iDeCo plus (employer contributions)

[KyushuWoozy]

https://www.ideco-koushiki.jp/owner/ideco_plus.html

I have been looking into this myself so thought I would share it here.

It's the part of iDeCo whereby the employer can make contributions together with the employee (企業型確定拠出年金). The total amount of contribution is classed as a business expense.

In the case of very small businesses like ourselves where the employer and the employee are one and the same, your accountant should be able to advise how to balance the premium to be paid by the employee vs that paid by the employer to gain the most benefit of lowering personal income tax vs lowering corporation tax.

Of course it's really paperwork heavy but if you are running a business in Japan you are already used to that

Hope this helps.

[Wales4rugbyWC23]

https://www.ideco-koushiki.jp/owner/ideco_plus.html

I have been looking into this myself so thought I would share it here.

It's the part of iDeCo whereby the employer can make contributions together with the employee (企業型確定拠出年金). The total amount of contribution is classed as a business expense.

In the case of very small businesses like ourselves where the employer and the employee are one and the same, your accountant should be able to advise how to balance the premium to be paid by the employee vs that paid by the employer to gain the most benefit of lowering personal income tax vs lowering corporation tax.

Of course it's really paperwork heavy but if you are running a business in Japan you are already used to that

Hope this helps.

Could this potentially go above the 68,000 yen monthly maximum contribution?

[TunaSki]

https://www.ideco-koushiki.jp/owner/ideco_plus.html

I have been looking into this myself so thought I would share it here.

It's the part of iDeCo whereby the employer can make contributions together with the employee (企業型確定拠出年金). The total amount of contribution is classed as a business expense.

In the case of very small businesses like ourselves where the employer and the employee are one and the same, your accountant should be able to advise how to balance the premium to be paid by the employee vs that paid by the employer to gain the most benefit of lowering personal income tax vs lowering corporation tax.

Of course it's really paperwork heavy but if you are running a business in Japan you are already used to that

Hope this helps.

Could this potentially go above the 68,000 yen monthly maximum contribution?

If I’m understanding this correctly, it won’t

Because it sounds like it’s only for category 2 insured employees (Shakai Hoken) who are not enrolled in a defined contribution plan with their employers.

And it sounds like the limit is still ¥23,000 per month. But difficult to understand if that allows a ¥23,000 per month for employee and ¥23,000 per month for employer (so ¥46,000 per month total) or not though.

[beanhead]

Could this potentially go above the 68,000 yen monthly maximum contribution?

Looks to me as though it refers to those paying into shakai hoken, as below:
第二号被保険者
企業年金無の会社員：月23,000円

It seems to allow the company to contribute some of that 23,000yen per month, but not 100% of it.

Ideally for the employee, would be as much as possible covered by the company, I presume.

[adamu]

Interesting, first I'd heard of this.

As the combined amount that can be invested (¥5k-¥23k) is the same, there doesn't seem to be much benefit to the employee - except maybe psychological because it feels like they're getting free money in addition to their salary. I don't think there's any difference between iDeCo plus and the employer giving the employee the money as salary to put into iDeCo themselves - except of course guaranteeing the money does go into iDeCo.

For the employer, the benefit seems to be that the payment can be treated as a loss for accounting purposes.

So it seems to be giving a small tax perk to employers in order for them to encourage people to set up iDeCo. I think setting up a Corporate DC Nenkin would be more tax efficient as that allows for up to ¥55k/mo, but it's probably a higher burden to set up than iDeCo plus.

[KyushuWoozy]

It seems to allow the company to contribute some of that 23,000yen per month, but not 100% of it.

Maximum combined amount contributed by employer and employee is 23,000, and it can be any combination for example 1,000 by employee and 22,000 by employer or vice versa.

[KyushuWoozy]

Interesting, first I'd heard of this.

As the combined amount that can be invested (¥5k-¥23k) is the same, there doesn't seem to be much benefit to the employee - except maybe psychological because it feels like they're getting free money in addition to their salary. I don't think there's any difference between iDeCo plus and the employer giving the employee the money as salary to put into iDeCo themselves - except of course guaranteeing the money does go into iDeCo.

For the employer, the benefit seems to be that the payment can be treated as a loss for accounting purposes.

So it seems to be giving a small tax perk to employers in order for them to encourage people to set up iDeCo. I think setting up a Corporate DC Nenkin would be more tax efficient as that allows for up to ¥55k/mo, but it's probably a higher burden to set up than iDeCo plus.

Yes, we opted for this option for now at least as it's pretty low hanging fruit.