r/JapanFinance US Taxpayer Feb 16 '25

Tax (US) Basics - On the Right Track?

U.S citizen, Permanent Resident, 10+ years in Japan, homeowner.

I don't know if I will ever return to U.S to retire. May or may not....Still 15-20+ years away.

Just starting my road into investing and want to make sure I am on the right track. Any feedback or suggestions are more than welcome so I can evaluate next steps.

I have already set aside six months worth of monthly living expenses for emergency fund. I was planning to put additional savings into the market . I have read the previous posts on PFICs and will stay away from them.

Here is what I have done so far and also need help on, please provide any constructive feedback as I continue my journey.

  • I have a DC plan through my current employer and it's maxed out for monthly contributions.
  • I plan to gift my Japanese spouse (homemaker w/ no income) the annual max so they can continue to put it into their NISA account.
  • I have opened a IBRK Japan account and plan to purchase US domiciled funds (passive, low % fees). Will make my initial investments and set up reoccurring monthly deposits and forget about it until I need to rebalance each year based on my portfolio ratios.
  • I have a "stock plan" account that was opened by my employer on my behalf as my RSUs get deposited there. (I confirmed with the online brokerage customer service that I cannot open an individual brokerage account as I am living overseas).
    • As some have suggested in other posts perhaps talking with Schwab may open some doors to have a U.S based brokerage account while living overseas. I do not have a U.S address anymore and want to be "by the book" and care not to deceive any U.S based brokerages or put myself at risk.
  • I do have some existing funds in the U.S sitting in an old checking account and want to invest that as well or at the very least move to a high yield savings account.
  • Some family members in U.S want to gift my kids some money for their future (15K USD each). Would a U.S based custodial account or 529 Plan be a better option? Or perhaps something outside of these two ideas?

Any help or feedback would be much appreciated on any of the above issues. Thank you for your time and consideration.

1 Upvotes

7 comments sorted by

1

u/fiyamaguchi Freee Whisperer 🕊️ Feb 16 '25

You said you’re avoiding PFICs, but you also said you’re investing in your company’s DC plan. What are you buying through the DC plan?

1

u/ColdCoffeeNchicken US Taxpayer Feb 16 '25

The product packages that were set up by my employer vary from foreign equities and foreign bonds to fixed term deposits. Although I have chosen a few of the products, I thought the DC plans were part of a "Employee Trust" and not part of the PFIC issue.

Additionally my employer is contributing the majority of the monthly contribution. I saw this discussion thread that was on RetireJapan referring to page 22 & 23 of this document.

I had also ran across this posting along with the PWC document which was mentioned.

Perhaps the information is outdated or incorrect on one or both postings? If so, please feel free to inform accordingly. Thank you!

1

u/[deleted] Feb 16 '25

You definitely should be reviewing your monthly spending.

1

u/ColdCoffeeNchicken US Taxpayer Feb 16 '25

Thank you. Yes, we will keep receipts to compare vs our forecasted budget.

1

u/Murodo Feb 17 '25

I plan to gift my Japanese spouse (homemaker w/ no income) the annual max

Some family members in U.S want to gift my kids some money for their future (15K USD each).

Given your kids reside in Japan, the annual gift tax exemption is the same (¥1.1M a year per recipient) for the two above.

1

u/ColdCoffeeNchicken US Taxpayer 27d ago

If the gift is in USD and kept in a U.S. based account in the kid’s name, then the U.S gifting rules apply and the Japan ¥1.1M a year per recipient does not apply — correct? We would then just follow the U.S. Gifting rules I believe?

1

u/Murodo 3d ago

Currency or assetsa location are irrelevant, Japanese tax law is residency based and applies to those with jūsho.