Simple Q&A - iDeCo

[beanhead]

I decided to set up my iDeco account with SBI the other day. However, each time I'm about to input my bank information, the error message below shows up. I've tried redoing the entire process from the beginning four times already at different times of the day, but with no luck. Does anyone know what I might be doing wrong? Thanks!

掛金引落口座登録のお手続きが中断されました。

お手数ですが最初からやり直して下さい。

You can't apply online. As a non-Japanese resident all of the brokers will require you to fill out paper forms. This should be made clear in the application process. If not, maybe just call them and ask them to send you the forms to fill out by hand.

[ClearAsMud]

According to the forms, it needs to be a "long term" kyosai member for the 12,000 limit to apply. I'm not sure what a long term member is, though.

"Long-term" here is not a reference to length of membership but to length of benefit payments (chōki kyūfu). Mutual-aid societies divide their social-insurance benefits into long-term benefits and short-term benefits. The former include items paid out more or less permanently, most centrally pensions. The latter include all paid-once-and-done benefits, meaning basically health insurance and associated benefits (the PMAC equates short-term benefits with health insurance on this page). Thus, the form is essentially asking your employer to check off which pension category you belong to.

[Darren]

After a long wait, I expect to have my iDeCo account ready by August. My question is, can I pay a lump sum for the months that I missed (January to July)? I see some people here saying that iDeCo does not have an annual allowance and contributions should be made monthly, but there are articles online, like the screenshot below from Yahoo, recommending an annual contribution to keep the fees low. Can someone please shed some light on this? Much appreciated.

[beanhead]

After a long wait, I expect to have my iDeCo account ready by August. My question is, can I pay a lump sum for the months that I missed (January to July)?

No, you cannot make payments for before you were signed up for iDeCo. That is not how it works.
Not sure about the graphic that you posted. The possibility of yearly pay for the tiny monthly handling fees has never crossed my mind.

[beanhead]

like the screenshot below from Yahoo, recommending an annual contribution to keep the fees low. Can someone please shed some light on this? Much appreciated.

Hang on, that says you pay the 105yen once a year instead of every month
This site here says the same thing...
https://ideco.kddi-am.com/learn/column/ideco0084/
Curious...

[RetireJapan]

Huh, had never seen that option before.

Not sure I can be bothered to fiddle with it to save 1000 yen a year, but interesting possibility.

(main risk seems to be if something goes wrong with the bank withdrawal, you lose your entire annual iDeCo allocation...)

[Darren]

I am not really after the savings for doing it annually. I would still like to contribute ¥6,700 monthly (category 1 with kokumin nenkin kikin) for dollar-cost averaging etc, but since I am starting my iDeCo mid-year, I am considering either a one-time whole-year lump sum just for this year or paying a lump sum for the seven months that I missed before my iDeCo opening in August.

[RetireJapan]

I am not really after the savings for doing it annually. I would still like to contribute ¥6,700 monthly (category 1 with kokumin nenkin kikin) for dollar-cost averaging etc, but since I am starting my iDeCo mid-year, I am considering either a one-time whole-year lump sum just for this year or paying a lump sum for the seven months that I missed before my iDeCo opening in August.

I don't think you can make up payments for months before the account was open, but do let me know if I'm wrong on that.

[Chizakura]

When coming to Japan, tax is is paid on the previous year's income. So the tax for the first year is paid in the second year.

Does that mean that it only really makes sense to start with iDeCo in the first year? Or will starting in the first year reduce the tax that has to be paid in the second year?

[adamu]

Does that mean that it only really makes sense to start with iDeCo in the first year? Or will starting in the first year reduce the tax that has to be paid in the second year?

The income deduction for iDeCo applies to the year the payments were made. If you also earn income that year, the deduction will apply to that income.

When coming to Japan, tax is is paid on the previous year's income. So the tax for the first year is paid in the second year.

This is not always true. Salaried employees, for example, often pay income tax for income the same year they earn it. It's true for residence tax, though.