iDeCo and dependent spouse
Posted: Tue Aug 10, 2021 4:54 am
Hello all, thanks in advance for any help you can give with my first post here!
I think my situation is fairly unique, although if this question has been asked before apologies.
I recently decided to use some saved money to take a year out of work and go to grad school to get a Masters degree. Since I will be a full time student and not employed during this time I will be able to contribute the full 68,000 yen per month to my iDeCo, and I'm eager to do as much as possible to convert some of my surplus cash savings into investments during that year.
However, my question is regarding the tax exemption system for dependent spouses. If we were to designate myself as a dependent spouse during that year, this would reduce the amount I could contribute to the iDeCo to 23,000 yen per month, and my wife would receive some money back from her tax bill (I think the maximum is 380,000 per year). So my question is, given the tax free (up to a limit) nature of iDeCo at the withdrawing end and the ability to rebalance tax free too, is it worth reducing the amount I contribute there now in order to claim the tax exemption for a year? My gut feeing is taking the exemption now makes sense, but the tax numbers at pay out for iDeCo are a little confusing and I was wondering if there was something I was missing.
Also, if you think it would be worth it to take the credit, what would you do with the extra money (given that we already have enough cash savings)? I was thinking that the extra money could possibly go into a regular investment account, but I'd like to know what people's opinions are. I'm already contributing the maximum to a Tsumitate NISA for context.
Thanks again!
I think my situation is fairly unique, although if this question has been asked before apologies.
I recently decided to use some saved money to take a year out of work and go to grad school to get a Masters degree. Since I will be a full time student and not employed during this time I will be able to contribute the full 68,000 yen per month to my iDeCo, and I'm eager to do as much as possible to convert some of my surplus cash savings into investments during that year.
However, my question is regarding the tax exemption system for dependent spouses. If we were to designate myself as a dependent spouse during that year, this would reduce the amount I could contribute to the iDeCo to 23,000 yen per month, and my wife would receive some money back from her tax bill (I think the maximum is 380,000 per year). So my question is, given the tax free (up to a limit) nature of iDeCo at the withdrawing end and the ability to rebalance tax free too, is it worth reducing the amount I contribute there now in order to claim the tax exemption for a year? My gut feeing is taking the exemption now makes sense, but the tax numbers at pay out for iDeCo are a little confusing and I was wondering if there was something I was missing.
Also, if you think it would be worth it to take the credit, what would you do with the extra money (given that we already have enough cash savings)? I was thinking that the extra money could possibly go into a regular investment account, but I'd like to know what people's opinions are. I'm already contributing the maximum to a Tsumitate NISA for context.
Thanks again!