Drawing a pension from a Korean pension savings account or IRP comes with an annual limit. Income Tax Decree Article 40-2 counts it as “pension receipt” only if you apply after 55, draw 5 years after opening, and stay within the withdrawal limit. The limit is account value ÷ (11 − pension year) × 120%; anything above it is treated as a non-pension withdrawal. With 100 million won, the first-year limit is 12 million won. A calculator is included.
1. Pension receipt needs: applying after 55, 5 years since opening, and staying within the limit.
2. Limit = value ÷ (11 − year) × 120% — 12 million won in year 1 on 100 million; no limit from year 11.
3. Accounts opened before 1 March 2013 start at year 6 — 24 million won in the first year on 100 million.
What counts as pension receipt — Art. 40-2(3)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Item 1 | Apply to the provider after 55, then draw | — |
| Item 2 | Draw 5 years after opening — not required if the account holds deferred retirement income | An IRP holding severance pay |
| Item 3 | Draw within the limit as at the start of the tax year | In the starting year, the application date |
| (5) | Above the limit is a non-pension withdrawal | Taxed differently |
Calculator
Updates as you type. Limit = account value ÷ (11 − pension year) × 120%, from year 11 no formula. Amounts drawn for the Article 20-2(1) reasons aren’t counted. A pension year counts from the first tax year you could draw.
Pension year — para. 4
The “pension year” counts the tax year containing the first date you could draw as year 1, adding one each year; from year 11 the formula doesn’t apply. Accounts opened before 1 March 2013 (including severance moved in full from a pre-2013 defined-benefit plan) start at year 6; inherited accounts carry the deceased’s year.
| Year (100 million won, our example) | Limit | Worth noting (ours) |
|---|---|---|
| Year 1 | 100m ÷ 10 × 120% = 12 million won | — |
| Year 6 | 100m ÷ 5 × 120% = 24 million won | First year for pre-March-2013 accounts |
| Year 10 | 100m ÷ 1 × 120% = 120 million won | More than the value |
| Year 11+ | No formula | — |
The value is re-measured at the start of each tax year; the table fixes it at 100 million won as our example. Tax rates on pension income and the 15 million won line are in pension withdrawal tax.
Checklist
- ☐ Over 55 and applied to start drawing
- ☐ 5 years since opening (IRP with severance excepted)
- ☐ Limit uses the 1 January value
- ☐ Pre-March-2013 account: start at year 6
- ☐ Above the limit: non-pension withdrawal
Questions that remain
What if I draw above the limit?
Paragraph 5 treats the excess as a non-pension withdrawal. Its tax is outside this article; see pension withdrawal tax.
What if the limit exceeds the value?
As in year 10, you can in effect draw it all (our reading).
Sources
- Korean law database (law.go.kr) — Income Tax Act Enforcement Decree Art. 40-2 — source (current text, effective 1 October 2026, No. 36737; checked 19 October 2026). Three conditions, deferred retirement income exception, the 120% formula, pension year and year 11, year 6 for pre-2013 accounts, inheritance, excess as non-pension withdrawal.
- Not read. The Article 20-2(1) withdrawal reasons; non-pension withdrawal tax.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your provider — this year’s limit and pension year.
Written on 19 October 2026. The content is from the source; the glosses are ours.
