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NISA and iDeCo both let you invest in Japan with tax benefits, but they solve different problems. NISA makes your investment gains tax-free, and you can sell any time. iDeCo cuts your income tax and resident tax every year, but you generally can’t take the money out until age 60. For foreign residents who may leave Japan, that lock-up is often the deciding factor.
Key facts (as of October 2026)
- NISA: Gains are tax-free with no time limit. You can invest up to ¥3.6 million a year, with a lifetime limit of ¥18 million. (FSA)
- iDeCo: Contributions are fully deductible from your income. You generally can’t withdraw until age 60. (iDeCo official site)
- New iDeCo limits: Higher limits start with December 2026 contributions. (MHLW)
- Risk: Investment trusts in either account are not principal-guaranteed. You can lose money.
What is the main difference between iDeCo and NISA?
The main difference is when you get the tax benefit, and when you can use the money.
| NISA | iDeCo | |
|---|---|---|
| What it is | A tax-free investment account | A private pension you build yourself |
| Tax benefit when you put money in | None | Contributions are fully deductible from your income (iDeCo) |
| Tax on gains | None (FSA) | None while invested (iDeCo) |
| Tax when you take money out | None | Deductions apply, as a pension or a lump sum (iDeCo) |
| When you can take money out | Any time, by selling | Generally from age 60 (iDeCo) |
| Who can join | Residents of Japan aged 18 and over (FSA) | Depends on your pension category (iDeCo) |
| Fees | Depend on your broker and what you buy | Fees to the national federation, plus provider fees (iDeCo FAQ) |
Outside NISA, gains and dividends from stocks and investment trusts are taxed at about 20%. Inside NISA, they are tax-free. (FSA)
NISA vs iDeCo: when you save tax
Both are tax-advantaged, but at different moments. iDeCo money is generally locked until age 60.
When you put money in
While it grows
When you take it out
What fits you
May leave Japan? Start with NISA
Staying long term? You can use both: iDeCo for the yearly tax cut, NISA for flexible savings.
Investment trusts are not principal-guaranteed. Source: FSA, iDeCo official site (National Pension Fund Association). As of October 2026.
How does each one save you tax?
NISA saves tax on your gains
You pay no tax on gains or dividends inside NISA. The tax-free period has no end date. (FSA)
NISA doesn’t reduce this year’s taxes. The benefit grows as your investments grow.
iDeCo saves tax every year you contribute
All your iDeCo contributions are deducted from your income. The iDeCo official site gives an example. Contributing ¥10,000 a month, with 10% income tax and 10% resident tax, saves about ¥24,000 a year. (iDeCo)
Gains inside iDeCo are reinvested without tax. When you take the money out, you can use the public pension deduction or the retirement income deduction, depending on how you receive it. (iDeCo)
How much can you put in each year?
NISA limits
| Quota | Annual limit | Lifetime limit |
|---|---|---|
| Tsumitate investment quota | ¥1.2 million | ¥18 million in total |
| Growth investment quota | ¥2.4 million | Up to ¥12 million of the ¥18 million |
You can use both quotas in the same year, for up to ¥3.6 million. When you sell, the purchase cost of what you sold becomes available again from the next year. (FSA, FSA Q&A)
iDeCo limits, before and after December 2026
iDeCo limits depend on your pension category. They go up with contributions for December 2026, which are debited in January 2027. (MHLW, MHLW)
| Who you are | Until November 2026 | From December 2026 |
|---|---|---|
| Self-employed, freelancers, students (Category 1) | ¥68,000 a month | ¥75,000 a month |
| Employees with no company pension (Category 2) | ¥23,000 a month | ¥62,000 a month |
| Employees with a company pension (Category 2) | ¥20,000 a month, within a combined cap | ¥62,000 minus your employer’s contributions |
| Dependent spouses (Category 3) | ¥23,000 a month | ¥23,000 a month (no change) |
For Category 1, the limit is shared with the National Pension Fund and additional premiums. (MHLW) The minimum contribution is ¥5,000 a month. (iDeCo)
A new Category 5 for people aged 60 to 69 also starts on December 1, 2026. (MHLW)
Why does leaving Japan change the answer?
Because iDeCo money is generally locked until age 60, and NISA money is not.
With NISA, you can sell your investments before you leave. You also have an option if your employer sends you abroad. By filing a notice in advance, you can keep your NISA holdings tax-free for a period, though you can’t buy more while abroad. (FSA Q&A) If you leave without filing that notice, your NISA account is treated as closed. (e-Gov)
With iDeCo, early withdrawal is possible only in narrow cases. You can receive a lump-sum withdrawal payment only if all of these apply. (iDeCo FAQ)
- You are under 60.
- You are not in a company-type DC plan.
- You can’t join iDeCo anymore. Non-Japanese people living abroad are one example.
- You are not a Japanese national living abroad aged 20 to 59.
- Your total contribution period is 5 years or less, or your assets are ¥250,000 or less.
- You are not entitled to a disability benefit.
- It has been 2 years or less since you last lost iDeCo or company DC membership.
If you have contributed for more than 5 years and have more than ¥250,000, you generally wait until age 60. Plan for that before you start.
Which should you start first?
It depends on how sure you are that you’ll stay in Japan. This table summarizes the trade-offs, not advice for your situation.
| Your situation | What usually fits |
|---|---|
| You may leave Japan within a few years | NISA, because you can sell any time |
| You plan to stay in Japan long term | Both. iDeCo for the yearly tax cut, NISA for flexible savings |
| You want to lower this year’s taxes | iDeCo, because contributions are deductible |
| You may need the money before 60 | NISA |
| You have a high income and a stable job | Both are worth comparing. iDeCo’s deduction is worth more at higher tax rates |
The last point follows from how deductions work. A deduction lowers your taxable income, so it saves more when your tax rate is higher. (iDeCo)
How does iDeCo affect furusato nozei?
iDeCo contributions are fully deductible from your income. (iDeCo) Your furusato nozei limit depends on your resident tax, and lower taxable income means lower resident tax. (MIC)
If you start iDeCo, recalculate your furusato nozei limit. See Furusato Nozei Limit.
Can foreigners use NISA and iDeCo?
NISA
Yes, if you live in Japan. The rules require you to be a resident of Japan aged 18 or over, and they set no nationality condition. You need your My Number to open the account. (FSA, NTA) Each person can have only one NISA account. (FSA)
Broker rules for foreign residents differ. Some accept applications only by mail, and some restrict US persons. See Best NISA Accounts for Foreigners.
iDeCo
You can join if you belong to a Japanese public pension category. Examples are company employees and self-employed people in the national pension. (iDeCo)
Some people can’t join. For example, people who are exempt from national pension premiums can’t join, and some employees in company DC plans can’t either. (iDeCo) Check your category before you apply.
What do they cost?
For NISA, costs depend on your broker and what you buy, such as fund management fees.
iDeCo has fees to the National Pension Fund Association: ¥2,829 when you join, and ¥105 each time you contribute. Your provider and its partner bank may charge more. (iDeCo FAQ) These fees are deducted from your contributions.
What should you do next?
- Decide how likely you are to stay in Japan for the long term.
- If you may leave, start with NISA. See NISA for Foreigners in Japan.
- If you plan to stay, compare iDeCo providers and check your pension category. See iDeCo for Foreigners in Japan.
FAQ
Can I use NISA and iDeCo at the same time?
Yes. They are separate schemes, so you can use iDeCo for the yearly tax cut and NISA for flexible savings.
Can I withdraw iDeCo money if I leave Japan?
Only in narrow cases. You need to meet all the lump-sum withdrawal conditions, including a contribution period of 5 years or less, or assets of ¥250,000 or less. (iDeCo FAQ)
What happens to my NISA if I leave Japan?
If your employer sends you abroad and you file a notice in advance, you can keep your holdings tax-free for a period. If you leave without the notice, the account is treated as closed. (FSA Q&A, e-Gov)
Is NISA or iDeCo safer?
Neither is guaranteed. Both hold investments that can lose value. Choose what you buy based on your own risk tolerance.
When do the new iDeCo limits start?
With contributions for December 2026, debited in January 2027. (MHLW)
Does iDeCo lower my furusato nozei limit?
It can. iDeCo lowers your taxable income, and your furusato nozei limit depends on your resident tax. Recalculate your limit after you start.
This article is general information, not investment or tax advice. Investment trusts are not principal-guaranteed. Information is as of October 2026. Sources: FSA: NISA, iDeCo official site, MHLW: iDeCo limit changes.