When you draw a pension from a Korean pension savings account or IRP, the provider takes tax off each payment. Income Tax Act Art. 129(1)5-2 sets how much: by age on the payment date, 5% under 70, 4% from 70 to under 80 and 3% at 80 or over, or 3% for a lifetime annuity paid until death (the lower rate if both apply). Local income tax adds 10% of that tax. If these payments total 15 million won or less in a year, withholding settles it (Art. 14(3)9). Go over, and not just the excess but the whole amount must be reported in May, where you choose global taxation or 15% separate tax (Art. 64-4). Enter the amount, age and contract type to see the tax taken and what more you would owe above 15 million.
1. Withholding 5%, 4%, 3%; lifetime annuity 3% — 5.5%, 4.4% and 3.3% with local tax (Art. 129; Local Tax Act Art. 103-13).
2. Up to 15 million won a year, that is the end of it — public pensions, severance taken as a pension and unavoidable withdrawals do not count (Art. 14(3)9).
3. One won over 15 million and the whole amount is reportable — at 65 on a fixed-period plan, 15 million costs 825,000 won and stops there; 15,000,001 won under 15% separate tax costs 2,475,000 won (our sum).
Calculator
Updates as you type. Only payments from tax-credited pension savings or IRP contributions and their returns count toward 15 million won — not public pensions such as the National Pension, not severance taken as a pension (deferred retirement income), and not withdrawals for medical or other unavoidable reasons (Art. 14(3)9). The withholding rate is 5, 4 or 3% by age, or 3% for a lifetime annuity, whichever is lower (Art. 129(1)5-2). Local income tax is 10% of the income tax (Local Tax Act Art. 103-13). Rounded down to the won (our method). Above 15 million, withholding does not settle it: in May you choose global taxation or 15% separate tax (Art. 64-4). “More to pay in May” is our sum after crediting the tax withheld; global taxation depends on your other income and is not calculated.
The provisions
| Provision | What it says | Note (ours) |
|---|---|---|
| Art. 129(1)5-2 | Pension income from pension-account contributions or their growth: (a) by age on the payment date, 5/100 under 70, 4/100 from 70 to under 80, 3/100 at 80 or over; (c) a lifetime annuity paid until death, 3/100. If both apply, the lower rate | The 3% for lifetime annuities applies to payments from 1 Jan 2026 (National Tax Service note — previously 4%) |
| Art. 14(3)9 | Separately taxed pension income: (a) severance taken as a pension; (b) withdrawals for medical, disaster or other unavoidable reasons; (c) other pension income where the total is 15 million won or less a year | Only (c) money counts toward 15 million |
| Art. 64-4 | With pension income outside separate taxation, choose either (1) the global tax, or (2) that pension income × 15/100 plus the tax on the rest | 15% on the whole of it, not just the excess |
| Local Tax Act Art. 103-13(1) | 10/100 of the income tax withheld is collected as local income tax | Why 5% becomes 5.5% |
Public pensions such as the National Pension follow a different route: the service withholds by table and settles the year in the following January — the two routes are compared in drawing down your pension.
Five sums — our examples
| Example (ours) | Tax taken at payment | Note (our sum) |
|---|---|---|
| 65, fixed period, 12 million won a year | 660,000 won (income tax 600,000 + local 60,000) | 5.5%, and done |
| 65, lifetime annuity, 12 million won | 396,000 won | 3.3% — 264,000 won less than fixed period at the same age |
| 75, fixed period, 15 million won | 660,000 won | 4.4%, exactly 15 million so done |
| 65, fixed period, 15,000,001 won | 825,000 won withheld | Under 15% separate tax, 2,475,000 won — 1,650,000 won more in May |
| 65, fixed period, 18 million won | 990,000 won withheld | Under 15% separate tax, 2,970,000 won — 1,980,000 won more in May |
The fourth row is why 15 million is a cliff, not a step: one won over and both choices cost more than the withholding (global taxation depends on your other income). “More in May” is our sum crediting the tax already withheld. The yearly ceiling on pension withdrawals is in the pension withdrawal limit calculator.
Checklist
- ☐ Add up only what counts toward 15 million (tax-credited contributions + returns)
- ☐ Age on the payment date — the rate changes at 70 and 80
- ☐ Lifetime annuity is 3% (a contract you cannot cancel)
- ☐ Check the year’s running total before year-end so it stays at or under 15 million
- ☐ If over, compare global taxation with 15% separate tax in May
Questions that remain
What if I draw from several providers?
Art. 14(3)9(c) speaks of “the total” of pension income, which reads as one combined 15 million, not 15 million per provider (our reading).
What if I take it as a lump sum instead?
A non-pension withdrawal is taxed as other income at 15% (16.5% with local tax), not as pension income — see the early-withdrawal section of drawing down your pension. This calculator covers pension payments only.
Sources
- Korean law database — Income Tax Act Arts. 14(3)9, 64-4 and 129(1)5-2 — source (current text, in force 1 July 2026, Act No. 21221; checked 6 November 2026 — the age table is an image, read from its text). Separately taxed pension income and 15 million, the 15% option, withholding rates and the lower rate.
- Korean law database — Local Tax Act Art. 103-13 — source (current text, in force 1 July 2026, Act No. 21308; checked 6 November 2026). 10/100 of the income tax withheld.
- When the 3% lifetime rate starts — National Tax Service pension income withholding note (“applies to payments from 1 Jan 2026 (previously 4%)”), as quoted in drawing down your pension.
- Not read. The Decree conditions for a lifetime annuity contract; the pension income deduction (for the global taxation route); rounding.
- Added by us. The example sums, the “more in May” sum and the notes column.
Where to check further
- The provider paying your pension — the year’s running total and tax withheld.
- National Tax Service helpline (126) — comparing global taxation with 15% separate tax.
Written on 6 November 2026. The provisions are set out as written; the notes and sums are ours.
