Working In Japan/American S.S.

Can anyone give me some info, preferably Americans in Japan, but anyone who knows the answer is welcome to respond too, about working in Japan and paying into the American Social Security system.

My question directly is "Being an American and working in Japan, how do you account for paying into social security?"

I plan to retire one day and would like to collect my social security benefits.

However, if I don't pay into it because I'm working abroad, I can't expect much in return.

Therefore, I'm wondering how other Americans working abroad deal with this issue?

Can anyone give me some info, preferably Americans in Japan, but anyone who knows the answer is welcome to respond too, about working in Japan and paying into the American Social Security system.

First off, I'm far from an expert on this topic but this is what I understand from trying to figure out my own Social Security situation.

If working in Japan on a full time salaried position you should be paying into the Japanese social security system. When you plan to leave Japan you have 2 options. You can take a lump sum withdrawal of up to three years worth of what you paid into the system in cash, or you can transfer years credit to the American system.

Now it all depends on how long you've stayed in Japan and how much money you make compared to what you make in the US, but in my situation, I plan to move back to the US where I may theoretically make more money. Therefore, my time in Japan would be at a lower income rate and most likely be excluded when assessing which years count toward social security. So I opted for the cash as it was more immediately useful and theoretically worth more if invested properly (unfortunately I spent it instead).

What you choose to do would depend on your situation, and your plans for the future. Also, I'm not sure the limit on how many years you can transfer between systems, but know that once you stay beyond 3 years you could be losing money paid into the system unless you plan on staying in Japan until you can collect Japanese social security.

Anyway, as I said, I'm no expert, and I'd appreciate it if anyone could correct any mistakes in what I posted.

What about the sources that you used to find this info?

Basically, How did you find this info?

Is this just something you found through first hand experience?

I'd be really interested in researching this but I'm clueless as to where to even start. Any recommendations?

Anything info is helpful.

You are not covered while working for Japanese business. Also your future benefits will be reduced (period of absence & amount of pension from Japan) - therefore if you plan to collect the S.S. I suggest your work only for the U.S. company in Japan. I provided the relevant links below:

http://www.socialsecurity.gov/.../agreements_overview.html -

http://www.socialsecurity.gov/pubs/10035.html

I originally learned this from the US based accountant that does our taxes. But after a quick search on the social security sight I found this:

https://www.socialsecurity.gov/pubs/10180.html

that says it is possible to transfer credits. And here is the actual agreement with Japan that say that you can transfer a minimum of 6 credits with no mention of an upper limit (its in the monthly benefits section).

https://www.socialsecurity.gov/international/Agreement_Pamphlets/japan...

This info should clarify it.

http://www.irs.gov/businesses/small/international/article/0,,id=97160,...

You are not covered while working for Japanese business. Also your future benefits will be reduced (period of absence & amount of pension from Japan) - therefore if you plan to collect the S.S. I suggest your work only for the U.S. company in Japan. I provided the relevant links below:

http://www.socialsecurity.gov/.../agreements_overview.html -

http://www.socialsecurity.gov/pubs/10035.html

Stanfordgal,

I saw your post after posting mine and I'm afraid you misinterpret the social security site. It is indeed possible to transfer credits, and assuming you work at the same salary and benefits level in Japan as in the US then your social security benefits theoretically won't change compared to if you worked a comparable time in the US. There are benefits of working for US companies in Japan (and disadvantages) but social security may or may not be one of them depending on your situation.

eQuetweeker,

It seems pretty clear from the Japan/US social security agreement (especially Section IV that discusses how credits are counted) that it is possible to have work in Japan counted towards US social security. But whether or not it is better to get Social Security credit or a cash refund depends on your particular situation and I'd suggest consulting an accountant to get expert advice.

Thanks for posting the links.

I'm in the process of researching which option is best for me,
and I haven't quite decided yet.

At any rate, The links have provided very helpful.
Learning about S.S. is just time consuming.

I'd still be very interested in hearing what other have done and have to say.

If anyone cares to continue the thread, keep it going for as long as you see fit.

Does any one care to share particularly what they've done with regards to American S.S. while working in Japan?

Americans that are S.S. Vested

In order for the foreign employment credit counted toward the U.S. social security American must have earned 6 credits in the U.S.

Credits from Japan can be added but since Japan credits are not transferable, the working years in Japan is calculated as $0 earning years (-**you and your employer must pay the Social Security and Medicare taxes on your earnings-having not contributed to the U.S. Social Security, and being participant in Japan social security), thus, only the 6 previous credits earned will be used to estimate your social security benefits upon qualified retirement age.

Another words, U.S. Social security is based on 35 years of highest earning. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35 years. Therefore, an American that has worked in Japan will be given the necessary 34 credits (8.5 years of participating in the Japan social security) to meet the statutory 40 credits to qualify for the U.S. Social security. Your benefits will be 6th of 40th or if your social security benefits is calculated as $1,000 per month, then you will receive 15% of $1,000 minus additional deduction due to any Japan social security or pension benefits.

For American that has worked in Japan, but previously without earned social security in U.S. he/she is not entitled to any Japan credits since he/she was not VESTED in the U.S. Social security per the Windfall Elimination Provision. SSA Publication No. 05-10045, January 2009, ICN 460275

IV.A.1. Benefits from the United States
However, to be eligible to have your Japanese credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the United States cannot count your Japanese credits.

IV.B. How credits get counted
Although each country may count your credits in the other country, your credits are not actually transferred from one country to the other.

Japan
American Embassy
Federal Benefits Unit
1-10-5 Akasaka
Minato-ku, Tokyo
107-8420 Japan
Phone: 81-3-3224-5000
Fax: 81-3-3224-5144
Email: FBU.Tokyo@ssa.gov

It is indeed possible to transfer credits, and assuming you work at the same salary and benefits level in Japan as in the US then your social security benefits theoretically won't change compared to if you worked a comparable time in the US. There are benefits of working for US companies in Japan (and disadvantages) but social security may or may not be one of them depending on your situation.

I have spent some more time looking into this and I found that what I posted above is not correct. As ppmike points out, credits earned in Japan are transferable in terms of time, but the cash paid into the system doesn't transfer. Essentially you transfer over social security credits at 0$ contribution for the time spent working in Japan. So it seems that it may not be beneficial to most people to count their years spent in Japan toward their US pension unless they need it to qualify for time requirement.

You are not covered while working for Japanese business. Also your future benefits will be reduced (period of absence & amount of pension from Japan) - therefore if you plan to collect the S.S. I suggest your work only for the U.S. company in Japan.

Also, I think I have misinterpreted stanfordgals above post to imply that credit earned at Japanese companies doesn't transfer at all to the states. Taken in context her post is not incorrect per say, but it should be clarified that payments into the Japanese system don't transfer, but time does.