[Submariner]

According to the MPF website:

"People ... who are covered by overseas retirement schemes" are exempt from the MPF contribution requirements. Does anyone know if a Roth IRA counts as a "retirement scheme"? Assuming it does, is there a minimum amount that one must contribute to the Roth to qualify for the MPF exemption? ie. Can I contribute a few dollars to my Roth to avoid the MPF requirement entirely?

[whong]

submariner,

if i am not mistaken, MPF contribution is mandatory unless you want to prove to HK IRD that you are being taxed as oversea. However, keep in mind, you would rather want to be taxed under hk side because we all know we would pay higher tax based on our worldwide income as citizens or greencard holders. Therefore, u dont want to lose your foreign tax exemption by avoiding the MPF contribution by contacting HK IRD that you are taxed as a foreign person. U know how IRS is...

i understand MPF contribution is a pain in ^&*...

if u have further questions, u may pm me.

[PDLM]

whong is wrong. Where you are taxed is irrelevant. What is relevant is whether you have an equivalent "retirement scheme" overseas.

The MPF Authority has a good and detailed website which has all the information you might need. From this page: http://www.mpfahk.org/english/intera...er.asp?id=67#a

Exempt Persons:

You may be exempted from joining an MPF scheme, only if you belong to one of these categories:

- Domestic employees;
- Self-employed hawkers;
- People covered by statutory pension or provident fund schemes, such as civil servants and subsidized or grant school teachers;
- Members of occupational retirement schemes which are granted MPF exemption certificates;
- People from overseas who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes; and
- Employees of the European Union Office of the European Commission in Hong Kong.

There is much more detail in this document: http://www.mpfahk.org/english/leg_re...files/iv15.doc

What exactly constitutes an "overseas retirement scheme" seems to be debateable. If you are employed by a multinational and you are a member of their pension scheme based somewhere else while you are employed in HK then it is pretty clear that you are exempt from MPF (even if contributions are not being made while you are in HK). However, if you have a personal pension scheme then it is a lot less clear.

Moreover, ONLY people who have Employment Visas can be exempted. If you have a Dependent Visa and are employed then the detailed document above is very explicit that you cannot be exempted from MPF. Nor can Permanent Residents of HK be exempted from MPF even if they do have an overseas pension.

[whong]

kudos to PDLM,

thanks for the clarification. u r indeed the tax expert here in HK. I guess it really depends on the individuals circumstance. I always hear complaint about MPF contributions... it seems like a lot of us here want to circumvent mandatory contributions and taxes. Dont me wrong! I am not advising ppl not to pay taxes... sometimes, there is a limitation on tax planning... Tax free is always good!! no planning.. no headache.

[PDLM]

Originally Posted by whong

kudos to PDLM,

thanks for the clarification. u r indeed the tax expert here in HK.

Thanks, and my pleasure, although I am beginning to wonder if I should charge KIA for this service

[Submariner]

Thanks for the clarification. Unfortunately, things still seem rather vague. PDLM, this is according to the link you provided:

14. For the purposes of exemption on the ground of overseas retirement scheme membership, the overseas scheme refers to any type of scheme, including a statutory, or social security or government retirement scheme which provides retirement benefits. Moreover, as long as the person is a member of an overseas scheme, whether contributions are made to the overseas scheme during the period the person is in Hong Kong is irrelevant.

According to this, most American citizens would be exempt as they are automatically invested in "social security". Also, it appears that if one has a 401k or an IRA, one is also exempt regardless of whether one is still contributing. However, I find this a little too good to be true.

[PDLM]

Why? I have had no difficulty being out of MPF for the last 7 years, first on the basis of a company pension scheme, then on the basis of a private savings scheme. As you say I see no reason why the UK National Insurance system should be reason for exemption as well.

It's not as if we're talking a huge amount of money here - the maximum that you might otherwise have to invest in MPF is HK$20,000 per year. And the disadvantage of not signing up for MPF is that you may lose the additional HK$20,000 a year which your employer would have to invest also (although obviously you might be able to negotiate that back in as additional salary). And even if you do have to invest then you can get your and your employer's contributions paid back to you when you leave.

[Submariner]

That's an interesing point. If I go for an exemption, I guess I lose the employer matching amount as well. The only issue I have with the MPF is the one-time withdrawal issue. I can anticipate the possibility of repatriating in 5-10 years and then returning to HK again sometime after that for another stint.

[PDLM]

Originally Posted by PDLM

It's not as if we're talking a huge amount of money here - the maximum that you might otherwise have to invest in MPF is HK$20,000 per year. And the disadvantage of not signing up for MPF is that you may lose the additional HK$20,000 a year which your employer would have to invest also

Ooops sorry - brain not quite working when I wrote that. The maximum is, of course, HK$12,000 per year from each side (5% capped at 5% of $20K per month). So it's an even smaller issue.

And if you're not sure whether you might come back, is there any harm in just leaving the investment here? The MPF funds might not be the world's most stunning performers, but there are some fairly solid investments which you can just consider as the "safe" end of your portfolio.

[Submariner]

Well, $12000 HKD/year still comes out to about $130 USD/month. I know it's not much, but we're pretty cheap about monthly recurring expenses. I guess in the long run, it's still better to get the employer matching.

The only reason we didn't want to leave our funds in HK is that we already have so many retirement, brokerage, and banking accounts that it will be a pain to try to keep track of one more. I suppose we should get better organized.

Thanks for the input.