Skip to main content
No. of Recommendations: 0
"The Hong Kong gov't is instituting something called the Mandatory Provident Fund--all employers have to contribute
the lesser of 5% of a worker's salary or HKD$1000 (about USD$125) per month to what is essentially a retirement fund. Workers have to do the same. Such a thing is brand new here. We've not been covered by any such thing up to now.

Would the IRS consider this a 'qualified retirement plan'? (As you might guess, this is an IRA eligibility question. We've qualified for deductible IRAs each year because we weren't covered by any plan.) Anyone have a clue whether the plan described will meet the IRS's 'qualified' standard? Or how I might research this?"

Interesting question. National Provident fund systems are becoming increasingly widespread, epecially in countries that haven't had a defined benefit retirement program (which our current Social Security system basically is).
For those of you who aren't familar with provident fund systems: Money is collected on a mandatory basis from both employee and employer (as with SS), and invested for long-term capital appreciation. Investments methods vary country to country, from a Trustee system (in effect a government operated mutual fund) as Hong Kong has created to a limited option menu of typically balanced (stock and bond) funds with a requirement that the share due the employee on retirement be used to buy an annuity (as in Chile).

As to whether the Hong Kong MPF is a "qualified retirement plan," I would suspect that it does. However, I would contact the IRS directly for their guidelines. Seeing as how many countries have adopted a provident system, I expect that there has been a formal ruling on the matter by now.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.