Any point to tsumitate=NISA?

[zeroshiki]

This is not how NISA works. Each NISA year is treated separately, independently of other NISA years.

So for 2022 tsumitate NISA would be tax-free until 2041, 2023 tsumitate NISA year would be tax-free until 2042, etc.

No. Roger, you you can use the Tsumitate Nisa MORE THAN 20 times.. The tax-free limit of one years contribution is 20 years. BUT you can use it more than 20 times.

This is a VERY common misconception that I myself originally had.

Sorry, I have no idea what this means:

「The tax-free limit of one years contribution is 20 years. BUT you can use it more than 20 times.」

So, can I keep paying into my tsumitate-NISA even after 20 years? So, say in 2050, I can still continue paying in, 29 years since I started?
I thought the clock starts ticking once you open your account, and you only have 20 years' to pay in? In my case 2021~2040.
I can pay in for 25 years? 30 years? Any limit?

I understand how each year's worth of contributions is only tax free for 20 years.
So my 2021 contributions (400,000 yen) are only tax free until 2040. I get that.
If I sell my 2021 t-NISA after 2040, I have to pay capital gains tax, yes?

You get a Tsumitate NISA account every year. This account is valid for 20 years. The 2022 TNISA account is tax free until 2042, the 2023 TNISA account is tax free until 2043 etc. What Haystack means is that you can hypothetically have more than 20 TNISA accounts when you start your 2043 TNISA account (The government hasn't actually extended TNISA to be this long yet but we're hoping)

The 2022 TNISA account has a 400k limit for 2022. When its 2023, you get a full 400k allowance for 2023 and so on. Nothing you do in 2025 affects your 2022 TNISA account unless you SELL where in that case your 2022 TNISA disappears.

If you sell your 2022 TNISA after 2042, you have to pay capital gains on the 2042 price as base. Lets say you have 100 yen in 2022 TNISA, its now 1000 in 2042. You keep it in a taxable account and it grows to 1100 in 2044. You pay capital gains tax on the difference between 1100 and 1000 (2042 price).

[RetireJapan]

So, can I keep paying into my tsumitate-NISA even after 20 years? So, say in 2050, I can still continue paying in, 29 years since I started?
I thought the clock starts ticking once you open your account, and you only have 20 years' to pay in? In my case 2021~2040.

You don't have 'a' tsumitate NISA account. You have a 2022 tsumitate NISA, and then a 2023 tsumitate NISA, and a 2024 New NISA, and...

[Roger Van Zant]

So, can I keep paying into my tsumitate-NISA even after 20 years? So, say in 2050, I can still continue paying in, 29 years since I started?
I thought the clock starts ticking once you open your account, and you only have 20 years' to pay in? In my case 2021~2040.

You don't have 'a' tsumitate NISA account. You have a 2022 tsumitate NISA, and then a 2023 tsumitate NISA, and a 2024 New NISA, and...

I understand.

Another question : when it comes time to sell and pull out some money, is the oldest t-NISA automatically sold first?
Or do I have to specify? For example, say in 2047 I want to pull out some money, do I have to choose "Sell 2021 t-NISA" or "Sell 2026 t-NISA".

[Roger Van Zant]

No. Roger, you you can use the Tsumitate Nisa MORE THAN 20 times.. The tax-free limit of one years contribution is 20 years. BUT you can use it more than 20 times.

This is a VERY common misconception that I myself originally had.

Sorry, I have no idea what this means:

「The tax-free limit of one years contribution is 20 years. BUT you can use it more than 20 times.」

So, can I keep paying into my tsumitate-NISA even after 20 years? So, say in 2050, I can still continue paying in, 29 years since I started?
I thought the clock starts ticking once you open your account, and you only have 20 years' to pay in? In my case 2021~2040.
I can pay in for 25 years? 30 years? Any limit?

I understand how each year's worth of contributions is only tax free for 20 years.
So my 2021 contributions (400,000 yen) are only tax free until 2040. I get that.
If I sell my 2021 t-NISA after 2040, I have to pay capital gains tax, yes?

You get a Tsumitate NISA account every year. This account is valid for 20 years. The 2022 TNISA account is tax free until 2042, the 2023 TNISA account is tax free until 2043 etc. What Haystack means is that you can hypothetically have more than 20 TNISA accounts when you start your 2043 TNISA account (The government hasn't actually extended TNISA to be this long yet but we're hoping)

The 2022 TNISA account has a 400k limit for 2022. When its 2023, you get a full 400k allowance for 2023 and so on. Nothing you do in 2025 affects your 2022 TNISA account unless you SELL where in that case your 2022 TNISA disappears.

If you sell your 2022 TNISA after 2042, you have to pay capital gains on the 2042 price as base. Lets say you have 100 yen in 2022 TNISA, its now 1000 in 2042. You keep it in a taxable account and it grows to 1100 in 2044. You pay capital gains tax on the difference between 1100 and 1000 (2042 price).

Thank you, I see.
The reason for my original question was what happens if I cannot max out the 400,000 in one particular year?
So, say I max out my t-NISA account for 2021, 2022, 2023, 2024, then pay in only 1000 yen per month in 2025 due to financial problems, then max out for 2026 etc....
Come 2044, my 2025 t-NISA will be pretty crap since I only put in 12,000 yen total.
This is why I was saying "If you don't use it, you lose it". I will "lose" ("forsake" is a better word, perhaps?) 400,000 - 12,000 = 388,000 in the above scenario.

[AreTheyTheLemmings?]

This...

The 2022 TNISA account is tax free until 2042, the 2023 TNISA account is tax free until 2043 etc. What Haystack means is that you can hypothetically have more than 20 TNISA accounts when you start your 2043 TNISA account (The government hasn't actually extended TNISA to be this long yet but we're hoping)

...and this...

You don't have 'a' tsumitate NISA account. You have a 2022 tsumitate NISA, and then a 2023 tsumitate NISA, and a 2024 New NISA, and...

...are the best descriptions I've seen of the system so far. This is the wording that should be used in explanations of Tsumitate NISA.

[Haystack]

Someone link the FSA this thread as reference to how "clear" the system is.

[RetireJapan]

The reason for my original question was what happens if I cannot max out the 400,000 in one particular year?
So, say I max out my t-NISA account for 2021, 2022, 2023, 2024, then pay in only 1000 yen per month in 2025 due to financial problems, then max out for 2026 etc....
Come 2044, my 2025 t-NISA will be pretty crap since I only put in 12,000 yen total.
This is why I was saying "If you don't use it, you lose it". I will "lose" ("forsake" is a better word, perhaps?) 400,000 - 12,000 = 388,000 in the above scenario.

If you only pay in 12,000 yen, you 'lose' 388,000 yen.
If you don't pay in at all, you 'lose' 400,000 yen

Paying in 12,000 yen is better.

[zeroshiki]

According to Daiwa Securities, the same security in a NISA account over different years is sold on a FIFO (first in first out) basis

https://daiwa.dga.jp/faq_detail.html?id=1251

So there is no danger of "wasting" the tax free years of newer purchases.

[Roger Van Zant]

According to Daiwa Securities, the same security in a NISA account over different years is sold on a FIFO (first in first out) basis

https://daiwa.dga.jp/faq_detail.html?id=1251

So there is no danger of "wasting" the tax free years of newer purchases.

Ah, good to know! Thanks.

[Tkydon]

The reason for my original question was what happens if I cannot max out the 400,000 in one particular year?
So, say I max out my t-NISA account for 2021, 2022, 2023, 2024, then pay in only 1000 yen per month in 2025 due to financial problems, then max out for 2026 etc....
Come 2044, my 2025 t-NISA will be pretty crap since I only put in 12,000 yen total.
This is why I was saying "If you don't use it, you lose it". I will "lose" ("forsake" is a better word, perhaps?) 400,000 - 12,000 = 388,000 in the above scenario.

If you only pay in 12,000 yen, you 'lose' 388,000 yen.
If you don't pay in at all, you 'lose' 400,000 yen

Paying in 12,000 yen is better.

Techically, you lose the tax free gain on the Y388,000 or Y400,000 yen

If you paid in the Y388,000 and it grew at say 7% per year for 20 years, it would end up being worth Y1,501,437, and that would be completely tax free.

If you paid in the Y400,000 and it grew at say 7% per year for 20 years, it would end up being worth Y1,547,873, and that would be completely tax free.

If you invested the money in a Taxable account; tokutei or normal, and it grew at say 7% per year for 20 years, then Y1,547,873 - Y400,000 = Y1,147,873 would be liable for 20.15% Capital Gains Tax... so you actually lose out on Y231,296 worth of free money...

Of course, you don't get any tax benefit if you don't make the investment.