Advices for my situation

[Tsunku]

Hello everyone,

First of all small introduction because i am new here.
Pierre, French in late thirties working in Tokyo for 4 years now.

I started as fulltime employee in last october ( was contract employee before in same company) and then my company has IDECo option for Full Time employees.
So situation now is as below:
=> company put 12000 yens each months in an account ( i selected where to invest)
=> i can put until 20000 ( actually i matched my company 12000 yens )each month in another account

I discovered retire japan i few weeks ago, and since i am watching videos i got interested in new NISA starting in 2024.
Questions is can i have a NEW nisa account since my company is giving me IDECO.
If yes, should i keep both and invest their or choose one and stick to it?

Thank you for reading and any advice.

Regards

Pierre

[RetireJapan]

Hello everyone,

First of all small introduction because i am new here.
Pierre, French in late thirties working in Tokyo for 4 years now.

I started as fulltime employee in last october ( was contract employee before in same company) and then my company has IDECo option for Full Time employees.
So situation now is as below:
=> company put 12000 yens each months in an account ( i selected where to invest)
=> i can put until 20000 ( actually i matched my company 12000 yens )each month in another account

I discovered retire japan i few weeks ago, and since i am watching videos i got interested in new NISA starting in 2024.
Questions is can i have a NEW nisa account since my company is giving me IDECO.
If yes, should i keep both and invest their or choose one and stick to it?

Thank you for reading and any advice.

Regards

Pierre

Welcome Pierre!

1. NISA and iDeCo are completely unconnected, you can have either, both, or neither. Completely up to you.
2. Ideally you would use both to get advantage of tax benefits, iDeCo is slightly better tax wise so most people do iDeCo -> then NISA -> then invest in a taxable account
3. iDeCo is a personal account, if you are doing something through your company it is likely not iDeCo but rather a company DC plan (can sometimes be done alongside iDeCo).

[Tkydon]

Hello everyone,

First of all small introduction because i am new here.
Pierre, French in late thirties working in Tokyo for 4 years now.

I started as fulltime employee in last october ( was contract employee before in same company) and then my company has IDECo option for Full Time employees.
So situation now is as below:
=> company put 12000 yens each months in an account ( i selected where to invest)
=> i can put until 20000 ( actually i matched my company 12000 yens )each month in another account

I discovered retire japan i few weeks ago, and since i am watching videos i got interested in new NISA starting in 2024.
Questions is can i have a NEW nisa account since my company is giving me IDECO.
If yes, should i keep both and invest their or choose one and stick to it?

Thank you for reading and any advice.

Regards

Pierre

Is the company Pension Plan a) Employee Defined Benefit? b) Employee Defined Contribution (sometimes referred to as a Japanese 401k) c) a combination of the two, or d) other?

It sounds like a Japanese Employee Defined Contribution 401k (at least the first line), as they are contributing and you are selecting where to invest...
The second line might be your an Employee Defined Contribution, or an Individual Defined Contribution iDECO Plan.

The money you invest will be locked up until you reach retirement age, but any contributions you make will be from pre-tax income, so will be tax free on the way in. Depending on your income level, that is like the government contributing 40% to your retirement savings, so it will only cost you 60% of the contributions in real terms, due to reductions in National Income Tax and Residents' Taxes.
(When you pay 12000 yen each month, you are actually paying 7,200 and the goverment is paying the other 4,800. If you pay 20000 yen each month, you are actually paying 12,000 and the goverment is paying the other 8,000. )
If you plan to stay in Japan long-term, and if you can afford to do so, you should probably max out your contributions to take the maximum tax benefit, and prepare for retirement. The Pension payment will be taxed when you receive them in retirement (in Japan or overseas).

On the other hand, NISA does not lock the money up until you reach retirement age.
Firstly, if you leave Japan, you will have to close your NISA, and take the gains, tax free.
You pay money into NISA after tax, so there is no tax benefit when you pay the money in, but the gains are completely tax free when you take the money out (in Japan).
NISA can be a good way to save for life's major cost events, such as getting married, buying a house, having kids, paying for their education, etc....

If your funds available for investment are limited, then it might be a good idea to split those funds between Pension and NISA so that you have both near term requirements and retirement requirements covered.
(If someone is not paying tax, then the tax benefit of Pension / iDECO does not apply... in which case concentrate more on NISA)

Only after taking maximum advantage of these tax advantaged plans, should you think about brokerage accounts; regular or tokutei...

[Tsunku]

Thank you both of you!

As you said yeah it is the 401k japanese from my company and then my Ideco account.

After reading your advice i will max my Ideco every month and then in january will open a new NISA to have both !

One more time thank you very much for enlightening me!

[RetireJapan]

After reading your advice i will max my Ideco every month and then in january will open a new NISA to have both !

You can actually open a NISA account now. More details here: https://youtu.be/ol7qH_D-iR8

[adamu]

Bonus points if you can stash away 1.2M in a NISA this year (or 400k in a Tsumitate NISA, but that will be more complicated to max out).