input
correction
surfaceA17
Tax bomb in 13 this year?
“Opening an IRP account for office workers, now mandatory, not optional”Tax deduction of up to KRW 9 million per year
It is expected that many office workers will have to pay additional taxes after the year-end tax settlement this year as well. An individual pension account (IRP) is one of the most effective ways to avoid the ‘tax bomb of 13 months’. Experts emphasize that “creating and investing in a separate IRP account is a must for office workers, not an option.”
The key is tax savings through tax credits. The government provides tax credits of up to 9 million won a year to encourage people to prepare for their old age. The deduction rate is 16.5% for annual income of 55 million won or less, and 13.2% for annual income exceeding 55 million won. If an office worker with an annual salary of 50 million won puts 6 million won into an IRP account for one year, 500,000 won per month, he can get back 990,000 won (600 × 16.5%) at the end of the year. In terms of yield, this equates to a fixed return of 16.5% per annum.
There is also a tax deferral effect. The IRP does not impose annual tax on operating income from the account. You pay taxes when you retire. It is explained that the compound interest effect can be maximized as no tax is paid in the middle of asset formation. Moreover, if you receive it as an annuity at retirement, you can pay taxes with a relatively low pension income tax.
Lee Jeong-hwan, head of Mirae Asset Global Investments’ ETF management division, said, “Considering tax issues, mid- to long-term investors are advised to purchase ETFs or funds through IRP.” If you operate it, the effect will increase,” he said.
Reporter Seong Sang-hoon uphoon@hankyung.com
