.

2021 NISA
2022 NISA
2023 NISA

are all independent of each other.

[adamu]

I had another question which kind of spans from this - since we are not limited to exactly 5 normal NISA years or 20 T-NISA years since we can mix & match, how does the limit work now?

To put it another way: Until 2028, every year you get to choose the type of NISA for that year. The type you choose determines what you can invest in that year, the amount of money you can invest that year, and how long those investments remain tax-free.

After 2028, the only known option so far is Tsumitate NISA. But of course things could change by then.

[Viralriver]

This is... really interesting, and more proof I think I didn't understand it as well as I originally thought I did. So there is no overall limit to how many years we can have a NISA account, and no limit to how much we can invest overall? The limits are just yearly limits, but over my lifetime I could have as many year/accounts as I want? I made my original decision thinking I had only 5 years or 20 years of tax-free investments so went with tsumitate, but if this is the case I can't see any benefit for the tsumitate if you are able to place 1.2m JPY in. Am I thinking correctly?