Korean Retirement Accounts (IRP + 연금저축) for Foreign Residents

The Individual Retirement Pension (개인형퇴직연금, IRP) and pension savings account (연금저축) are Korea's main long-term retirement vehicles for individual account holders. They share one combined tax-deduction ceiling and are typically used as a pair. But the rules differ from each other in ways that matter significantly when you are a foreign resident, especially when leaving Korea. English coverage of these accounts is thin and, in places, outdated. This guide covers the full operational picture.

The hub guide at Personal Finance Accounts in Korea covers the foundational concepts: what Korean tax residency (거주자 status) means, the 19% flat-rate trap, and the combined ₩9M deduction limit. Read that first if you are new to these accounts.

The flat-rate trap: a short reminder

If you elected the 19% flat income tax rate under 조세특례제한법 제18조의2, your IRP and 연금저축 세액공제 (tax credit) is zero. Not reduced. Zero. Contributing to these accounts still grows your money tax-deferred, but you receive no annual tax refund on contributions.

The rest of this guide assumes you are on progressive income tax rates. If you are on the flat rate, treat every tax-credit figure below as zero for your situation.

Two accounts, one deduction ceiling

The NTS pension account deduction page sets the combined limit. Here is how it works:

• 연금저축 alone: deductible up to ₩6M per year.
• IRP alone or combined with 연금저축: the combined ceiling across both accounts is ₩9M per year.
• The overall annual contribution limit (including non-deductible amounts) across IRP, 연금저축, and employer defined-contribution (확정기여형, DC) personal top-ups is ₩18M.

The standard strategy used by most Korean investors is to fill 연금저축 first to ₩6M, then contribute ₩3M to IRP. The reason is investment flexibility: 연금저축펀드 (the fund variant, opened at a securities firm) has no safe-asset floor and can be invested 100% in equity ETFs. IRP, by contrast, requires at least 30% of the account balance in safe assets at all times. Filling 연금저축 first keeps the equity-accessible portion of your tax-deductible envelope as large as possible.

The annual tax saving at the full ₩9M contribution:

One note worth making explicitly: there is no longer an additional deduction for workers aged 50 or over. A temporary provision from 2020 to 2022 gave that group an extra ₩2M of headroom. The 2022 tax reform made the ₩9M cap universal for all ages from tax year 2023. Old English guides that still mention the 50+ bonus are outdated.

What you can hold inside each account

IRP: the 30% safe-asset floor

Under 근로자퇴직급여보장법 시행령 제26조 (Act on Guarantee of Employee Retirement Benefits Enforcement Decree, Article 26), IRP holders must keep at least 30% of the account balance in safe assets (안전자산) at all times. The remaining 70% can be in risk assets (위험자산).

Many English secondary sources still cite 40% as the safe-asset floor. That figure is incorrect. The current rule is 30%. (As of 2025-2026, the Financial Supervisory Service and the Ministry of Employment and Labor have been in active discussion about raising the equity ceiling further, potentially to 100%, but no legislative change had been enacted as of May 2026. The 30% floor remains current. Verify at account opening.)

Safe assets (안전자산) include bank deposits and savings products, principal-guaranteed insurance products, money market funds (MMF), and bond funds and bond ETFs. Mixed bond-equity ETFs may qualify as safe assets if the bond component dominates, though this has been a contested classification with providers.

Risk assets (위험자산) include equity funds, equity ETFs, mixed equity ETFs, and REITs.

What IRP can hold:

• Korean-listed ETFs, including ETFs listed on the Korean Stock Exchange (KRX) that track overseas indices such as the S&P 500, Nasdaq 100, or MSCI World: yes. These count toward either the safe or risk bucket depending on their asset type.
• Overseas-listed securities (NYSE, NASDAQ, LSE-listed stocks or ETFs): no. Only KRX-listed products are permitted.
• Individual stocks (Korean or foreign): no.
• Leveraged ETFs (레버리지 ETF) and inverse ETFs (인버스 ETF): no.

Confirmed by Mirae Asset investpension IRP ETF restrictions.

For investors who want real-time ETF trading inside an IRP, use a securities-firm IRP (증권사 IRP), not a bank IRP or insurance IRP. Banks offer limited ETF access without real-time trading; insurance companies offer mainly guaranteed-return products with minimal ETF access. Mirae Asset's institution comparison page walks through the differences.

연금저축펀드: no safe-asset floor

The fund variant of 연금저축, opened at a securities firm, has no safe-asset floor requirement. A holder can allocate 100% of the balance to equity ETFs. This is the primary reason 연금저축 should be filled before IRP in any growth-oriented strategy.

Investment restrictions mirror IRP: KRX-listed ETFs are permitted, including those tracking US or global indices. Overseas-listed securities are not permitted. Individual stocks are not permitted. Leveraged and inverse ETFs are not permitted.

There are two other 연금저축 variants worth knowing: 연금저축보험 (insurance type), which offers principal protection and fixed or lifetime annuity options but lower growth potential, and 연금저축신탁 (bank trust type), which stopped accepting new accounts on 1 January 2018 and has near-zero new uptake. If you are opening a new account with investment intent, 연금저축펀드 at a securities firm is the standard choice.

One account rule: you can hold only one 연금저축 account across all financial institutions at any time. IRP, by contrast, permits one account per institution, so you could technically hold IRP at two providers, though this is rarely practical.

The 2025 double-taxation issue for overseas ETF holders

From January 2025, Korean withholding tax on foreign dividends and interest from overseas-index ETFs held inside pension accounts has not been credited against the final pension income tax on withdrawal. Holders of ETFs such as KODEX 미국S&P500 or TIGER 나스닥100 inside IRP or 연금저축 are therefore paying foreign withholding at source plus Korean pension tax on the same income.

The government announced a foreign tax credit (외국납부세액 공제) fix effective July 2026. A credit pool accumulates from January 2025 retroactively at approximately 55.2% of the foreign withholding paid, deductible against final pension income tax on withdrawal. Holders who withdraw before July 2026 cannot access the credit. Source: Bizwatch, 12 August 2025. Verify the exact effective date and credit rate with NTS or your provider before making withdrawal decisions based on this figure.

Severance pay and the IRP

Since April 2022, most employers must transfer severance pay (퇴직금) directly into the departing employee's designated IRP account rather than paying it to a bank account. The full pre-tax severance is transferred; retirement income tax (퇴직소득세) is deferred until withdrawal. This was confirmed by the Kim and Chang legal alert on the 2022 근로자퇴직급여보장법 amendment.

There is one exception directly relevant to foreign residents leaving Korea: foreign workers who depart the country (국외 출국) are exempt from the mandatory IRP transfer requirement, per the Ministry of Employment and Labor Q&A. In that case, the employer may pay severance directly to your bank account.

If your employer runs a defined-contribution (DC, 확정기여형) pension scheme, employer contributions have been flowing into an IRP-equivalent account throughout your employment regardless of visa type or departure plans. Check your IRP statement for both "퇴직소득" and "개인납입" rows: these are tracked as separate pools inside the same account.

The tax treatment of these two pools on withdrawal differs:

Source: Samsung Securities IRP taxation page.

The 퇴직소득세 reduction percentages for the pension phase were consistently cited across brokerage sources but have not been confirmed against a primary law.go.kr citation in this research. Verify against current 근로자퇴직급여보장법 시행령 before making withdrawal timing decisions.

For full severance mechanics, including how severance is calculated and what rights E-9 workers have, see the Korea severance pay guide.

Pre-55 withdrawal: the 16.5% penalty and exceptions

The 16.5% 기타소득세 penalty applies to contributions that received a tax credit and all investment gains. Contributions you made above the ₩9M deductible cap that never received a credit come back to you tax-free when you withdraw.

There is a category of recognized exceptions (부득이한 사유, unavoidable causes) under the income tax law where early withdrawal is taxed at the lower 3.3-5.5% pension rate instead of 16.5%.

For 연금저축, the recognized 부득이한 사유 list includes:

Source: Mirae Asset investpension mid-term withdrawal page.

The same list applies to IRP voluntary contributions. 소득세법 시행령 제20조의2 제1항 제1호 나목 explicitly includes 해외이주 as a 부득이한 사유 for 연금계좌, which is the umbrella category for both 연금저축 and IRP voluntary contributions. Submit the 해외이주신고 확인서 to your provider within 6 months of certificate issuance and the lower 3.3-5.5% pension rate applies to the voluntary contribution portion of an IRP just as it does for 연금저축. Older Korean financial blog posts that say IRP overseas departure does not qualify either predate the current 시행령 wording or conflate the voluntary IRP portion with the severance pay portion, which has its own 퇴직소득세 timing rules (a 3-year holding window applies to severance transferred into an IRP).

IRP does not permit partial withdrawals of voluntary contributions for medical expenses in the ordinary sense. Full account termination (under a 부득이한 사유, or with the 16.5% penalty if no exception applies) is the only option. 연금저축 allows partial withdrawal (중도인출) of contributions that did not receive a tax credit, without penalty.

Leaving Korea: the departure workflow

This is the section that most English guides skip. Both accounts can be closed at the lower pension rate on departure if you use the 해외이주 exit cleanly; both default to the higher 16.5% rate if you do not.

Recommended order of operations:

1. Before booking departure flights, contact both your 연금저축 and IRP providers. Get their current documentation checklist. Procedures vary by institution.
2. Obtain the 해외이주신고 확인서 (Overseas Relocation Confirmation Certificate) from the Overseas Koreans Agency (재외동포청). This document is what triggers the pension rate for both 연금저축 and IRP voluntary contributions. Samsung Securities and Mirae Asset typically require this certificate to be presented within 6 months of its issuance, per brunch.co.kr/@dominiccho/183. Confirm the timing with your provider.
3. Close 연금저축 using the 해외이주 exemption while still in Korea and while your ARC is still active. This qualifies for the 3.3-5.5% pension rate.
4. Close IRP using the same 해외이주 exemption, simultaneously. The voluntary contribution portion qualifies for the same 3.3-5.5% pension rate under 소득세법 시행령 제20조의2. The severance (퇴직금) portion follows 퇴직소득세 rules separately.
5. Documents required for in-Korea closure: 해외이주신고 확인서 (for both accounts), ARC, passport, linked Korean bank account details. Some institutions may require additional documents.
6. Branch visits are typically required for closure. Processing at the branch is usually same-day when documents are complete.

If you have already left Korea and cancelled your ARC, IRP can still be closed. The process requires a consulate-notarized power of attorney (영사 확인 위임장). You obtain this at a Korean consulate abroad, send it to a designated representative in Korea, who visits the branch on your behalf. The proceeds go to your Korean bank account, not the representative's account, per KB Kookmin Bank's IRP FAQ. This is a multi-week process. It is easier to close accounts before you leave.

Your IRP proceeds and 연금저축 proceeds will arrive in KRW to your Korean bank account. Transferring abroad follows the standard remittance process (Wise, WireBarley, or bank SWIFT transfer).

For National Pension Service (국민연금) refunds on departure, see the Korea pension refund guide.

Post-55 withdrawal: for residents planning to retire in Korea

Three conditions must be met for pension-rate treatment:

1. You are 55 years of age or older.
2. The account has been open for at least 5 years (the 5-year clock runs from account opening date, not first contribution). For severance pay transferred into IRP, the 5-year holding requirement does not apply.
3. Annual withdrawals stay within the formula: [account balance divided by (11 minus the pension receipt year number)] multiplied by 120%. Withdrawals above this formula amount are taxed at 16.5%.

Pension tax rates by age at withdrawal (연금소득세), confirmed by the NTS pension income page:

Annual pension income threshold: from tax year 2024, private pension income (연금소득 from IRP and 연금저축 combined) at or below ₩15M per year is taxed at the flat pension rate above (분리과세, separate taxation). Income above ₩15M gives you two choices: combine with other income for comprehensive progressive taxation, or elect a 16.5% flat rate on the excess. This threshold was raised from ₩12M effective tax year 2024 per the Nongmin.com coverage of the amendment. Any guide still citing ₩12M is outdated (as of 2026, verify at NTS).

Most foreign residents drawing a pension of ₩15M or less per year from these accounts will stay under the threshold and face no comprehensive-taxation complication.

Taking the entire account as a lump sum at age 55 does not qualify for the pension rate. A lump-sum withdrawal is treated as early/non-pension withdrawal and is subject to 16.5% on the credited and gains portion. The point of reaching age 55 is to draw the account as a multi-year annuity at the reduced pension rate, not to take one payment.

For a foreign resident who left Korea before age 55 and never closed the IRP: you can hold the account abroad and begin pension withdrawals from abroad once you turn 55, if you meet the 5-year condition. Payments flow to your Korean bank account and are then remitted abroad. You may also be required to submit annual status documentation to the financial institution to continue receiving payments. The 3.3-5.5% pension rate should apply if the conditions are met, but non-resident withholding treatment and applicable tax treaty provisions may affect the final rate. Confirm with NTS or a Korean tax agent (세무사) before commencing withdrawal from abroad.

Opening an account: providers for foreign residents

Documents required at most providers:

• ARC (외국인등록증): primary ID.
• Passport: secondary ID, required at most institutions.
• Korean bank account: for contributions and withdrawals.
• Korean postpaid phone number: for SMS-based authentication.

Name format consistency across your phone carrier, ARC, and brokerage registration is the most common failure point for foreign residents. Ensure the name on your bank account and your ARC match exactly.

Providers with documented foreign-resident access:

"Confirmed" means a primary or institution source was found. "Inferred" means the institution supports brokerage account opening for foreign residents and the pension accounts are expected to follow the same access rules, but no IRP/연금저축-specific foreign-resident source was verified in this research. Confirm with your chosen provider before opening.

The financial certificate (금융인증서) introduced in May 2024 reduces one layer of authentication friction for foreign residents at institutions that support it.

Annual filing

Each January, your financial institution issues a 연금보험료등 소득공제 증명서 confirming your contribution amount and eligible deduction. This is automatically pulled into the NTS Hometax 간소화 서비스 (simplified year-end tax service), which opens in mid-January.

Employed workers: the deduction flows through 연말정산 (year-end tax settlement), which your employer processes in January and February. Hand the 간소화 printout or digital confirmation to your HR department.

Self-employed workers: include the deduction in your 종합소득세 신고 (comprehensive income return), filed by 31 May of the year following the contribution year.

The year-end tax settlement guide covers the full timeline and deduction stack.

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FAQ

Should I put more into 연금저축 or IRP?

Fill 연금저축 first, up to ₩6M per year. Then add up to ₩3M to IRP to reach the combined ₩9M cap. 연금저축펀드 has no safe-asset floor, so you can invest 100% in equity ETFs. IRP requires at least 30% in safe assets, which reduces effective equity exposure. If your goal is growth, 연금저축 gives you more flexibility for the first ₩6M.

I am on the 19% flat rate. Are these accounts useless?

For the annual tax credit, yes: electing the flat rate zeros out both the IRP and 연금저축 세액공제 entirely. The accounts can still grow tax-deferred, but you get no annual refund on contributions. Before contributing, recalculate whether the flat rate is still the correct choice for your total income. The year-end tax settlement guide covers the comparison.

Will I lose money on IRP if I leave Korea before retirement?

Not if you use the overseas emigration (해외이주) exit path. Under 소득세법 시행령 제20조의2, overseas emigration is a recognized 부득이한 사유 for 연금계좌, which includes both IRP and 연금저축. Close the account while you are still in Korea using the 해외이주신고 확인서, within 6 months of certificate issuance, and the voluntary IRP portion is taxed at the lower 3.3-5.5% pension rate rather than the 16.5% penalty. The severance pay portion of an IRP follows separate 퇴직소득세 rules. If you close IRP outside the 해외이주 exit (for example, after ARC cancellation, or without the certificate), the 16.5% penalty does apply.

What's the difference between closing IRP early under 해외이주 vs without it?

With 해외이주 properly invoked: the voluntary IRP portion (credited contributions + gains) is taxed at the lower 3.3-5.5% pension rate. Without it: the same portion is taxed at the 16.5% 기타소득세 penalty rate. The certificate (해외이주신고 확인서, issued by the Overseas Koreans Agency, 재외동포청) is what makes the difference. Submit it to your IRP provider within 6 months of issuance. The severance pay portion of the IRP is taxed under 퇴직소득세 rules regardless of the 해외이주 path.

Can I hold US stocks inside my IRP or 연금저축?

Not directly. Neither account allows overseas-listed securities. However, you can gain exposure to overseas indices through Korean-listed ETFs that track those benchmarks, such as KODEX 미국S&P500 or TIGER 나스닥100. These are listed on the Korean Stock Exchange and are permitted inside both accounts. Leveraged and inverse ETFs are not permitted inside either account.

I am self-employed. Does the IRP make sense for me?

Yes. Since 2017, self-employed individuals with Korean business income can open an IRP and claim the same ₩9M combined tax deduction. You file through the comprehensive income return (종합소득세 신고) in May rather than through 연말정산. The same contribution logic applies: fill 연금저축 to ₩6M first, then IRP to ₩3M.

What happens to my severance if it lands in an IRP and I want to withdraw it?

Severance pay transferred into an IRP is tracked as a separate pool and taxed under retirement income tax (퇴직소득세) rules, not the 16.5% penalty that applies to voluntary contributions. For most shorter tenures, this produces a lower effective rate than 16.5%. For full severance mechanics, see the Korea severance pay guide.

Is there still an additional tax deduction for people over 50?

No. A temporary provision from 2020 to 2022 gave workers aged 50 and over an additional ₩2M of deductible headroom. The 2022 tax reform made the ₩9M combined cap universal for all ages from tax year 2023. The age-based bonus no longer exists. Any English guide that still mentions the 50+ additional credit is outdated.

@misc{seoulstart-irp-pension-savings-foreign-residents-korea,
  author = {{Seoulstart Editorial Team}},
  title = {{Korean Retirement Accounts (IRP + 연금저축) for Foreign Residents}},
  year = {2026},
  publisher = {Seoulstart},
  url = {https://seoulstart.com/guides/irp-pension-savings-foreign-residents-korea},
  note = {Last updated May 25, 2026}
}