hi im a new working employee (新入社員) for a japense company started this april.
so my company just gave me the guide documents to “defined contribution plan” 確定拠出年金 (DC) and ive been reading all the papers and searching on the internet the past few days. and i still wanna know what you guys think or how many of you who are working in a japanese company who actually applied for it.
i know that 確定拠出年金 (DC) is know divided into two types: the 生活設計年金 and the 生活設計手当. the first one is the type that you can only access once you reached 60 yo, and the other one is the type that basically just will be given to you as your current salary every month.
and i also read that i can’t stop in the middle of I chose the 生活設計年金 one and have to wait until im 60 yo to access the money.
tbh im not sure like how long i’ll live in japan. it could be yes forever until im dead, or probably just another 10 years or so before i make new plan to move from the country.
can you guys please share your opinions or thoughts or maybe experiences for applying this “defined contribution plan” 確定拠出年金 whether it’s the (DC) or (iDeCo) one?? thank you very much!!!
edit: no, im not a US citizen, im an indonesian.
4 comments
Are you a US citizen?
DC plans where you contribute a portion of your salary into it could potentially make you subject to PFIC reporting, although I heard that DC plans that are paid entirely by the company won’t.
If you aren’t a US citizen then the above doesn’t apply.
If you’re a US citizen, definitely talk to the company’s accountants and some tax experts before you make a decision. My new company automatically gave me a 401k and I had a hard time figuring out if the US considers it a taxable account or not. The situation for Americans and taxes is complicated.
You absolutely should. The tax benefits are huge, and the fact that you can’t access the money until you’re 60 is a very good thing, even though it might not seem that way now
Both the initial investment and the growth are tax free, which makes it a very good deal especially if you’re a high tax payer. The cost as you say is locking your money up until 60. Generally you’re almost certainly going to need some money to retire on, so that’s not a big problem unless you’re very short on cash at the moment and want to spend everything you earn.
Certainly if you have enough income to be maxing your NISA allowance then I’d say put as much as you can into the DC (it probably won’t be a whole lot).