It is possible to make additional payment in salary for the allowance for 401K Personal Type on behalf of 401K Entity type but it is just internally handled not officially for 401K Entity Type. It means that the added allowance in salary has to be handled as a salary which impact to social security deduction, withholding income tax, and withholding inhabitant tax. However, if employee use the allowance paid additionally for 401K personal Type personally, although it impact to social security deduction, withholding income tax, and withholding inhabitant tax first as mentioned above, withholding income tax, and withholding inhabitant tax charged is adjusted to be paid back in Year-end adjustment for income tax, but not social security deduction.
In the case of 401K Entity Type employer pay, it does not impact to social security deduction, withholding income tax, and withholding inhabitant tax from first. As a result, on employee side, if they use 401K Personal Type with markup salary, they just lose a little bit amount due to social security deduction.
In fact, social security consist of social insurance and labor insurance in Japan. There is capped amount for socialinsurance. It means that if the employee’s salary is enough to over the threshold, there is no difference in social insurance deduction. finally impact to only labor insurance deduction for small amount.
