RetireJapan

Hi,

I am considering opening an iDeCo account for myself and one for my wife (she's Japanese). We are in our early 40's and we are both employees contributing to the national pension scheme.

I read on Retire Japan that iDeCo is only recommended if you intend to be living in Japan until retirement (60 years-old). Is that really the case?

We have no plans of leaving Japan in the immediate future but don't think that we will be here for another 20 years. We might leave, we might come back and leave, who knows... What I figured is that it is always good to use tax free investment plans even if you are not going to be using them for ever. It's good for as long as it lasts.

From what I was reading on this website - https://www.ideco-koushiki.jp/english/ - there is a process in place in case the account holder moves overseas - moving overseas seems to trigger ineligibility meaning that contributions are not possible anyomore but collection is still possible (upon truning 60 years-old).

Am I missing something?

If you leave Japan right now your account gets frozen: you can no longer contribute but can manage the funds and cash out once you reach the age of 60. If you come back to Japan presumably you can start contributing again.

The only reason for not recommending it to short-term residents is that they might find it difficult to remember their account information and do the paperwork to cash out in Japanese several decades in the future

Also, the government seems to be considering allowing people to close their iDeCo accounts if they leave Japan which would remove even that obstacle.

If you cash out abroad, could you end up having to pay capital gains every time you sell? Even then, just the income tax deduction on the money you put in doesn't hurt, though.