Changes to the NISA System in Japan

Japanese NISA program updates new rules

If you’re planning your retirement in Japan, the chances are you’ve already heard of the NISA (Nippon Individual Savings Account) System. But are you aware of the recent changes that the Japanese government has decided to implement to the NISA program? If not, you’ll be excited to learn about some of the new benefits that NISA will have to offer.

What is the Japanese NISA Investment Program?

NISA for Americans, retirement accounts for Americans, retirement savings for foreign people in JapanThe NISA system was launched in Japan by the Japanese government in 2014. The system emulates other tax-advantaged private retirement account systems, such as those in the U.K. and Canada. The intention was to encourage individuals to take initiative in saving for their retirement independently, rather than relying on the declining pension system.

The original NISA system offered two types of accounts: regular NISA and Tsumitate NISA. Both accounts offered contributors exemption from capital gains and dividend taxes on their NISA investments. The regular NISA offered a higher annual contribution limit while the Tsumitate NISA offered a longer period of exemption.

Initially, the NISA system was to be temporary. Contributors would be able to open new accounts with the regular NISA system until 2028. New Tsumitate NISA would be available until 2042. However, the system was so well-received that a revised NISA system will be permanently available starting in 2024.

What Are the Changes And Updates to the Japanese NISA Account System?

Changes to the NISA system in Japan will include a number of benefits for investors. Not only will the system become permanent, but the caps on contributions will be raised and the period of tax exemption will be extended. Here are some of the new benefits contributors can look forward to:

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  • -The Tsumitate NISA and Regular NISA will be consolidated into a new Tsumitate framework.
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  • -The maximum annual investment for the new Tsumitate framework will increase from ¥400,000 to ¥1,200,000.
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  • -The Regular NISA account will be replaced by a new growth investment that will be available along with the new Tsumitate NISA
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  • -Exemption limit for the new Regular NISA account will increase from ¥1.2 million to ¥2.4 million.
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  • -The tax exemption period will now be unlimited for both Regular and Tsumitate accounts
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  • -The lifetime tax exemption limit will be raised to ¥18 million
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  • -Of the ¥18 million tax exemption limit, ¥12 million may be applied to the growth investment framework.

What Do These Changes Mean for Foreign Residents in Japan?

Retirement in Japan for Americans, Retirement Accounts for Americans, American Retirement Savings, NISA for AmericansThese changes to the NISA system in Japan provide more opportunities for foreign residents to save money in a tax-free account and invest in the stock market. The increase in the annual investment limit also means greater cumulative gains for investors. Despite these improvements, however, the NISA investment program is not perfect.

The NISA is not a complete financial plan. In addition, challenges such as language restrictions can make it difficult for English speakers to navigate the program. Fortunately, an experienced financial expert can help. 

A trusted financial advisor will understand all your investment options and be able to devise a full financial plan perfect for your individual needs. Don’t leave your retirement to chance. Talk to an advisor today so you can rest easy knowing your future is secure.

 

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