No iDeCo deduction from salary?

[Max]

My employer has kindly filled in the iDeCo application form, but also told me they "can't" do deductions from my salary. Has anyone else had this experience? Given that the government mandates it as one of the ways to contribute to iDeCo, is my employer even allowed to refuse to make the deductions?

[RetireJapan]

I believe it is up to the employer whether they can be bothered to deduct it (it creates more work for them). If there is any chance you will change employer doing the bank account deduction might be better as it will avoid the need to change later (tedious, paper based, takes months).

[adamu]

Happened to me, but it actually made it easier when changing jobs.

Do 個人払込 and get it deducted from your bank account. Make sure to declare it on your end of year tax adjustment every year.

[William]

I do not believe the Japanese government "mandates" such a thing. Employers may offer this "service," for the employee's benefit, but it's on the employer to decide if they want to add this benefit.

As said by Adamu, you do want to make sure you declare your iDeco deduction when your employer gives you your tax-adjustment paper once a year.

[Max]

i appreciate the replies. As I will probably only be in my current job one more year it is probably the proverbial blessing in disguise. Still, I was hoping to head off any potential problems with bank account name not matching brokerage name by having the money directly deducted.

[Crudzilla]

I'm in the same boat. (Employer filled out form but wants me to arrange my iDeCo payments myself).

Before I set it up I have a few questions:

1. Does the payment need to made from the same bank account that my salary is paid into?
My salary is paid into my local inaka bank account. But that account won't link to Rakuten, so I'm using a second Yucho account for all my NISA payments. (I visit my bank every payday, take out a bundle of cash and pay it in at the Post Office across the road, then funnel it into Rakuten Securities online. Will that work for iDeCo too?)

2. After making a years worth of payments, I can then reclaim the tax on my 年末調整?
I assume I will get a refund for the excess income tax I paid, but how does the residence tax work?
Is that also refunded? Or does it simply function to reduce the total payments for the next year?

[TunaSki]

I'm in the same boat. (Employer filled out form but wants me to arrange my iDeCo payments myself).

Before I set it up I have a few questions:

1. Does the payment need to made from the same bank account that my salary is paid into?
My salary is paid into my local inaka bank account. But that account won't link to Rakuten, so I'm using a second Yucho account for all my NISA payments. (I visit my bank every payday, take out a bundle of cash and pay it in at the Post Office across the road, then funnel it into Rakuten Securities online. Will that work for iDeCo too?)

2. After making a years worth of payments, I can then reclaim the tax on my 年末調整?
I assume I will get a refund for the excess income tax I paid, but how does the residence tax work?
Is that also refunded? Or does it simply function to reduce the total payments for the next year?

1) no. I get paid into my Sony bank, but use MUFG for my iDeCo (MUFG has correct katakana. Couldn’t be bothered with changing Sony bank katakana to the correct kana because all my credit cards come out of Sony bank and don’t want to risk having to faff around with them).

2) Rakuten will send you a post card slip around Q4 of the year. You can give this to your employer to include in your YETA, or keep it for your own final tax return

[adamu]

2. After making a years worth of payments, I can then reclaim the tax on my 年末調整?
I assume I will get a refund for the excess income tax I paid, but how does the residence tax work?
Is that also refunded? Or does it simply function to reduce the total payments for the next year?

For income tax the deduction is applied to your salary for the current year via 年末調整, and if a refund is due you should get it in December (or later if your employer isn't organised).

For residence tax, the numbers from the 年末調整 are forwarded to the local authority by the tax office, and used to calculate your residence tax for next year. You should get a notification slip in May which will list the amounts that will start to be deducted from June.

https://retirewiki.jp/wiki/IDeCo#End_of ... Adjustment

Realistically it's a close call this year. If any payments get taken this year, you might want to coordinate with your broker to ensure you get the required certificate, because 年末調整 season has already started and brokers have already sent out the paperwork for this year. I've heard that it's possible to amend a 年末調整, but I don't know what that entails. If you miss the 年末調整 you'll have to do a tax return - which could affect you in other ways, for example if you do Furusato Nozei or have any side income.

[Crudzilla]

2. After making a years worth of payments, I can then reclaim the tax on my 年末調整?
I assume I will get a refund for the excess income tax I paid, but how does the residence tax work?
Is that also refunded? Or does it simply function to reduce the total payments for the next year?

For income tax the deduction is applied to your salary for the current year via 年末調整, and if a refund is due you should get it in December (or later if your employer isn't organised).

For residence tax, the numbers from the 年末調整 are forwarded to the local authority by the tax office, and used to calculate your residence tax for next year. You should get a notification slip in May which will list the amounts that will start to be deducted from June.

https://retirewiki.jp/wiki/IDeCo#End_of ... Adjustment

Realistically it's a close call this year. If any payments get taken this year, you might want to coordinate with your broker to ensure you get the required certificate, because 年末調整 season has already started and brokers have already sent out the paperwork for this year. I've heard that it's possible to amend a 年末調整, but I don't know what that entails. If you miss the 年末調整 you'll have to do a tax return - which could affect you in other ways, for example if you do Furusato Nozei or have any side income.

Sorry, I'm really new to the Japanese tax system.

I'm finding the whole concept of 年末調整 rather confusing. If it is a summary of your tax etc over the year, why is all the paperwork conducted well before the year has ended? When brokers send out these certificates, are they just predicting the amount you will pay in the final months of the year?

I don't like the sound of filing a tax return this year, it sounds above my capabilities, and I do have some small side income (plus I think I will have to file one next year due to recieving gifts over the allowance). I guess it is best to leave the iDeCo until the new year, and make my first contribution then...?

Now I'm worrying about the timing of the paperwork to create the account.

If possible I would like to get it set up ready to begin making payments from January. If I am making the payments myself each month (i.e. not withheld from paycheque), would it be possible to set up the iDeCo account now, and then just not pay into it for November & December? Is there any negative aspect to missing a payent (other than it being limiting to your total annual contribution)?

The other option would be to just open the account in January. If made my application in January, would the account be set up in time to make January's payment? And can the self payment into iDeCo be made at any time during the month for which it is intended?

Appologies for my ignorance, and thanks so much for your help. I'm learning, albeit slowly.

[Tkydon]

Sorry, I'm really new to the Japanese tax system.

I'm finding the whole concept of 年末調整 rather confusing. If it is a summary of your tax etc over the year, why is all the paperwork conducted well before the year has ended? When brokers send out these certificates, are they just predicting the amount you will pay in the final months of the year?

I don't like the sound of filing a tax return this year, it sounds above my capabilities, and I do have some small side income (plus I think I will have to file one next year due to recieving gifts over the allowance). I guess it is best to leave the iDeCo until the new year, and make my first contribution then...?

Now I'm worrying about the timing of the paperwork to create the account.

If possible I would like to get it set up ready to begin making payments from January. If I am making the payments myself each month (i.e. not withheld from paycheque), would it be possible to set up the iDeCo account now, and then just not pay into it for November & December? Is there any negative aspect to missing a payent (other than it being limiting to your total annual contribution)?

The other option would be to just open the account in January. If made my application in January, would the account be set up in time to make January's payment? And can the self payment into iDeCo be made at any time during the month for which it is intended?

Appologies for my ignorance, and thanks so much for your help. I'm learning, albeit slowly.

If you only receive income from one or max two Employers through the year, AND tax is withheld at source, AND you do not have any unusual Deductions, AND you have nothing else to claim or report, then your employer can complete the Year-End Adjustment 年末調整 on your behalf.

They will have made a forecast of how much you would earn in the full year, and along with the information about your dependents, they used a table provided by the Tax Office to calculate how much tax to withhold from your salary every month to meet your final tax bill. Pay As You Earn - PAYE...

At the end of the year (November), you can provide documentation to your employer to confirm your Dependents for Standard Allowances and provide the documents you received confirming premiums for certain Qualified Deductions, such as iDeCo and certain other Insurances; life, medical, earthquake..., and they will calculate the exact amount of tax due, and make a final adjustment in December Payroll, by either giving you a refund, if you have over-paid through the year, or taking additional tax to meet the bill.

If you have nothing else to claim or report, then that fulfills your reporting obligation and the employer will issue you the Gensen-Choushu-Hyo - Statement of Tax Withheld.

On the other hand, if you have anything else to claim , such as first year of Mortgage Tax Relief or report, any additional income over 200,000, or Capital Gains, etc., or if you miss the deadline for supplying the documentation to your employer in time for the Nenmatsu Chousei, then you have an additional reporting obligation and you have to file a Tax Return - Kakutei Shinkoku with the Gensen-Choushu-Hyo - Statement of Tax Withheld from your employer(s).

If your side income is over 200,000 in the year, you have to file the Kakutei Shinkoku.

You will definitely not be able to make November iDeCo contribution now. It is too late.
If you were able to make December, which I doubt, you would only make one Installment, so the Tax Refund would be

Refund = iDeCo Contribution / (1 - Marginal Income Tax Rate and Reconstruction Tax) - iDeCo Contribution

e.g. 23000 / (1 - 0.2042) - 23000 = 5,900 Yen Refund

However, I don't think you will be able to make December Contribution now. I think it is too late and the paperwork takes quite a long time to process...

The withdrawal from your bank account will be on a specified day every month by Direct Debit, and if there are insufficient funds, you will miss the contribution for that month. there are no other penalties.