What Happens to Junior NISA Assets After the Program Ends
Junior NISA stopped accepting new purchases at the end of 2023, but assets already held can continue to grow tax-free until the account holder turns 18. Previously, withdrawals were restricted until age 18, but with the program's termination, tax-free withdrawals became available at any time from 2024 onward. However, partial withdrawals are not allowed - you must close the account and withdraw the entire balance.
For example, if 80 man-yen was invested in 2020 and has grown to 120 man-yen by 2024, the 40 man-yen in unrealized gains (which would otherwise incur roughly 8 man-yen in tax) remains tax-free. Continuing to hold until the child turns 18 allows further compound growth. At 5% annual return over 10 years, 80 man-yen would grow to approximately 130 man-yen.
Transition Strategy to the New NISA at Age 18
When the account holder turns 18, the account automatically transitions to a standard adult NISA account. The new NISA's lifetime tax-free allowance (1,800 man-yen) is a separate quota, so a strategy of selling Junior NISA holdings and repurchasing within the new NISA is viable. However, there is no direct rollover from Junior NISA to the new NISA - you must sell first and then repurchase in the new NISA account.
The timing of the sale requires careful consideration. New NISA guides for young adults explain that if unrealized gains are substantial, selling tax-free within the Junior NISA and repurchasing the same product in the new NISA resets the cost basis, making future gains tax-free as well.
Using the Assets for Education vs. Long-Term Growth
If you plan to use Junior NISA assets for university tuition and enrollment fees, it is prudent to begin shifting into safer assets 2-3 years before the funds are needed. Holding a 100% equity portfolio right up to university enrollment carries the risk of a market crash reducing the balance below the required amount. Gradually moving into bond funds or time deposits starting around the first year of high school can mitigate the risk of principal loss.
On the other hand, if education funds are secured separately and you want the Junior NISA assets to serve as seed money for your child's future wealth building, continuing to invest after age 18 is a valid option. Books on education fund planning can also help you make the right decision for your family's circumstances.
What to Do Now to Protect Your Child's Assets
If you hold assets in a Junior NISA, start by checking the current valuation and unrealized gains or losses. Next, write down when your child turns 18 and when education funds will be needed. If university enrollment is more than 5 years away, continue with an equity-focused allocation. Once the window narrows to less than 3 years, create a schedule to gradually shift into safer assets.
If education funds are already secured, consider continuing to invest in a new NISA account after the child turns 18. This is also a great opportunity to teach your child the basics of investing before they enter the workforce. Since the transition from Junior NISA to the new NISA requires selling first, factor in market conditions and execute the transfer in several stages for safety.