A few claims follow Korea's ISA (Individual Savings Account) around wherever it is discussed. "Locked for three years." "The low-income type gets 4 million won." "Anything above the ceiling is taxed at 9.9%."
So we read Article 91-18 of the Restriction of Special Taxation Act from start to finish. Four things turned out differently from the common account, and the biggest was the three-year rule.
"Where, before three years have passed from the date the contract was first concluded, an amount exceeding the aggregate of the amounts paid in during the contract period is withdrawn, the contract shall be deemed terminated early on the date of that withdrawal."
— Restriction of Special Taxation Act, Article 91-18(8)
The test is not whether you withdrew, but whether you withdrew more than you put in. Taking money out within the principal you have contributed reads as not triggering early termination at all. The statute does not spell that out, though, and how it works in practice depends on your provider's terms and systems — so if you actually need the money, ask them first.
The rate above the ceiling is 9%, so where does 9.9% come from?
Here is how the statute sets the rate on interest and dividends above the tax-free ceiling.
"… on the amount exceeding the tax-free ceiling, notwithstanding Article 129 of the Income Tax Act, a rate of 9 percent shall apply, and it shall not be aggregated into the global income tax base."
— Restriction of Special Taxation Act, Article 91-18(1)
The phrase worth noticing is "notwithstanding Article 129 of the Income Tax Act." Article 129 is where withholding rates on interest income live, and ordinary interest income sits at 14% there. The ISA provision overrides that Act outright and applies 9% instead — and the income does not get folded into your global income either.
| Category | Governing provision | Rate |
|---|---|---|
| Ordinary interest and dividend income | Income Tax Act, Art. 129(1)1(d) | 14% |
| ISA income above the ceiling | Special Taxation Act, Art. 91-18(1) | 9% |
The familiar 15.4% and 9.9% appear in neither Act. They come from adding local income tax, which is a 10% surcharge on the income tax and lives in a different statute altogether. Using 15.4% to work out what you owe is correct; saying "that is what the law says" is not.
There is no "low-income type" in the statute
The 4 million and 2 million won ceilings are real. What is not real is the naming: the statute never calls them a "low-income type" and a "standard type." They are subparagraph 1 and subparagraph 2.
| Statutory item | Who it covers | Ceiling |
|---|---|---|
| Subparagraph 1 | Residents whose total salary in the immediately preceding tax year was 50 million won or less, or whose global income was 38 million won or less. Farmers and fishers prescribed by Presidential Decree are included | 4 million won |
| Subparagraph 2 | Everyone not covered by subparagraph 1 | 2 million won |
More important than the naming is the reference period. It is the immediately preceding tax year — last year's income, not this year's — tested both when you open the account and when you extend it. A drop in income this year does not move you into the higher ceiling now.
The verification process is in the statute too. The Commissioner of the National Tax Service checks eligibility and notifies your provider, and where the earned-income requirement is not met, the contract is deemed terminated on the date that notification is received.
The remaining conditions
| Item | What the statute says | Provision |
|---|---|---|
| Who may open one | Aged 19 or over; or 15 or over with earned income in the preceding tax year (those with only non-taxable income are excluded) | Para. 1 |
| Number of accounts | One per person | Para. 3, subpara. 1 |
| Term | Three years or more | Para. 3, subpara. 4 |
| Total contribution cap | 100 million won, less the contracted total of certain other savings schemes if you hold them | Para. 3, subpara. 5 |
| Offsetting losses | Income is computed after deducting losses on those assets | Para. 5 |
| Eligible assets | Deposits and instalment savings, collective investment securities (foreign ones excluded), derivative-linked securities, listed shares | Para. 3, subpara. 3 |
Of these, loss offsetting is where the money actually is. In an ordinary account, tax attaches to whatever made money while the losers are simply losses; here the statute directs that income be worked out after deducting them. Run several positions and that difference adds up faster than people expect.
One thing we could not pin down is the annual contribution cap. The 100 million won total is written as a figure, but the annual limit is given as "an amount calculated under the following formula," with the formula in a separate table we could not open.
After maturity you can roll it into a pension account
Pay the remaining balance into a pension account after three years and the statute treats the contract as having expired. Doing so also raises your pension tax credit cap.
"Where an ISA's contract period has expired and all or part of the balance is paid into a pension account, that amount is included in the pension account contributions … (the tax credit cap is extended by 10% of the converted amount, up to 3 million won)."
"* The ISA conversion add-on applies only in the year the matured balance is paid in."
— National Tax Service, pension account tax credit guidance
That "only in the year" qualifier matters — it is a one-off. For reference, the pension credit itself is capped at 6 million won of contributions (9 million including retirement pension), at 15% for global income up to 45 million won and 12% above.
Deposit insurance does not give it a separate limit
This is the most commonly misread part. The deposit insurance limit is 100 million won and applies separately by category — retirement pensions separately, pension savings separately, insurance separately. The ISA is not one of those separate categories.
| Category | How the limit applies |
|---|---|
| Defined-contribution and individual retirement pensions | Separately, per participant |
| Pension savings accounts | Aggregated, then separately |
| Insurance proceeds | Separately |
| Other deposit claims | Separately |
| ISA | Aggregated with those other deposit claims |
So if you also hold ordinary deposits at the same bank, they and your ISA share the same 100 million won. Worth a look if you have a large balance sitting in one place.
Deposit insurance generally is covered in this article, and where to park an emergency fund in this one. For pension accounts see pension savings and IRP, for fund taxation the ETF tax guide, and for the arithmetic the compound interest calculator.
Questions people ask
What if I need the money inside three years?
The statutory test is the aggregate of what you have paid in. Early termination is deemed on the day you withdraw more than that aggregate — so a withdrawal by itself does not end the contract. How your provider handles it in practice may differ, so check with them.
What gets clawed back on early termination?
The income tax equivalent to the special treatment you received. Unavoidable grounds prescribed by Presidential Decree, such as death or emigration, are excluded. The specific list sits in the Decree, which we did not open.
How much can I pay in per year?
We could not establish it. The 100 million won total is written as a figure, but the annual limit is given as a formula in a separate table we could not open.
Can under-19s open one?
Yes, from 15, provided there was earned income in the preceding tax year. Those with only non-taxable income are excluded.
Can foreign ETFs go in?
The statute admits collective investment securities but adds in parentheses that foreign ones are excluded. Whether a product is domestically listed appears to be the dividing line, though which side any specific fund falls on cannot be settled from the statute alone — check the product disclosure.
Sources
- Restriction of Special Taxation Act (in force 1 January 2026; Act No. 21223) — Article 91-18 (special taxation for individual savings accounts) (checked August 2026). The eligibility routes, "notwithstanding Article 129 of the Income Tax Act, a rate of 9 percent" and the exclusion from global income, the 4 million and 2 million won ceilings and their conditions, one account per person, the three-year term, the 100 million won cap and eligible assets, the deduction of losses, clawback and unavoidable grounds, "an amount exceeding the aggregate of the amounts paid in… deemed terminated early," the NTS notification, and deemed expiry on a pension rollover all come from this article.
- Income Tax Act, Article 129(1)1(d) — Korean Law Information Center (checked August 2026). The source for the 14% withholding rate on other interest income.
- National Tax Service — Tax credits — pension account tax credit (checked August 2026). The 10%-of-converted-amount extension up to 3 million won, the "only in the year" qualifier, and the pension credit's own 6 million won cap (9 million including retirement pension) at 15% and 12%.
- Enforcement Decree of the Depositor Protection Act, Article 18(7) — Korean Law Information Center (checked August 2026). The 100 million won payout limit, the separate application to each category in subparagraph 1, and subparagraph 2 aggregating the ISA with other deposit claims. Covered in detail in the deposit insurance article.
- What we worked out ourselves. "A withdrawal within the principal paid in is not early termination" is paragraph 8 read in reverse; "the statute has no low-income type" and "retirement pensions, pension savings and insurance stand alone while the ISA is aggregated" come from setting the provisions side by side. No provision states any of it that way.
What we could not verify
- The annual contribution cap. Paragraph 3, subparagraph 5 places the formula in a separate table we could not open. Only the 100 million won total is confirmed.
- The list of unavoidable grounds. Paragraph 7 delegates it to the Presidential Decree, which was not opened.
- How providers actually operate this. Withdrawal and termination handling may vary by terms and system. This article read the statute only.
- Whether a specific product is eligible. How "foreign collective investment securities excluded" applies to any given fund cannot be settled from the statute alone.
- Comparison with other tax-advantaged accounts. No arithmetic against pension savings or IRP is done here — see that article.
As of August 2026. The requirements and rates come from Article 91-18 of the Restriction of Special Taxation Act, the pension conversion effect from National Tax Service guidance, and the deposit insurance treatment from the Enforcement Decree of the Depositor Protection Act. This is general information about reading the statute and is neither investment advice nor tax advice. Check opening and closing decisions with your provider, and tax questions with a professional.
