Accounts & Tax

Fill the sheltered space first

Over 30 years, the account wrapper around an investment often matters as much as the investment itself. Every country covered here offers legal, government-designed spaces where compounding runs partly or wholly tax-free. Using them fully — before investing a single unit of currency in an ordinary taxable account — is the closest thing to free return you will ever get.

"The miracle of compounding returns is overwhelmed by the tyranny of compounding costs."

— John C. Bogle, founder of Vanguard
Which year these figures are for. Everything below is the 2026 tax year — US limits are the IRS figures for 2026, Japan is the NISA and iDeCo system in force in 2026, Korea is the regime after the 2026 ISA expansion. Each section lists its primary source and the date the figures were last checked. They change with almost every budget cycle in all three countries. Verify against official sources (IRS, 国税庁/金融庁, 국세청/금융위원회) or a licensed professional before acting.
United States

401(k), IRA, and the long-term capital-gains advantage

AccountAnnual limit — 2026 tax yearTax treatmentLong-horizon note
401(k) / 403(b) $24,500 (employee)
+$8,000 catch-up at 50+; $11,250 at ages 60–63		 Traditional: deductible now, taxed on withdrawal. Roth: taxed now, tax-free later. Always capture the full employer match first — it is an instant, guaranteed return no market can offer.
IRA / Roth IRA $7,500
+$1,100 catch-up at 50+		 Roth: contributions after-tax, all growth and withdrawals tax-free in retirement (income limits apply). Decades of compounding entirely tax-free makes the Roth especially powerful for the young; contributions (not gains) can be withdrawn anytime.
HSA $4,400 (self) / $8,750 (family) Triple-advantaged with a high-deductible health plan: deductible in, growth untaxed, medical withdrawals untaxed. Investable HSA balances are a stealth retirement account for those eligible.
Taxable brokerage Unlimited Long-term capital gains (held >1 year): 0% / 15% / 20% by income. Qualified dividends at the same rates. Holding for decades defers tax indefinitely; heirs currently receive a stepped-up basis. Index funds are tax-efficient by design.

US investor priority order (a common default)

  1. 401(k) up to the full employer match.
  2. High-interest debt paid off; emergency fund in cash.
  3. Roth or traditional IRA to the limit.
  4. HSA to the limit, if eligible.
  5. Rest of 401(k) to the limit.
  6. Taxable brokerage with broad index funds; hold ≥1 year, ideally decades.
Source Last checked: 12 September 2026.
Japan

The new NISA: a decades-scale gift

Japan's reformed NISA (2024–) is one of the most generous retail tax wrappers anywhere. Inside it, capital gains and dividends are tax-free with no time limit, versus 20.315% tax in an ordinary account. For a resident of Japan compounding US or global index funds for 20–30 years, filling NISA first is close to a no-brainer.

Going deeper on NISA. The two quotas, how the ¥18M lifetime cap counts at book value, the misconceptions, and the administrative traps that quietly cost money — all of it is on the dedicated NISA page.
WrapperAnnual capacityLifetime capacityNotes
NISA — tsumitate quota ¥1.2M ¥18M combined
(max ¥12M via growth quota)		 Monthly-style purchases of approved low-cost funds — S&P 500 and all-country index funds dominate the approved list. Built for dollar-cost averaging.
NISA — growth quota ¥2.4M Wider menu including listed stocks and ETFs. Selling restores lifetime capacity the following year — the wrapper is reusable.
iDeCo ≈ ¥144k–816k
(varies by employment)		 — Personal pension: contributions are income-deductible, growth untaxed, but funds are locked until age 60. The deduction makes it very attractive for stable earners.
Tokutei (特定) taxable account Unlimited — 20.315% flat tax on gains and dividends, with the broker handling withholding and reporting. The overflow destination once NISA and iDeCo are full.
US stocks from Japan: the US withholds 10% of dividends under the US–Japan treaty (file the W-8BEN with your broker). In a taxable account Japan then taxes the dividend too, with a foreign tax credit available at filing. Inside NISA the Japanese tax disappears but the 10% US withholding still applies — one reason low-dividend broad index funds fit NISA especially well. Yen-denominated mutual funds tracking the S&P 500 handle all of this plumbing internally.

Japan resident priority order (a common default)

  1. Emergency fund in yen deposits.
  2. NISA tsumitate quota with a low-cost S&P 500 / all-country fund, automated monthly.
  3. iDeCo if the income deduction helps you and the age-60 lock is acceptable.
  4. NISA growth quota toward the ¥3.6M annual total.
  5. Tokutei account for anything beyond.
Source Last checked: 12 September 2026.
Korea

연금저축, IRP, ISA — and the 22% overseas gains tax

Korean investors holding US-listed stocks directly face a distinctive tax landscape: capital gains on overseas-listed stocks are taxed at 22% (including local surtax) on net gains above a ₩2.5M annual deduction, self-reported each May. Losses realized the same year offset gains. US dividends are withheld at 15% under the treaty, and large financial income can trigger comprehensive taxation. The sheltered accounts below can hold Korean-listed ETFs that track US indexes — which is how most long-term Korean investors get tax-advantaged S&P 500 exposure.

AccountContributionTax benefitLong-horizon note
연금저축펀드
(pension savings fund)		 Up to ₩18M/yr
(with IRP combined)		 Tax credit of 13.2–16.5% on up to ₩6M (₩9M with IRP); growth tax-deferred; withdrawn as pension at 3.3–5.5%. Can hold Korean-listed S&P 500 / Nasdaq / all-world ETFs. The closest Korean analogue to a Roth-style decades wrapper, plus an annual tax credit.
IRP (개인형 퇴직연금) Shares the ₩18M Same credit pool as 연금저축, up to ₩9M combined; ≥30% must sit in lower-risk assets. Best used after 연금저축 for the extra ₩3M of credit; funds locked until 55 with limited exceptions.
ISA (중개형) ₩40M/yr, ₩200M total
raised from ₩20M / ₩100M in 2026		 Gains up to ₩5M tax-free (₩10M on the 서민형 / 청년형 variants), raised from ₩2M / ₩4M in 2026; excess taxed at 9.9% separately, not comprehensively. 3-year minimum holding. Holds Korean-listed stocks and ETFs (not foreign-listed directly). On maturity, proceeds can roll into 연금저축 for an extra credit — a powerful relay for patient savers.
Overseas brokerage (taxable) Unlimited 22% on gains above ₩2.5M/yr; 15% US dividend withholding. Direct US-listed shares and ETFs. The annual ₩2.5M deduction rewards gradual, planned realization of gains.
Korean-listed vs US-listed funds: the same S&P 500 exposure is taxed differently depending on where the fund is listed — Korean-listed overseas-index ETFs in a taxable account are taxed as dividend income (15.4%, and count toward comprehensive-tax thresholds), while US-listed funds fall under the 22%/₩2.5M capital-gains regime. Which is better depends on your amounts and other income; inside 연금저축/IRP/ISA the question mostly disappears, which is one more argument for filling those first.

Korea resident priority order (a common default)

  1. Emergency fund in won deposits.
  2. 연금저축펀드 to ₩6M for the full tax credit, in broad index ETFs, automated monthly.
  3. IRP to ₩9M combined if the extra credit and age-55 lock suit you.
  4. ISA (중개형) toward its annual limit.
  5. Taxable account — Korean-listed or US-listed funds per the tax note above.
Source
  • The 22% rate on overseas share disposals, the ₩2.5M annual deduction and the May self-assessment — National Tax Service.
  • 연금저축 and IRP tax-credit rates and ceilings — National Tax Service; product rules via Financial Services Commission.
  • The 2026 ISA expansion — the 조세특례제한법 amendment; see Ministry of Economy and Finance. Verify the ISA figures before acting: secondary coverage of this change disagreed on the exact commencement date, so the amounts here are stated as the expanded limits now in force, not as of a specific date.
Last checked: 12 September 2026.
Cross-border fine print

Three things non-US holders of US stocks should know

1. Dividend withholding

The US withholds tax on dividends before they reach you: 10% for Japanese residents, 15% for Korean residents under the respective treaties — make sure your broker has a valid W-8BEN on file, or the default rate is 30%. Your home country may tax the dividend again, with a foreign-tax credit at filing. Capital gains, by contrast, are generally not taxed by the US for treaty-country residents — only at home.

2. US estate tax

Non-resident aliens get only a $60,000 exemption on US-situs assets (including US-listed stocks) before US estate tax of up to 40% applies. Japan has an estate-tax treaty with the US that can substantially raise the effective exemption; Korea has none. For large portfolios this is a real planning issue — some non-US investors use non-US-domiciled funds (e.g. Ireland-listed UCITS) partly for this reason. Talk to a cross-border professional before it matters.

3. Currency & costs

FX conversion fees at purchase and sale are a real cost — often larger than fund fees — and vary widely between brokers. Home-listed funds that hold US stocks (a Tokyo-listed S&P 500 fund, a KRX-listed S&P 500 ETF) push FX handling inside the fund at institutional rates and fit sheltered accounts. See the currency section for the hedged-vs-unhedged question.