Defined Contribution Changes from 2022
Posted: Wed Aug 11, 2021 5:40 am
Hi,
Sorry if this has been covered elsewhere in the fourm. I couldn't find it.
I stumbled on this article https://www.aon.com/getmedia/bdedf2c7-4 ... 00828.aspx
In the reddit Japan Finance wiki https://www.reddit.com/r/JapanFinance/w ... sting/long.
It recaps proposed changes to iDeCo and Corporate DC happening in 2022.
Of note:-
1. From May 2022, DC participants of foreign citizenship who return to their home country may receive their assets as a lump-sum before the age of 60 (if participation period is 5 years or less or balance is ¥250,000 or less). A serious relaxing of the rules.
2. From May 2022, You can make iDeCo contribtions up to the age of 65. (Currently 60).
(You need to be paying into kousei or kokumin nenkin at the same time but who amongst us will get to 40 years of contributions by age 60!
https://kabu.com/kabuyomu/money/418.html )
3. From May 2022, Corporate DC has changes about age participation. The main one being you can contribute up to 70 (currently 65).
4. From April 2022, the latest age when a participant must start receiving benefit from a corporate DC or iDeCo will be extended from the current age 70 to age 75.
5. From Oct 2022, iDeCo participation criteria for employees who also participate in corporate DC plan will be relaxed.... employees can join iDeCo with a monthly contribution not exceeding ¥20,000 without impacting employer contribution to corporate DC.
This below thread, ignoring my personal contributions, has some great research about timing to withdraw iDeCo and combining with Retirement allowance.
viewtopic.php?f=6&t=867
The big take away resulting from these changes for me is;
Even if you aren't working past 60, but still have gaps in kokumin nenkin and have the cash on hand. You could use iDeCo between 60-65 then pull down as late as 75.
As an illustration. Given each year's allowance is 400K (or 700K after 20 years particpation) totally tax free. You could invest 68K * 12 (816,000) in year 1 and the minimum 5,000 per month in years 2-5. If you leave that until age 75, you could compound growth at 5% annually and have almost no tax exposure when you withdraw. (And obviously, if you are just extending the number of years you contribute to ideco to 65 it will all get added together when you withdraw.)
Typically this is where someone pops up and says these changes have been postponed indefinitely..
Sorry if this has been covered elsewhere in the fourm. I couldn't find it.
I stumbled on this article https://www.aon.com/getmedia/bdedf2c7-4 ... 00828.aspx
In the reddit Japan Finance wiki https://www.reddit.com/r/JapanFinance/w ... sting/long.
It recaps proposed changes to iDeCo and Corporate DC happening in 2022.
Of note:-
1. From May 2022, DC participants of foreign citizenship who return to their home country may receive their assets as a lump-sum before the age of 60 (if participation period is 5 years or less or balance is ¥250,000 or less). A serious relaxing of the rules.
2. From May 2022, You can make iDeCo contribtions up to the age of 65. (Currently 60).
(You need to be paying into kousei or kokumin nenkin at the same time but who amongst us will get to 40 years of contributions by age 60!
https://kabu.com/kabuyomu/money/418.html )
3. From May 2022, Corporate DC has changes about age participation. The main one being you can contribute up to 70 (currently 65).
4. From April 2022, the latest age when a participant must start receiving benefit from a corporate DC or iDeCo will be extended from the current age 70 to age 75.
5. From Oct 2022, iDeCo participation criteria for employees who also participate in corporate DC plan will be relaxed.... employees can join iDeCo with a monthly contribution not exceeding ¥20,000 without impacting employer contribution to corporate DC.
This below thread, ignoring my personal contributions, has some great research about timing to withdraw iDeCo and combining with Retirement allowance.
viewtopic.php?f=6&t=867
The big take away resulting from these changes for me is;
Even if you aren't working past 60, but still have gaps in kokumin nenkin and have the cash on hand. You could use iDeCo between 60-65 then pull down as late as 75.
As an illustration. Given each year's allowance is 400K (or 700K after 20 years particpation) totally tax free. You could invest 68K * 12 (816,000) in year 1 and the minimum 5,000 per month in years 2-5. If you leave that until age 75, you could compound growth at 5% annually and have almost no tax exposure when you withdraw. (And obviously, if you are just extending the number of years you contribute to ideco to 65 it will all get added together when you withdraw.)
Typically this is where someone pops up and says these changes have been postponed indefinitely..
