How to Invest in U.S. ETFs Through a Pension Savings Plan and IRP in 2026
A complete guide to investing in U.S. ETFs through a pension savings plan and an Individual Retirement Pension (IRP). Covers a maximum tax credit of KRW 1.485 million, tax deferral, and a three-account combination tax-saving strategy. Use the tax credit calculator to check your refund.
"Can I get a refund at year-end tax settlement while simultaneously investing in U.S. ETFs?" — Yes, it's possible. By using a pension savings plan and an IRP (Individual Retirement Pension), you can enjoy a triple tax-saving benefit: a tax credit (refund) on contributions, tax deferral (postponing tax) on investment returns, and low-rate taxation (reducing tax) after age 55. Adding domestic-listed U.S. ETFs to the mix maximizes the tax-saving effect. In this article, we will cover the differences between a pension savings plan and an IRP, the structure of the triple tax benefit, the list of investable U.S. ETFs, and the ultimate tax-saving strategy combining a pension savings plan + IRP + ISA — everything from start to finish so that beginners can take action right away.
Table of Contents
- Pension Savings Plan vs. IRP at a Glance
- Triple Tax-Saving Structure (Tax Credit + Tax Deferral + Low-Rate Taxation)
- Tax Credit Calculator
- List of Investable U.S. ETFs
- Pension Savings Plan + IRP + ISA Three-Account Combination Tax-Saving Strategy
- Step-by-Step Guide from Account Opening to Investing
- Cautions
- Frequently Asked Questions
1. Pension Savings Plan vs. IRP at a Glance
A pension savings plan and an IRP can be confusing because their names are similar and both offer a tax credit. However, the two accounts differ clearly in terms of eligibility, contribution limits, and investment flexibility. Let's compare the key differences in the table below.
| Category | Pension Savings Plan (Fund) | IRP (Individual Retirement Pension) |
|---|---|---|
| Eligibility | Anyone (regardless of income) | Earned-income workers or self-employed individuals |
| Contribution Limit | Combined annual limit of KRW 18 million (Pension Savings Plan + IRP total) | |
| Tax Credit Limit | Up to KRW 6 million per year | Combined maximum of KRW 9 million including the pension savings plan |
| Risk Asset Investment Limit | 100% (Fully investable in ETFs) | 70% (Remaining 30% must be in safe assets) |
| Early Withdrawal | Partial withdrawal possible (taxes apply) | Only for legal reasons (home purchase for non-homeowners, long-term care, etc.) |
| Payout Conditions | Age 55 or older AND at least 5 years of enrollment | |
| Investment Flexibility | High — Free trading of ETFs and funds | Medium — Mandatory 30% allocation to safe assets |
Conclusion: Which account should you open first?
If you want aggressive investing (100% U.S. ETFs), first max out your pension savings plan at KRW 6 million. There is no limit on the risk asset allocation, so you can put the entire amount into a U.S. S&P 500 ETF. Then, if you want to maximize the tax credit, add KRW 3 million to your IRP to fill the combined KRW 9 million limit. The IRP requires 30% in safe assets such as a bond ETF, but the remaining 70% can still be invested in U.S. ETFs.
One more thing. The combined contribution limit for the pension savings plan and IRP is KRW 18 million per year. You can contribute beyond the tax credit limit (KRW 6 million for pension savings plan + combined KRW 9 million for IRP). Excess contributions do not qualify for the tax credit, but the tax deferral benefit still applies. Because investment returns are not taxed immediately and are deferred until pension payout, those who want to maximize the compounding effect use the strategy of contributing beyond the tax credit limit.
2. Triple Tax-Saving Structure
The tax-saving benefits of a pension savings plan and IRP work in three overlapping layers. This is why it is called the "triple tax-saving." Let's break it down one by one.
through year-end tax settlement
but deferred until pension payout
only a low rate of 3.3-5.5% applies
Tax Credit Rate Details
The tax credit rate depends on your total salary (earned income). Simply put, the lower your income, the larger your refund.
| Total Salary Threshold | Tax Credit Rate | Maximum Refund (at KRW 9 million contribution) |
|---|---|---|
| KRW 55 million or less | 16.5% | KRW 1.485 million |
| Above KRW 55 million | 13.2% | KRW 1.188 million |
The calculation may seem complicated, but it's very simple. If your total salary is KRW 55 million or less: KRW 9 million x 16.5% = KRW 1.485 million is refunded at year-end tax settlement. If above KRW 55 million: KRW 9 million x 13.2% = KRW 1.188 million is refunded. You receive money before even investing, so this alone is a sufficient reason to use a pension savings plan and IRP.
The Compounding Effect of Tax Deferral — A Concrete Simulation
Let's compare the numbers to see why tax deferral is so important. Assume you start at age 30, contribute KRW 9 million per year, and invest for 25 years at an average annual return of 10%.
| Category | Regular Account | Pension Account (Tax-Deferred) |
|---|---|---|
| Annual Contribution | KRW 9 million | |
| Investment Period | 25 years (Age 30 to 55) | |
| Average Annual Return | 10% | |
| Annual Tax | 15.4% on returns (deducted every year) | KRW 0 (deferred until payout) |
| Assets at Age 55 | Approx. KRW 730 million | Approx. KRW 880 million |
| Difference | Approx. KRW 150 million gap (compounding effect of tax deferral) | |
Same money, same return rate, but a difference of about KRW 150 million after 25 years. The secret is simple. In a regular account, 15.4% of returns is deducted every year, reducing the principal available for reinvestment. In contrast, in a pension account, taxes are not deducted and the full amount is reinvested, allowing compounding to work harder.
Pension Payout Tax Rate After Age 55
Taxes deferred through tax deferral are finally paid when you receive a pension after age 55. The tax rate applied at that time is surprisingly low.
| Pension Payout Age | Tax Rate (when annual payout is KRW 15 million or less) |
|---|---|
| Age 55-69 | 5.5% |
| Age 70-79 | 4.4% |
| Age 80 or older | 3.3% |
Compared with paying the 15.4% dividend income tax in a regular account, the pension account is only 3.3-5.5%. That's about 1/3 to 1/5 of the tax. However, if annual pension payouts exceed KRW 15 million, a 16.5% tax is imposed on the excess (with the option of separate or comprehensive taxation), so keeping annual payouts at KRW 15 million or less is the key point of tax savings.
Triple Tax-Saving Summary
1. Tax Credit: Up to KRW 1.485 million refund at contribution (recurring annually)
2. Tax Deferral: 0% tax on investment returns → Maximize compounding (approx. KRW 150 million gap over 25 years)
3. Low-Rate Taxation: Payout at 3.3-5.5% after age 55 (1/3 of the regular 15.4%)
When these three overlap, a tax-saving effect of tens of millions to hundreds of millions of KRW is generated over the long term.
3. Tax Credit Calculator
Enter your salary and contribution plan to instantly check the tax credit amount you can receive at year-end tax settlement.
세액공제 계산기
연말정산 환급 예상액
1,485,000원
공제율 16.5% 적용
💡 9,000,000원을 넣으면 연말정산에서 1,485,000원을 돌려받습니다. 세액공제 한도를 꽉 채웠습니다!
* 2026년 기준. 실제 환급액은 기납부 세액에 따라 달라질 수 있습니다.
4. List of Investable U.S. ETFs
There's one thing you must know if you want to invest in U.S. ETFs through a pension savings plan or IRP.
Overseas-Listed ETFs Cannot Be Purchased Directly!
U.S.-listed products such as SPY, QQQ, VOO, and SCHD cannot be purchased directly through a pension savings plan or IRP. Instead, you can indirectly invest in the U.S. market through domestically listed overseas ETFs on the Korean stock market (KOSPI/KOSDAQ). These ETFs track U.S. indices while allowing you to receive all the tax benefits of a pension account.
Below is a list of representative U.S. ETFs investable through a pension savings plan or IRP. All are products listed on the Korean stock market.
| ETF Name | Underlying Index | Total Expense Ratio | Pension Savings Plan | IRP | Features |
|---|---|---|---|---|---|
| TIGER U.S. S&P 500 | S&P 500 | 0.07% | O | O | Largest size, low expense ratio |
| KODEX U.S. S&P 500 | S&P 500 | 0.09% | O | O | Samsung Asset Management, high trading volume |
| TIGER U.S. NASDAQ 100 | NASDAQ-100 | 0.07% | O | O | Big tech-focused, growth stocks |
| ACE U.S. Dividend Dow Jones | Dow Jones US Dividend 100 | 0.01% | O | O | Monthly dividend, dividend growth stocks |
| KODEX U.S. 10Y Treasury Futures | U.S. 10-Year Treasury | 0.09% | O | O | Suitable for the IRP 30% safe-asset allocation |
| TIGER U.S. Dollar Short-Term Bonds | U.S. Short-Term Treasury | 0.15% | O | O | Safe asset, USD exposure |
All the ETFs above are purchasable through both the pension savings plan and the IRP. In a pension savings plan, you can invest the full amount in equity ETFs (S&P 500, NASDAQ 100, etc.), but in an IRP, the risk asset cap is 70%, so the remaining 30% must be allocated to bond ETFs (such as KODEX U.S. 10Y Treasury Futures or TIGER U.S. Dollar Short-Term Bonds) or deposits.
If you want a more detailed comparison of S&P 500 ETFs, see Part 4: S&P 500 ETF Comparison Guide. If you are interested in dividend ETFs, see Part 5: Dividend ETF Comparison Guide.
Recommended Portfolio for Beginners
The simplest and most effective combination is as follows. Pension Savings Plan: TIGER U.S. S&P 500 (100%). IRP: TIGER U.S. S&P 500 (70%) + KODEX U.S. 10Y Treasury Futures (30%). These two options let you invest in the entire U.S. stock market while satisfying the IRP safe-asset requirement.
5. Pension Savings Plan + IRP + ISA Three-Account Combination Tax-Saving Strategy
This section is the highlight of this 7-part series. Combining the taxes (Part 1), ISA (Part 3), and the pension savings plan and IRP covered here completes the ultimate tax-saving strategy that leverages three tax-advantaged accounts simultaneously.
4-Step Fund Allocation Strategy
Three-Account Combination Annual Tax-Saving Simulation
How much can an employee with a total salary of KRW 50 million (16.5% tax credit rate) save per year by fully utilizing the three-account combination?
| Tax-Saving Item | Calculation | Tax Saving |
|---|---|---|
| Pension Savings Plan Tax Credit | KRW 6 million x 16.5% | KRW 990,000 |
| IRP Tax Credit | KRW 3 million x 16.5% | KRW 495,000 |
| ISA Tax Exemption | KRW 0 tax on up to KRW 2 million in gains (savings: KRW 2 million x 15.4%) | KRW 308,000 |
| ISA Separate Taxation | Based on KRW 3 million of excess gains: (15.4% - 9.9%) x KRW 3 million | KRW 165,000 |
| Pension Tax Deferral Effect | Approx. KRW 900,000 of pension account gains x 15.4% (tax not imposed) | Approx. KRW 139,000 |
| Total Annual Tax Saving | Approx. KRW 2.097 million | |
Three-Account Combination Conclusion
By using a pension savings plan + IRP + ISA simultaneously, you can achieve a tax-saving effect of about KRW 2 million or more per year. Over 10 years, that becomes KRW 20 million, and over 25 years, more than KRW 50 million. Add the compounding effect of tax deferral, and the real difference is even greater. Investing only in a regular account without using tax-advantaged accounts is the same as throwing away KRW 2 million every year.
If you want to understand the basics of taxes, see Part 1: Complete Guide to U.S. Stock Taxes. For more on ISA accounts, see Part 3: How to Use an ISA Account.
6. Step-by-Step Guide from Account Opening to Investing
"I get that it's good, but how do I actually start?" — Just follow the 5 steps below.
Key Point
One of the biggest advantages of a pension account is that no taxes are incurred on buying and selling within the account. In a regular account, selling an S&P 500 ETF and buying a NASDAQ 100 ETF triggers capital gains taxes. In a pension account, you can freely swap them with zero tax. You can flexibly adjust your portfolio.
7. Cautions
16.5% Miscellaneous Income Tax on Early Termination Before Age 55
This is the most important caution. If you terminate your pension savings plan or IRP before age 55, a 16.5% miscellaneous income tax is imposed on the entire amount of tax credits previously received as well as all investment returns. Not only do you have to give back the money received through tax credits, but a high tax rate also applies to your investment returns. Therefore, only put money into a pension savings plan and IRP that you will absolutely not touch until age 55.
Below are other cautions you should be aware of.
- IRP 70% Risk Asset Limit: In an IRP, you can invest up to 70% in equity ETFs. The remaining 30% must be allocated to safe assets (bond ETFs, deposits, MMFs, etc.), and the order itself will be rejected if the ratio is exceeded.
- Leveraged/Inverse ETFs Not Allowed: Leveraged and inverse products such as TIGER U.S. S&P 500 Leverage and KODEX Inverse cannot be purchased through a pension savings plan or IRP. Only standard ETFs are allowed.
- Caution When Annual Pension Payout Exceeds KRW 15 Million: Even after age 55, if annual pension payouts exceed KRW 15 million, a 16.5% tax is imposed on the excess (with a choice between separate or comprehensive taxation). Keeping annual payouts at KRW 15 million or less is the key to tax savings.
- What if You Need Money Mid-Term? Partial withdrawals are possible from a pension savings plan, but a 16.5% miscellaneous income tax applies to the withdrawn amount. IRP is stricter — early withdrawals are permitted only for legal reasons such as a non-homeowner buying a home, individual rehabilitation, or 6+ months of care. If you might need cash in a hurry, focus on the pension savings plan and reduce your IRP allocation for safety.
- Must Open as a Pension Savings Fund: To invest in ETFs, you must open the account as a "pension savings fund" at a securities firm. Opening it as a bank's "pension savings trust" or an insurance company's "pension savings insurance" makes ETF trading impossible. If you already opened it elsewhere, an account transfer to a securities firm is possible.
Reference Date Notice: The tax credit rates, contribution limits, and payout tax rates in this article are based on tax laws as of March 2026. Tax laws may be amended every year, so please check the latest information at the National Tax Service (www.nts.go.kr) or the Financial Supervisory Service (www.fss.or.kr).
Frequently Asked Questions
Q1. If I can only choose one between a pension savings plan and an IRP, which should I pick?
If you must choose one, we recommend the pension savings plan. There are three reasons. First, you can invest up to 100% in risk assets, so the entire amount can go into U.S. ETFs. IRP requires 30% in safe assets. Second, if you urgently need money mid-term, partial withdrawal is possible (taxes apply). IRP does not allow withdrawals at all without a legal reason. Third, even with just a pension savings plan, you can receive a KRW 6 million x 16.5% = KRW 990,000 tax credit refund. However, to maximize the tax credit (KRW 1.485 million), the optimal combination is pension savings plan KRW 6 million + IRP KRW 3 million.
Q2. Should people in their 20s also start a pension savings plan?
Bottom line: if you have income, the sooner you start, the better. Starting in your 20s gives you an investment horizon of 30+ years until age 55, maximizing the compounding effect of tax deferral. For example, if you invest KRW 6 million per year in an S&P 500 ETF from age 25 (assuming 10% annual returns), you will accumulate over KRW