Should I wait and see what happens with the NISA change proposals or open a Tsumitate NISA now?

[Block]

Hello,

I want to open a Tsumitate NISA but I heard about the NISA change proposals.

So, I want to know should I wait and see what happens or open a Tsumitate NISA now?

Thank you.

[Tkydon]

You have to / have the opportunity to make a new application every year, so if you want to do something for 2022, you need to do it now.

If you want to do something for 2023, you should to do it under the current system within 2203.

Even if implemented in 2023 the earliest change would be from Jan 2024...

You can change to the new system for 2024.

[Block]

Thank you for your reply.

I understand. I will go ahead and apply.

[AussiePete]

Apologies for hijacking this thread, but I have a slightly similar question.

I received an email from Rakuten at 10:30pm on New Year's Eve, telling me that my NISA application had been approved. That did not leave me a great deal of time to do anything during 2022, so I will be starting fresh from 2023.

I would also like to open accounts for my two kids, but it seems that Junior NISA will end at the end of this year (to be replaced by the new system?). Therefore, is it worth opening new accounts for the kids this year? Or can I just put everything under my name for now, and then transfer some of the funds to my kids' accounts when the new system is up and running in 2024?

I know the specifics of the new system are not clear yet, so perhaps a better question is whether such transfers are possible under the current system? (If so, I will take a risk and assume that the new system will be the same)

[TokyoBoglehead]

Apologies for hijacking this thread, but I have a slightly similar question.

I received an email from Rakuten at 10:30pm on New Year's Eve, telling me that my NISA application had been approved. That did not leave me a great deal of time to do anything during 2022, so I will be starting fresh from 2023.

I would also like to open accounts for my two kids, but it seems that Junior NISA will end at the end of this year (to be replaced by the new system?). Therefore, is it worth opening new accounts for the kids this year? Or can I just put everything under my name for now, and then transfer some of the funds to my kids' accounts when the new system is up and running in 2024?

I know the specifics of the new system are not clear yet, so perhaps a better question is whether such transfers are possible under the current system? (If so, I will take a risk and assume that the new system will be the same)

The old and new system are completley separate.

There is NO new Child NISA. So 2023 is the absolute last chance to use that 80 man allowance per child.

2023 is your last chance to use an 40 man tsumitate or 120 man regular Nisa.
...................

In 2024 the system will be 18+, 18 million yen lifetime pot, 3.6 million a year. (1.2 Index, 2.4 anything).

..................

Basically max out all you can in 2023, from 2024 onwards a new system takes it place. All old investments continue on as normal. Use it, or lose it.

[sutebayashi]

If you imagine 800K tax free investment per kid until they turn 18 would be useful for your family, I’d go ahead and open the junior nisa(s) even if just for this one year.

Indeed I have junior nisa for each of my kids and plan to max them out this year. (My personal nisa already being maxed out)

[AussiePete]

Thank you both for your comments. I had not obviously not properly looked into the conditions of the current Junior Nisa and the age limit on the new Nisa next year.

For a bit more background, my eldest will be 18 in less than five years, while my younger child is more than five years away from turning 18. Given my current projected budget for the year, I do not see myself being able to contribute more than 1.2 million this year.

On the one hand, to maximise the tax benefit over the long term, it would seem best to put 400K into the 20-year tsumitate in my own name, and then 800K in my younger child's name. On a pure numbers basis, my understanding is correct there, right?

On the other hand, having separate accounts for each of them and getting my eldest child actively involved in the process might be a learning experience that is more valuable than the tax benefit.

Straying slightly off topic, until now I have actively been using furusato nozei, as the ~30% return on paying tax early seemed like a good deal. But the novelty of receiving food packages from towns we will likely never visit is starting to wear off, plus I have always felt a little uneasy about depriving my own city of funds that could be used in the schools etc. So maybe I will give that up this year in order to put more into the Junior Nisa.

[RetireJapan]

Thank you both for your comments. I had not obviously not properly looked into the conditions of the current Junior Nisa and the age limit on the new Nisa next year.

One benefit of opening a Junior NISA this year is that the child will also get a child taxable broker account. I'm not really aware of any other way of doing this. They can then (presumably) use that account until they turn 18.

[adamu]

Straying slightly off topic

I'll take the bait

maybe I will give that up this year in order to put more into the Junior Nisa.

Note that the amount of tax you pay doesn't change, whether you do Furusato Nozei or not (besides the 2000 yen fee).

~30% return

If you do it on Rakuten and get points during a sale, it's more like 40-50%.

novelty of receiving food packages from towns we will likely never visit is starting to wear off

You can basically get anything with Furusato Nozei, it's a good way to get things you were going to buy anyway for free.

I have always felt a little uneasy about depriving my own city of funds

Don't have a good answer for that one.

[TokyoBoglehead]

I have always felt a little uneasy about depriving my own city of funds

Don't have a good answer for that one.

If you live in a large city/ward with a healthy tax base and you're supporting a city or town that needs it, it's very morally justifiable.

If you live somewhere that needs your taxes and your items are coming from a wealthier district, I think it's highly questionable.