iDeCo withdrawal taxing

[workbalance]

Although 20 years away for me, I was wondering how profits will be taxed when you withdraw from your IDeCo.

On the deco site https://www.ideco-koushiki.jp/english/#

It say investment returns are tax free.

However, it also says:

"If you take your benefits in the form of an annuity, you are eligible for a “public-pension deduction”; if you opt for a lump sum, you can take advantage of a “retirement income deduction.”

I am wondering if iDeCo withdrawals will always be tax free or if there are cases when it could be taxed.

[Dan]

The tax free amount at time of withdrawal is calculated based on the time period someone has paid into iDeCo so it actually makes sense to start doing that as early as you can, at least by paying the minimum monthly amount into the account.

I believe that the minimum amount someone has to pay into iDeCo is set at 5,000 yen a month and that everyone is allowed to adjust the monthly payments one time a year. But I am not sure if someone is able to stop monthly iDeCo payments completely if they would like to do so and would still be living in Japan when they do.

Update: the link http://www.dcnenkin.jp/sp/faq/#link02 suggests it is possible for someone to stop payments if they want.

[RetireJapan]

The lump sum is tax-free based on years paid in up to a certain amount. I believe it is 400,000 * first twenty years of contributions + 700,000 * next ten years. The maximum is 15 million tax free.

This allowance is shared with any other taishokukin you might get. Half of anything over the tax-free allowance is taxed at (20%? -not sure as an in a hospital now and can't check easily).

The pension income is added to any other pension and taxed at a preferential rate.

[workbalance]

Thanks that is very helpful.

[ivanpgs]

The lump sum is tax-free based on years paid in up to a certain amount. I believe it is 400,000 * first twenty years of contributions + 700,000 * next ten years. The maximum is 15 million tax free.

This allowance is shared with any other taishokukin you might get. Half of anything over the tax-free allowance is taxed at (20%? -not sure as an in a hospital now and can't check easily).

The pension income is added to any other pension and taxed at a preferential rate.

Hi RetireJapan,

Is there any resource / link out there either in Japanese or English where I can read the numbers you are sharing above?

I saw this document in English: https://www.nta.go.jp/tetsuzuki/shinkok ... pdf/43.pdf
Showing the same numbers you are mentioning (page 12) but is not specific for iDeCo only.

Thanks in advance!

[RetireJapan]

The lump sum is tax-free based on years paid in up to a certain amount. I believe it is 400,000 * first twenty years of contributions + 700,000 * next ten years. The maximum is 15 million tax free.

This allowance is shared with any other taishokukin you might get. Half of anything over the tax-free allowance is taxed at (20%? -not sure as an in a hospital now and can't check easily).

The pension income is added to any other pension and taxed at a preferential rate.

Hi RetireJapan,

Is there any resource / link out there either in Japanese or English where I can read the numbers you are sharing above?

I saw this document in English: https://www.nta.go.jp/tetsuzuki/shinkok ... pdf/43.pdf
Showing the same numbers you are mentioning (page 12) but is not specific for iDeCo only.

Thanks in advance!

Hi ivan

iDeCo comes under the same tax allowance as retirement bonuses. There are also rules about how long you have to wait until you can reset the allowance.

https://www.nta.go.jp/shiraberu/ippanjo ... l/02_3.htm

[ivanpgs]

Thank you very much RetireJapan !

That is exactly what I was searching for!