T-Nisa to New Nisa

[Yoorin]

Hi all,

Apologies in advance if this question has already been covered and answered in previous posts. I'm relatively new to investing and am a little bit confused on what to do with my current Tsumitate NISA going forward.

I have been investing the max into my Tsumitate NISA for 4 years.
I've recently doubled my salary and am now able to invest considerably more.

With the new NISA opening up next year, will I be able to invest into both my current Tsumitate (max) and new NISA concurrently going forward?

If I am not able to run both NISA at the same time, would the ideal situation be to withdraw the total 2.8 ish from my Tsumitate and pump it into the new NISA in 2024?

Again, apologies for my ignorance and appreciate your help with this.

[RetireJapan]

No the New NISA replaces the current system and has nothing to do with it.

Your existing accounts will still run, but new money will go into New NISA from 2024.

Generally speaking if you can fund your New NISA from income you should probably keep your existing t-NISA accounts for their entire tax-free duration.

If you can't, selling them to invest the money into the New NISA might be an option.

[Yoorin]

Thank you very much for your reply. I appreciate you getting back to me on this.

Let me just quickly confirm. Am I understanding this correctly?

So it is possible for the current T-NISA to continue to run with the new NISA but no new money will be able to be put into it.

If I wanted to sell up and invest the Tsumitate into the new NISA, I would have to apply for that at the start of next year, right?

If so, how much would I be able to invest? I'm a bit confused about the difference between the つみたて投資枠 and 成長投資枠 new NISA formats.

Thank you.

[RetireJapan]

Your broker will likely open a New NISA for you automatically next year.

The two sections of the New NISA are basically the current tsumitate and current regular NISA, but you get both and they are both expanded.

So each year you get a 1.2m yen allowance that can only be used for mutual funds, and a 2.4m yen allowance that can be used for anything* (including mutual funds).

New NISA investments are tax free forever until you sell them. You have a lifetime contribution allowance of 6m (mutual funds only) and 12m (anything). This allowance can be reused if you later sell some of your investments.


*anything being restricted to things the Japanese government has decided are reasonable investments, so no leveraged funds, etc.

[zeroshiki]

I think OP is falling into the common trap of thinking T-NISA for 20 years means you have 20 years to invest 400k per year into the account.

OP, NISA accounts exist per year. Your 2023 TNISA account will be valid until 2043 regardless of the existence of New NISA. The money you put into the previous years' TNISAs are still valid until they run out.

[adamu]

I've recently doubled my salary

Nicely done.

Now keep your lifestyle the same but invest half your income.

[Yoorin]

I think OP is falling into the common trap of thinking T-NISA for 20 years means you have 20 years to invest 400k per year into the account.

I mean, is that not what it is? I assumed that T-NISA was literally 20 years at 400,000 a year? How am I wrong there?

[RetireJapan]

I mean, is that not what it is? I assumed that T-NISA was literally 20 years at 400,000 a year? How am I wrong there?

No, each NISA year (tsumitate or otherwise) is independent of other NISA years. So your 2023 t-NISA would be tax free until the end of 2042, your 2022 t-NISA year would be tax free until the end of 2041, etc.

The years are not connected and under the current system you could change types each year, not use NISA, change providers. It was quite flexible.

The New NISA next year replaces the current system, but existing years will remain tax free until they mature.

[adamu]

Tsumitate NISA started in 2018, and the last year you can invest in it is this year, 2023. So for 6 years (not 20), you could invest 400,000 each year, and that 400,000 is tax free for 20 years including the year it is invested. From next year, you can't invest new money in a Tsumitate NISA.

It is currently not clear how brokers will handle the transition of existing NISA/T-NISA customers to the new system from next year.

[Billy]

anything being restricted to things the Japanese government has decided are reasonable investments, so no leveraged funds, etc.

Do we have a list for those “reasonable investments”? Would American ETFs be included, for example?