iDECO for newly self-employed

[oki-j]

FIRST POST - be nice please

I have been a "Couch Potato" investor (Millionaire Teacher) in banks outside of Japan for a couple of years (SAXO Singapore + InvestNow in New Zealand). A few months ago, I decided 100% to retire in Okinawa .

MY FINANCIAL SITUATION: I am self-employed, but my current income - outside of the overseas investments - is so low that my health insurance is under my wife's name.

MY FINANCIAL GOAL: Bring most of my overseas investments into Japan in two ETFS:
1. A world index: (https://emaxis.jp/fund/253425.html) *70-80%
2. A developed country government bond index: (https://emaxis.jp/fund/252489.html) *20-30%

TWO QUESTIONS:
1. Are these funds compounding/plowback/"special dividend"? *PREFERRED*

2. If I apply for iDECO as a dependent to my wife's insurance, would I be categorized as Self-employed or as a Housewife ( )?

3. If the latter, should I wait until I can afford to pay my own insurance & pension or are their benefits to be categorised a housewife ( )?

This probably doesn't apply to many investors on this forum (which btw has been REALLY helpful - THANK-YOU, Ben Tanaka!) so...many thanks in advance for your educated responses.

Oki-J

[RetireJapan]

Welcome to the forum

I believe those two funds reinvest dividends internally and do not pay a dividend. As they are mutual funds, you can also set them to reinvest when you buy them (再投資型).

If you are on your wife's shakai hoken as a dependent, your iDeCo would also be as a dependent (limit of 23,000 yen a month, no income tax benefit). If you started paying your own kokumin nenkin, you would then be able to use iDeCo to reduce your income tax and enjoy the higher limit (68,000 yen a month).

The benefit of paying in as a dependent is having accounts in your name and starting to build up a tax-free allowance (iDeCo is eventually taxed as retirement bonus, and there is a tax-free allowance based on the number of years paid in).

Anyone else?

[oki-j]

Good morning,

Thank-you Ben Tanaka for this answer.

*Although I said I had 2 questions, there were actually 3 - and you answered each one with clear-cut replies.

If I may, I have 1 further question + 1 Gordian knot:

- QUESTION 1: With regard to iDECO, is SBI Securities still the recommended bank for iDECO investments?

- GORDIAN KNOT: As a a kiwi retiring in Japan, what if any KNOTTY issues surround investment in RAKUTEN VT? I recall reading that someone "wouldn't touch VT with a 10 foot pole", but can't find the reference...

Again, THIS FORUM is absolutely helpful - thanks again, Ben:)

Oki-J

[RetireJapan]

Any online broker is fine for iDeCo, including SBI Securities.

The main problem with VT is that it is a US fund, so dividends are taxed in the US at 10% before Japan taxes them at 20% (or 0% in NISA). It may also be subject to US inheritance taxes. These problems can be avoided by buying a similar Japan-issued fund.