NISA change proposals

[fiyamaguchi]

It seems like 金融庁 have published updated information, that old NISA investments can’t be rolled over into the new NISA allotment. That means you’d have to sell what you have one time and reinvest that money in the new NISA if that’s what you’d like to do.

It also confirms that new NISA is for over 18s only.

https://www.fsa.go.jp/policy/nisa2/abou ... index.html

[ClearAsMud]

The tax reform outline (税制改正大綱) adopted by the ruling parties on December 16 received cabinet approval on December 23. See this MOF page for updated links to the general description and the complete proposal. Links to these documents will also be found on other government sites. The MOF provides a "lite" version of the key points in English in this two-slide PDF document..

As mentioned by fiyamaguchi, no provision exists for under-18s to open NISA accounts or add to current Junior NISA accounts after 2023: the basic expectation is that upon expiration, legacy Junior NISA accounts will be cashed out or transferred to another account (what kind of account isn't exactly clear, but the Financial Services page cited above by fiyamaguchi says that the nontaxable status of assets will be able to be maintained until the account holder turns 18, so it appears that some sort of procedure will eventually be set up even if new investments won't be allowed).

The total investment limit can be partially replenished by selling assets, but the annual limits cannot be reclaimed in this way, so an investor will have to wait until the following year to make use of the extra investment pool.

Between now and January or February is when the proposals will change in status from the outline (大綱) to proper Diet bills (法案); the Ministry of Finance is responsible for the language of the bill for national taxes, while the Ministry of Internal Affairs and Communications takes responsibility for local taxes. The wording may incorporate adjustments to facilitate implementation and iron out wrinkles. Once submitted, bills normally don’t get changed much, but formal committee approval precedes final submission, and opposition parties can certainly make their opinions known in the open-session Q&As that take place.

The Deloitte summary of the reform, in English, can be downloaded here.

[TokyoBoglehead]

Considering the changes, what type of legacy NISA will everyone be sticking with for 2023? Regular or Tsumitate?

I'm already locked in to tsumitate as the money was withdrawn a week ago!

[RetireJapan]

Considering the changes, what type of legacy NISA will everyone be sticking with for 2023? Regular or Tsumitate?

I'm already locked in to tsumitate as the money was withdrawn a week ago!

Tsumitate! The 20-year tax-free period plus a chance to start saving cash to max out the eternal NISA from 2024

[sutebayashi]

I am rolling over my regular and junior NISAs more or less, so it’s regular NISA 1.2 / 0.8 million limits for me in 2023. When the 2023 anccount ends in 2028, the contents can go towards any new NISA limit for that year.

Actually I am thinking about the Junior NISA for 2023. Since these funds can’t be rebalanced etc, I might buy just plain all world toshin.

[TokyoBoglehead]

I am rolling over my regular and junior NISAs more or less, so it’s regular NISA 1.2 / 0.8 million limits for me in 2023. When the 2023 anccount ends in 2028, the contents can go towards any new NISA limit for that year.

Actually I am thinking about the Junior NISA for 2023. Since these funds can’t be rebalanced etc, I might buy just plain all world toshin.

I am not sure you can rollover the J-Nisa, it just "stays" tax-free until your child is 18. It is then dumped into their taxable, which was opened at the same time (they come in a package).

[zeroshiki]

With the new no rollover approach and the 18M limit, I find it difficult to see an argument for regular NISA being better than T-NISA for 2023. With T-NISA, you get 400k tax free for 20 years completely separate from the 2024 New-New-NISA. In fact, if you had timed it right, you could have 4 T-NISA accounts going in addition to the 2024 NISA which is basically an extra 1.6M invested tax free (note that this is from a pure min-max perspective and assuming people would instantly max out their 18M NISA allotment in 5 years which I realize is a rough ask even for most of the people on here).

I would run the numbers but I'm not even sure what parameters I should use.

[RetireJapan]

With the new no rollover approach and the 18M limit, I find it difficult to see an argument for regular NISA being better than T-NISA for 2023.

I'm changing to tsumitate NISA for 2023.

[adamu]

I find it difficult to see an argument for regular NISA being better than T-NISA for 2023

I'm rolling over 1.8M. Seemed the sensible decision.

[sutebayashi]

I am not sure you can rollover the J-Nisa, it just "stays" tax-free until your child is 18. It is then dumped into their taxable, which was opened at the same time (they come in a package).

At least until now, J-NISA balances could be rolled over - e.g. my J-NISA from 2018 has been rolled over for 2023's allocation. It was always 800K per year but only up to 5 years, similar to a regular NISA in that respect. I seem to recall reading that similar rollover procedure will be for the remaining years too, but indeed it seems a pointless requirement now, given the changes.

The other change for J-NISA I gather is, with the initial investment accounts ending in 2023, from 2024 the rule about the child being 18 years of age is to be eliminated, so one could access the funds anytime one likes. However, with there being no obvious new tax-free home for these old J-NISAs, I am currently thinking I'll indeed leave them in J-NISA and not plan on selling out.

With the new no rollover approach and the 18M limit, I find it difficult to see an argument for regular NISA being better than T-NISA for 2023. With T-NISA, you get 400k tax free for 20 years completely separate from the 2024 New-New-NISA. In fact, if you had timed it right, you could have 4 T-NISA accounts going in addition to the 2024 NISA which is basically an extra 1.6M invested tax free (note that this is from a pure min-max perspective and assuming people would instantly max out their 18M NISA allotment in 5 years which I realize is a rough ask even for most of the people on here).

I didn't give this much thought, it was just a default, lazy choice. I started with regular NISA in 2014, and never looked at it much when Tsumitate NISA came out - even now I suspect I probably don't know what I might be missing, but ah well.

Still, if one has a maxed out regular NISA going into 2024, there will be 3,600,000 million new tax-free to use, along with 4 years worth of remaining regular NISA balances (which might be worth upwards of 4,800,000 hopefully), for a total 8,400,000 tax free bracket. Then in 2025 it's up to 7.2 + 3.6 (10.8m), 2026 to 10.8 + 2.4 (13.2m), 2027 to 14.4 + 1.2 (15.6m), and then in 2028 just the 18.0m. (After 5 years, these assets under investment will hopefully be worth more than the tax-free allocation anyway.)

Either way, T-NISA or regular NISA, the result is much more tax-free investing. and one'd probably need to review the situation in 2040 to determine whether they really did better choosing one or the other in light of their personal investment portfolio, I suspect.