The worry that comes up most often about an ISA is that "the money is locked in for three years". Open the statute and it is only half true. The contract must indeed run three years or more — but taking money out is governed by a different rule, and that rule is generous.
1. Withdrawals come out of «principal» first. Decree art. 93-4(13).
2. It counts as early termination only when you take out «more» than you paid in. Act art. 91-18(8).
3. So inside the principal, nothing happens. The relief you have had stays with you.
4. Moving the matured balance to a pension account raises the deduction — but not by the whole transfer. By 10% of it, at most 3m won.
What "locked in" actually means
The Act separates terminating the contract from withdrawing money. Terminate before three years and the relief is clawed back (art. 91-18(7)). But withdrawals?
Where an amount exceeding the total paid in during the contract is withdrawn, the contract is deemed terminated early on the date of that withdrawal (art. 91-18(8)).
And the Decree adds a line: a partial withdrawal is treated as coming out of the principal first (art. 93-4(13)).
Read together: you may take out everything you paid in, at any time, without terminating anything. Only when you reach into the profit does the withdrawal "exceed", and only then is it deemed early termination. You do not even have to arrange it — the Decree orders it for you.
What you take out does, of course, use up your allowance if you want to put it back: the 100m won total counts what has been paid in cumulatively, not what is sitting there now.
The unavoidable reasons are separate
Some early terminations are not clawed back (Decree art. 93-4(14)).
| Reason | Provision |
|---|---|
| Death of the account holder | Decree art. 93-4(14)1 |
| Emigration under the Emigration Act | |
| Certain events arising within six months before the closing date | art. 93-4(14)2 |
| A special-termination declaration must be filed with the provider (art. 93-4(15)). | |
Moving the balance to a pension account
After three years the balance may be moved into a pension account, and once it is, the ISA is treated as having matured (art. 91-18(11)).
Here is where summaries blur. "Move it and you get more deduction" is right, but the transfer is not what gets deducted.
Income Tax Act art. 59-3(4) adds to the cap, not to the deduction: the lesser of 10% of the transfer and 3m won. Move 30m won and the cap rises by 3m won; move more and it rises no further.
Filling that room is worth 450,000 won at the 15% rate or 360,000 won at 12%. The higher rate applies where global income is 45m won or less (or salary alone is 55m won or less).
The transfer itself also counts as a payment into the pension account (art. 59-3(3)), so that room is filled without putting in fresh cash.
Questions that remain
Can it be split over two years?
Yes, but 3m won in total: the provision says in parentheses that where payment straddles the previous and the current tax year, the figure is 3m won less what was already applied.
How does it sit with the 9m won pension cap?
It is added. Paragraph (4) treats the cap as the transfer-based amount plus the ordinary cap — 6m won for a pension savings account alone, 9m won including a retirement pension account.
When can the transferred money be taken out?
Under the pension account's own rules. Because it has attracted a deduction, taking it out other than as a pension attracts other-income tax. Money that was freely withdrawable inside the ISA takes on the pension account's restrictions the moment it moves. Worth weighing before you move it.
Must it be moved at maturity?
No — it can be renewed. Article 91-18(4) allows the contract to be extended before the expiry date, and on renewal the tax-free cap is assessed again as at the renewal date (art. 91-18(2)).
Sources
Restriction of Special Taxation Act art. 91-18 — (4) extension, (7) claw-back on early termination, (8) withdrawal exceeding the principal, (11) maturity deemed on transfer to a pension account.
Its Enforcement Decree art. 93-4 — (13) principal first, (14) unavoidable reasons, (15) the declaration form.
Income Tax Act art. 59-3 — (1) rates and caps, (3) the transfer counts as a payment, (4) the 10% / 3m won addition.
The provisions were read directly on the Korean Law Information Centre. "Locked in for three years" changes once (7) and (8) are read apart — and the withdrawal order is not in the Act at all, but in the Decree.
Where to check
The saving itself is worked out in the ISA tax-saving calculator; the set-off in loss set-off; the basics in the ISA guide. What happens after the move continues in pension savings and IRP.
