Expat Guide to Individual Retirement Plan (IRP) Accounts in Korea

Many international residents live and work in Korea over time. This means sometimes severance pay gets caught up in retirement accounts. When you move jobs, you need to have a basic understanding of IRPs (Individual Retirement Accounts/개인형 퇴직연금), where to get them, how to open them, and why you might want one. This Expat Guide to Individual Retirement Accounts (IRPs) in South Korea does not cover ALL aspects of IRPs. Instead, it’s a guide to how to research them on your own.

Disclaimer

Not Financial Advice: This article is for general informational purposes only and is not intended as financial, investment, tax, or legal advice. Financial products, tax rules, and retirement regulations in South Korea can vary based on individual circumstances such as visa type, income level, tax residency, and length of stay. What works for one person may not be appropriate for another. Before opening an IRP or making decisions about retirement funds, you should speak directly with a qualified financial professional, tax advisor, or your bank to confirm how the rules apply to your specific situation.

What Every International Resident Living in Korea Should Know

Many jobs in Korea may now offer severance pay that is deposited into retirement accounts (퇴직연금), which collect interest. However, these types of accounts can’t be withdrawn into a regular savings account without high tax penalties until you retire or leave the country permanently. This means that when you move jobs, you may need to open an IRP (Individual Retirement Account/개인형 퇴직연금) for them to move that severance to after you change jobs. This information generally gets dropped on you at the last minute, so let’s get ahead of it.

Making sense of Korea’s financial and retirement system can be confusing in your own language and social system; it’s wild on your own at the last minute. Additionally, many international residents come to Korea young, and this may be their first time learning about IRPs. Suddenly, they are navigating a language barrier, a cultural barrier, and a timeline to get their severance moved into an IRP when moving jobs. Overwhelming is an understatement.

That said, even if your job doesn’t put you in a position where you need to open an IRP, consider opening one anyway if you plan to stay in Korea for a long time. You need more than just your National Pension when retirement age rolls around. As of 2026, some pensions can even be opened in USD instead of KRW to theoretically protect against currency fluctuation.

Now that you know why you need to know about IRPs as an international resident in Korea, let’s talk about what they are.

What Is an IRP?

An IRP (Individual Retirement Pension / 개인형 퇴직연금) is a retirement account in Korea where your retirement money (like severance pay) is held and managed. It’s different from the National Pension (국민연금), which is Korea’s government pension. IRPs are private accounts offered by banks and financial companies. Please download and read the following FREE PDF about IRPs in Korea to learn more:

Why IRPs Exist

It may feel VERY frustrating to have your severance wrapped up in an IRP, but this occurred to protect severance money and make sure that you are earning interest on it, not your employer.

• Historically, when employees quit or retire in Korea, their retirement pay was paid as cash. However, this often meant that employees didn’t get their severance at all.
• With reforms aimed to benefit employees, companies are now required to transfer statutory severance pay into an IRP unless it goes directly to a new employer’s pension plan.
• Once in an IRP, you can keep it until retirement age (often 55+) or withdraw in specific circumstances.

You can also add your own contributions to the IRP beyond just the severance pay.

Who Needs an IRP?

Not everyone needs to be worried about IRPs, but you might need an IRP if:

You are changing jobs in Korea

If your employer deposits severance pay into a pension plan (DC/DB), you generally must transfer it into your own IRP if you aren’t staying with the same plan at your new job.

You want to keep retirement savings safe

IRPs are a structured way to keep your retirement money in Korea instead of withdrawing it as cash for transfer to another country (which can trigger taxes).

You want certain tax benefits

Korean tax rules offer income tax deductions on contributions up to certain limits.

Can Foreigners Open an IRP?

Yes, foreigners can open an IRP in Korea. Eligibility doesn’t depend on nationality. Instead, it depends on whether you are considered a tax resident (usually based on your stay and income in Korea). So if you live here, work, and pay taxes, you’re generally allowed to open one and even receive tax deductions on it.

Important notes for foreign residents:

• Some banks may require in-branch verification for foreigner-opened IRP accounts.
• Some app-based IRP openings may not allow foreign IDs without visiting a branch.
• Temporary or short-stay visa holders might encounter extra requirements.

At least one of our volunteers successfully opened their IRP through their Hana Bank App. The entire process was only in Hangul. They used ChatGPT and screenshots to navigate the process. When they ran into two online form elements they couldn’t understand, they asked for help from a co-worker.

IRP Tax Benefits Explained in an Oversimplified Way

IRPs aren’t just savings accounts; they also offer tax incentives. We are not experts on this, but here is what we gathered through looking at English-language banking information. The IRP acounts offer:

Tax Deductions

• You can receive income tax deductions on a portion of your IRP contributions.
• Combined with other pension savings, this can reduce your annual tax burden if you are a tax resident.

Tax-Deferred Growth

Investment returns inside the IRP are tax-deferred, meaning you don’t pay tax on gains each year.

Important for International Residents

Tax benefits depend on your residency status, income level, how long you stay in Korea, and what country you come from. Always check tax eligibility for your situation. Download the following PDF and translate the Hangul to English to learn more:

How Does an IRP Work?

This is going to be the fastest overview that we can write. There may be all kinds of little hurdles you run into or don’t run into because of your nationality or bank choice. So we will keep it simple:

1. When You Leave a Job

If your employer paid severance into a pension plan, you must transfer it to an IRP. Ideally, you set up a VERY basic IRP to get started that allows you plenty of flexibility. Research IRPs in Korea to know more about what this means.

2. Investment Options

Once in your IRP, you can choose how to invest the money:

• Low-risk options like time deposits
• Funds
• Target date portfolios (varies by financial institution)

Regulations require a portion of the IRP to stay in safe assets to protect the principal, so they aren’t going to let you go hard on investing.

3. Withdrawals

• Typically allowed after age 55, even though regular retirement in Korea is now 60. Keep in mind, the amounts will be low if you start pulling retirement this early.
• Early withdrawals may trigger tax penalties. We are talking about withdrawing before the age of 55.
• If you permanently leave Korea, rules vary on how and when you withdraw (ask your bank or a tax professional).

This is wildly over simplified so please dig deeper when researching where to open your IRP.

Korean IRP Pros & Cons: What Expats Should Know

Once again, this is NOT financial advice. This is generic information provided online by financial institutions. Here is what we found:

Benefits for International Residents

• Allows you to save for retirement.
• You comply with Korean retirement and labor laws.
• Money stays in a structured retirement account.
• Potential tax deductions and tax-deferred growth.

Frustrations for International Residents

• Korean language may dominate documentation and app menus.
• Apps sometimes prevent foreigners from opening accounts without branch visits.
• If you leave Korea soon, maintaining an IRP long-term can be messy.
• U.S. citizens and certain others may face complex tax reporting back home.

Opening an IRP

Now lets look at an oversimplified view of opening and IRP:

1. Choose a bank or financial institution that offers IRPs
   • KB Kookmin Bank: 개인형 IRP available through branches and online banking.
   • Shinhan Bank: Offers personal IRP accounts, plus pension investment options and non-face-to-face opening in some cases.
   • Hana Bank: Provides IRP products as part of its retirement pension lineup.
   • Woori Bank: Supports individual retirement pensions (IRP) and related account setup.
2. Visit a branch (most likely required for foreigners) or look for the option to open one in your banking app.
3. Provide your FRC (Foreigner Registration Card) and Korean phone number.
4. Decide how the severance pay or personal contributions will be invested.
5. Sign the documents with help from the bank staff.

This list is wildly simplified. No way for us to go into much more detail since each bank and system works a little differently. We had to answer so many questions and fill out so many forms. Lots of questions about our investment goals and risk levels. Have ChatGPT ready to help you understand the translation of the paperwork and the purpose of the questions you are answering.

10 Key Korean Terms for IRPs (개인형 퇴직연금)

At South of Seoul, we also like to provide language terms for those learning Korean or needing to search online for more information. Here are 10 terms to get you started on your IRP journey. We looked for 10 high-value terms to add to your vocabulary so that you can understand more information on the topic:

1. 개인형 퇴직연금 (IRP)
   Individual Retirement Pension
   A personal retirement account used to hold severance pay and/or personal retirement savings.
2. 퇴직금
   Severance pay
   Retirement money earned based on length of employment, usually paid when leaving a job.
3. 퇴직연금
   Retirement pension
   The broader system covering IRPs, company pension plans, and retirement savings.
4. 연금 수령
   Pension payout / receiving pension
   Receiving retirement money as scheduled payments after the qualifying age.
5. 연금 외 수령
   Non-pension withdrawal
   Early or lump-sum withdrawal that does not qualify as a normal pension payout and is taxed more heavily.
6. 중도 인출
   Early withdrawal
   Taking money out of an IRP before retirement age often triggers higher taxes.
7. 세액공제
   Tax deduction/tax credit
   The tax benefit applied to eligible IRP contributions for Korean tax residents.
8. 과세 이연
   Tax deferral
   Taxes on investment gains are delayed until withdrawal, not paid yearly.
9. 연금저축
   Pension savings
   A related retirement savings product is often mentioned alongside IRPs.
10. 퇴직연금 담당자
    Retirement pension officer
    The bank staff member who handles IRP and pension accounts (important phrase when visiting a branch).

Final Tips

Before we leave, here are a few things to consider now that you have all this information:

• Know your timeline in Korea. The longer you stay, the more sense an IRP usually makes.
• Check tax residency rules before assuming tax benefits apply.
• Ask questions at the bank. Don’t sign documents in Korean if you don’t understand them.
• Consider a financial advisor if you have a complex tax status (e.g., U.S. citizen).

More About Managing Finances in South Korea

You can learn more about banking and finances:

• Opening a Bank Account in South Korea
• US Military: Banking in Korea
• Expat Guide to Navigating Credit Cards in Korea
• Managing Your Korean Credit Rating