RetireJapan

I searched for this small/medium sized business insurance/loan system and didn't find anything here so figured I would post here and see if anyone else has had experience with it.

I started paying into it more than 10 years ago and the way it works is you set a monthly/bi-annual/annual amount and can claim it as an expense on your taxes as an independent contractor or small business owner
https://kyosai-web.smrj.go.jp/index.html
This has a retirement function (can start cashing out after 65), Insurance using the premiums if you have some business/health misfortune, or can take out low-interest loans (~0.9-1.5%) against the premium that you have paid in.

The trick is that when you're ready to cash out, the lump sum is treated as income, so you have to time it carefully and have some major expenses set up to offset the tax hit.

I'm curious if anyone else out there has used this system or if you know of other pseudo-insurance/retirement vehicles you might recommend as an independent contractor or small business owner.

That's the 'safety kyosai' thing, right?

They also have a retirement savings fund offered through the same org. My wife does that, paying in up to 70,000 yen a month (which is fully deductible as a business expense).

The other major one is iDeCo, up to 68,000 yen a month if you are on kokumin nenkin.

You're confusing keiei safety kyousai (previously known as tousan boushi) with shokibo kigyo kyousai.

The former is bankruptcy prevention, the latter is a retirement fund.

keiei safety kyousai is a scheme where you may deposit between 5,000 to 200,000 yen up to a maximum of 8,000,000.
They can be considered a business expense (technically, insurance/asset in your PnL) when tax filing.

When your business comes into trouble, you're able to access an amount 10x what you've deposited for a max of 80,000,000 at 1.5% I believe, but you'll forfeit your deposits.

A separate thing you can do borrow around 80% of your deposits at 1.5% p.a and use it for whatever you like. No guarantor or due diligence required. You're supposed to pay it off at the end of the year, or you may extend the loan again as well as also borrowing 80% of whatever you deposited the past 12 months.

At the end of 40 months, you're able to close the account without penalties. The issue, as you've mentioned is that the cash you receive will be considered income. So you'll have to find some additional business expenses to offset it against.

I'm in both of those schemes, and will be cashing out when I've reached around 4m worth of deposits. I'll offset it against a van replacement, as well as a lump sum payment into the latter scheme (70k * 11 + 70k * 12 = 1.61m). In the mean time, I have borrowed against my deposits to invest in index funds.

Same thing in my company, I'm depositing 200k each month and borrowing 1.7 to 2m each year to invest in index funds. Similarly, I've timed it so that I'll be able to offset it against a large purchase at time of withdrawal.

The shokibo kigyo kyousai however, is a simple retirement fund generating 1% of interest each year. When you finally do decide to retire, you will receive a tax-advantaged lump sum. It's essentially taishokukin so if you've been in the scheme for 20 years, you'll get 8m tax free while only half the remainder is taxed.

And just like the KSK scheme, you may also borrow 80-90% of whatever you've deposited at 1.5% p.a. I also use this to invest in index funds.