Hong Kong

The Mandatory Provident Fund Schemes Ordinance was enacted in 1995, and the MPF System was launched in December 2000,¹ to set up non-governmental schemes for the purpose of funding benefits on retirement, overseen by the Mandatory Provident Fund Schemes Authority (MPFA).² An employer must see that each relevant employee becomes a member of a registered scheme,³ and a self-employed person must join one.⁴ A master trust scheme is open to the employees of more than one employer and to the self-employed; an employer sponsored scheme only to one employer's employees, or a company's and its associated companies'.^5,6 The trustee keeps a separate account for each member,⁷ and a contribution account is split into sub-accounts for your employer's mandatory money, your own mandatory money, former-employment money and voluntary money.⁸

Your employer pays, from its own funds, 5% of your relevant income, which is all your pay from the job,⁹ and deducts another 5% from your pay as your contribution.^10,11 For a monthly-paid employee the levels are HK$7,100 and HK$30,000 a month: below HK$7,100 you pay nothing while your employer still pays, and above HK$30,000 each side pays HK$1,500 a month (US$193 at the Treasury's year-end 2025 rate).^12,13 You may elect, by notice to your employer, to contribute below the minimum level or on income above the maximum.¹⁴ Your employer may pay voluntary contributions for you,¹⁵ and you can add three kinds of your own: voluntary contributions through your employer into your contribution account; tax deductible voluntary contributions (TVC), which anyone holding a contribution or personal account may pay into a TVC account; and special voluntary contributions (SVC), which are unrelated to employment and which not all schemes offer.^16,17,18,19

Mandatory money and TVC are preserved until you reach 65, the retirement age, except on the statutory grounds: early retirement at 60, permanent departure from Hong Kong, total incapacity, terminal illness, a small balance, and death.^20,21,22,23 Voluntary money is paid as the scheme's own rules say, which may let you take it when a job ends.^24,25,26 When you leave a job and give no instruction within three months after the trustee is told the job ended, your contribution account in a master trust or industry scheme (one for the catering and construction industries)²⁷ moves to a personal account in the same scheme, and one in an employer sponsored scheme to a personal account in a master trust the trustee nominates.^28,29 A TVC account is not part of that move.³⁰ A personal account takes no contributions from a current job.³¹

The Civil Service Provident Fund Scheme, for officers who joined the civil service on new entry terms from 1 June 2000, is set up under the MPF Ordinance, and the government has engaged three master trust schemes for it, so an officer's account is an MPF account in one of them.^32,33 The government pays its mandatory 5% and a voluntary contribution, together 5% to 25% of basic salary by years of service, into two sub-accounts, and a disciplined services officer also gets a Special Disciplined Services Contribution of 2.5% of basic salary.^34,35

An employer that pays a severance or long service payment under the Employment Ordinance can apply to the trustee, which must pay it from your account an amount equal to the part that can be offset; if the employer has not paid, the trustee pays that amount to you.^36,37 The offsetting arrangement was abolished from 1 May 2025 without retrospective effect: employer mandatory money can no longer offset a payment for service from that date, but for an employee who started earlier any employer money can still offset the part of a payment for service before it, and employer voluntary money can offset any part.^38,39,40 TVC is never offset.²³

A foreign trust: the Ordinance requires each scheme to be governed by a trust. No IRS guidance addresses the MPF.

A foreign trust. The Ordinance defines a provident fund scheme as a scheme governed by a trust, and a scheme member as a person who has a beneficial interest in the scheme.^41,42 The trustee must see that the scheme's assets are administered and dealt with as trust property, apart from its own,⁴³ keep a separate account for each member,⁷ and act in the members' interests and not its own,⁴⁴ and accrued benefits from mandatory money cannot be charged or assigned, a protection TVC and voluntary money lack.^45,23 That fits the U.S. test for a trust: trustees who take title to property to protect or conserve it for the beneficiaries.⁴⁶ A scheme can be registered only if it will be governed by the law of Hong Kong, so on our reading it meets neither test for a domestic trust and is foreign.^47,48,49 No IRS guidance addresses the MPF; the nearest IRS reasoning is its counsel's 1997 advice, which is not precedent, on Singapore's Central Provident Fund.⁵⁰

The strongest authority against, point by point. A trust's beneficiaries cannot share in managing it,⁵¹ while MPF members choose among the investment funds inside a scheme, its constituent funds; but a fund whose members chose from options the trustee selected was still a trust in the IRS's ruling on it.⁵² An investment trust with a power to vary its investments is not a trust,⁵³ and special voluntary contributions can be withdrawn or transferred at any time, and voluntary money is paid on request as the scheme's rules allow, which is the strongest point for that reading;^54,25 but the scheme exists for retirement benefits, and its mandatory money and TVC pay only on statutory grounds,^2,20 so the cautious course still reads each scheme as one trust. Unlike Singapore's fund, the MPF is not social security, on our reading: its schemes are non-governmental, and the MPFA says the first pillar of the World Bank's framework is not applicable in Hong Kong.^2,1 On our reading each registered scheme is one trust, its constituent funds parts of it,⁵⁵ so the tests below run scheme by scheme, with a separate Form 3520 for each.⁵⁶ If a scheme is not a trust, none of the answers here apply.⁵⁷

A §402(b) employees' trust: your compulsory 5% counts as your employer's; what you choose to pay in, TVC and SVC too, is yours.

Employers contribute for their employees to a trust, so on our reading each scheme is an employees' trust under §402(b),⁵⁸ as a private ruling held for a foreign fund with mandatory employer contributions, member accounts and full vesting.⁵⁹ A trust created outside the United States escapes §402(b) only if it would otherwise meet §401(a),^60,61 and nothing suggests an MPF scheme does. Mandatory contributions vest as soon as they are paid to the trustee,^62,63 so your employer's 5% is U.S. income to you when paid,^58,64 and the foreign earned income exclusion cannot cover it.⁶⁵ The vesting rule opens with the words "Subject to section 12A", the offsetting rule. On our reading that does not delay vesting: an offset takes out only an amount equal to a severance or long service payment your employer has paid you, so nothing is forfeited, and a substantial risk of forfeiture needs a condition on your future services.^36,66 No IRS guidance applies these rules to an offset.

Your own mandatory 5% is withheld from your pay because the law requires it, so on IRS counsel's reasoning, in advice on Singapore's fund that is not precedent, it counts as your employer's: a share withheld because the law requires it is not withheld at your election and not constructively received.⁶⁷ The Ordinance calls it a contribution by the employee, and unlike Singapore's fund, where the employer owes the whole contribution and recovers part from pay, the MPF splits the two;¹⁰ that is the strongest point against. This site's guides apply the same reasoning to the compulsory shares of India's and Israel's funds, which their laws also treat as the employee's. So you are not treated as owner of the part your employer's money and your 5% fund.⁶⁸

Money you choose to put in is your own, taxed as pay:⁶⁹ voluntary contributions through your employer, TVC and SVC in the same scheme. An election to contribute below the minimum level or on income above the maximum is your choice, though your employer then deducts and pays it as for mandatory money:¹⁴ IRS counsel's reasoning fits it less well, so the cautious course counts it as yours, and this is not settled. If your contract of employment requires voluntary contributions from you, whose they are is not settled; the cautious course counts them as yours. Your employer's voluntary contributions are your employer's and vest as the scheme's rules say,⁷⁰ so they are income when they vest, and on later vesting the value of your vested interest then is included.⁷¹ The MPFA may pay a special contribution into a member's account;⁷² whether it is income when credited, and whose it is, is not settled, the cautious course does not count it as your employer's, and we do not know whether any U.S. member has received one. If you are exempt from the MPF because you came to Hong Kong for a limited period or stay in a plan abroad, and your employer enrolls you anyway, every contribution for you is voluntary:^73,74,24 nothing is withheld because the law requires it, so on the cautious course your share counts as your own,⁶⁷ and the whole balance is voluntary money, which the rules on voluntary money below reach.

In the Civil Service Provident Fund, the government's voluntary contributions vest only on ten continuous years of service, or at the normal retirement age if earlier, with nothing vested before, and the Special Disciplined Services Contribution vests only on retirement at or after the normal retirement age, 60 for officers appointed from 1 June 2015 and 55, or 57 for certain ranks, for those appointed earlier, or sooner on death, permanent incapacity or terminal illness.⁷⁵ So a U.S. officer includes the value of the government's voluntary sub-account in the year the tenth year of service ends, and that of the special contribution in the year of retirement.⁷¹ Forfeiture or withholding on disciplinary grounds is forfeiture for cause, which on our reading does not delay vesting.^76,77 The count for owning a part, below, runs in whichever of the three master trusts holds the officer's account, with other MPF money there, such as a TVC or personal account, counted in the same test.³³

IRS counsel said that so long as your own contributions do not exceed your employer's, no part of the fund is treated as owned by you.⁷⁸ Once your own total in a scheme exceeds your employer's money and your compulsory 5% combined, as of any date, you are treated as owner of the part your money funds, if the grantor trust rules are otherwise met,⁷⁹ and the income credited to your account meets them.^80,7 The count is per scheme, and at 5% each your own money starts at nil, so ownership needs real voluntary, TVC or SVC money in the same scheme, or a move read as a payout. Payouts are taxed under §72 when paid or made available, with what was already taxed to you as basis.^81,82,83

Money you could take just by asking is made available, and taxed then, whether you take it or not.^84,85 From 65 you are entitled as of right to all your mandatory money and TVC,^86,23 and to voluntary money only as far as the scheme's rules let you take it on request.^24,25 From 60, once you have permanently stopped all work and say so by statutory declaration, you are entitled to it in the same way,⁸⁷ and after a permanent departure from Hong Kong, claimed by statutory declaration with proof that you may live elsewhere, to all of it as a lump sum, once only before 65.^88,89,90,91 Both rest on a statutory declaration of fact, not a showing of hardship. The strongest point against is that the claim turns on that declaration, and a false one can be prosecuted.⁹² Whether either is made available before you claim is not settled, and no IRS guidance reads such a declaration; the cautious course treats the balance as made available once the facts that found the claim exist. On that course the amount for a year is what is first made available in that year, not the whole balance again each year.⁸¹ Whether money made available and left in the scheme then counts as your own money for Part II is not settled; read as never having left, it keeps its mix, and no IRS guidance addresses it.⁷⁹ Special voluntary contributions, which you can withdraw at any time,⁵⁴ are made available as credited, though trustees may set a minimum withdrawal and a maximum frequency, which is the point against,⁹³ and voluntary money the rules let you take when a job ends is made available then.²⁶

Moves inside a scheme. When you leave a job and give no instruction for three months, you are taken to have elected to move your contribution account to a separate personal account in the same scheme.^28,94 On our reading that deemed election is a statutory default about where preserved money sits, not a choice to receive it, and you could have named another destination.⁹⁵ IRS officials told GAO, in a report that is not guidance, that the IRS generally treats routine administrative transfers within a foreign plan as distributions,⁹⁶ even where the member takes no action,⁹⁷ and GAO's own example is this one: the automatic move of a leaver's contribution account to a personal account within the same scheme.^98,99 Whether it is a payout is not settled. For mandatory money, which stays preserved, the cautious course shows the move on Part III unless you report it as compensation income;¹⁰⁰ on the reading that the move is not a payout (the locked reading, in the notes on moves at the end of this guide), the money keeps its mix of your employer's and your own in the personal account, and if the IRS reads the move as a payout, what moved is your own money there, which can bring Part II and Form 3520-A for that account, and that is not settled.⁷⁹

Voluntary money is different where the scheme's rules let you take it when a job ends: it is then made available to you,²⁶ and once moved to a personal account, which officials told GAO takes no employee or employer contributions,¹⁰¹ it is money the scheme's rules let you take on request, held in an account of your own.²⁵ On the cautious course, as for Israel's provident funds, you are treated as owner of that money in the personal account, and the move is your transfer.⁸⁰ That reads it on its own even though it stays in the same scheme, and it may overstate what you own; it is not settled.⁷⁹ It means yearly Part II and Form 3520-A on that part for a leaver whose scheme's rules let voluntary money out when a job ends.

Moves between schemes. From an employer sponsored scheme the default moves your money to a personal account in a master trust the trustee nominates,²⁹ which is another scheme and so another trust: it follows the shared rule on moves between plans at the end of this guide, and on the payout reading the receiving account holds only your own money, so Part II there would reach the whole account.^96,79 A TVC account can move only to another scheme's TVC account,³⁰ and one left in an employer sponsored scheme when you leave the job moves by the same kind of default to a TVC account in a master trust the trustee nominates, which follows the same rule.¹⁰² Moves you choose follow that rule too: moving your employee mandatory money to a personal account of your choice once a calendar year, moving money from former jobs, and moving a TVC account to another scheme's;^103,104 from 21 December 2026, a date still subject to the Legislative Council, an employee whose job began from 1 May 2025 can move the employer's mandatory money as well.¹⁰⁵ Changing constituent funds inside a scheme is not a move.¹⁰⁶

Offsets. When the trustee pays your employer from your account an amount equal to a severance or long service payment, the employer takes it against what it paid you.³⁶ Part III reaches what you receive directly or indirectly,^107,108 so on the cautious course the offset is a payout to you, taxed under §72 unless you report it as compensation income, and the severance or long service payment itself is pay. How much of your basis an offset uses up is not settled, and it is outside this guide.^81,83

If you are a highly compensated employee and one reason a scheme is not exempt is that it fails the U.S. coverage tests, you include your vested balance, less what has already been taxed to you, in income each year instead.¹⁰⁹ MPF membership is compulsory for relevant employees, at the same 5%,^3,11 but a person who came to Hong Kong to work for a limited period, or who stays in a plan abroad, is exempt.⁷³ A nonresident alien with no U.S.-source earned income from the employer is an excludable employee in those tests,¹¹⁰ but a U.S. citizen exempt because of a plan abroad is not, so on our reading an employer that leaves U.S. staff out may be caught. No IRS guidance on the MPF says so.

Rev. Proc. 2020-17 is unlikely. The proposed regulations are unlikely for a scheme that takes SVC; otherwise not settled.

Rev. Proc. 2020-17 exempts an eligible individual (one who has filed U.S. returns and reported the plan's income as U.S. law requires)¹¹¹ from Forms 3520 and 3520-A for a retirement trust that meets its conditions,¹¹² conditions established by the laws of the trust's jurisdiction,¹¹³ and it needs no treaty. The MPF's purpose is retirement.² It is tax-favored: your mandatory contributions are deductible up to HK$18,000 a year (US$2,312 at the Treasury's year-end 2025 rate), and benefits from mandatory money paid on retirement, death, incapacity, terminal illness or permanent departure are left out of taxable salary.^{114,115,116,13} Reporting is met only weakly, on our reading under the words "otherwise available": you claim your deductions on your own return, and the eMPF Platform, the MPF system's central online platform,¹¹⁷ sends a yearly TVC summary to help you file.^118,119

Three conditions are likely not met. Contributions must come only from earned income,¹²⁰ but anyone who holds a contribution or personal account may pay TVC, whatever their earnings, and special voluntary contributions are unrelated to employment.^17,18 Contributions must be limited,¹²¹ and mandatory money is 5% of relevant income,¹¹ but on our reading the law caps no voluntary money: you may pay more than the mandatory amount, and pay into a TVC account, with no limit stated,^122,123 and TVC is capped only for the deduction, at HK$60,000 a year (US$7,708), and contributions above that are allowed, just not withdrawn early.^124,125,13 Payouts must wait for retirement age, disability or death, or carry a penalty, and the examples of permitted early payouts are in-service loans, hardship, education and buying a primary residence.^126,127 Payouts at 65 or 60, on total incapacity and on death fit, and terminal illness is close to disability on our reading, but a permanent departure, or a balance of HK$5,000 (US$642) or less, once no mandatory contribution has been due for 12 months and you hold no other MPF money, pays everything with no penalty,^89,128 special voluntary contributions can be withdrawn at any time,⁵⁴ and voluntary money may come out when a job ends,²⁶ and none of those is among the examples. The employer condition applies to an employer-maintained trust and counts comparable plans together.^129,130 Every employer must put each relevant employee into a registered scheme, though it may use more than one,^3,131 so on our reading the condition is met for an employer sponsored scheme, and for a master trust if it applies to one at all. With no IRS guidance on the MPF, Rev. Proc. 2020-17 is unlikely to cover a scheme.

The proposed regulations, which you may rely on now if you apply them in full and consistently with related persons,¹³² need contributions only "generally" from earned income, with allowances for limited contributions by unemployed individuals,¹³³ and let a value test of US$600,000 (adjusted for inflation from 2026) stand in for a contribution limit;¹³⁴ on our reading that test adds together all your trusts in Hong Kong. TVC is open only to people who hold a contribution or personal account or belong to an MPF-exempted ORSO scheme (the next block), all of which come from work or past work,¹⁷ and it is deducted against salaries tax,¹³⁵ so a scheme whose own-money options are TVC may pass on "generally". Special voluntary contributions, unrelated to employment, go further, so the proposed regulations are unlikely for a scheme that takes them,¹⁸ and not all schemes do.¹⁹ Their payout condition has the same words as Rev. Proc. 2020-17's, so permanent departure and a small balance stay open.¹³⁶ For a scheme without SVC they are possible, and that is not settled.

No treaty: none covers Hong Kong, and the 1984 treaty with China does not reach it.

No treaty: the United States has no income tax treaty with Hong Kong,¹³⁷ and its 1984 treaty with China covers only the territory where the laws on Chinese tax are in force,¹³⁸ while Hong Kong practises an independent taxation system.¹³⁹ Hong Kong's own list of its tax agreements has no United States entry, and lists a separate arrangement with the Chinese Mainland.¹⁴⁰ So nothing defers U.S. tax on contributions or growth, and there is no treaty election or Form 8833 to make; U.S. tax follows §402(b) alone.⁵⁸ Hong Kong leaves benefits from mandatory money paid on the statutory grounds out of taxable salary, so there may be no Hong Kong tax on a payout to credit.¹¹⁵

A U.S.-Hong Kong agreement exempting income from operating ships ended from 1 January 2021, and it never reached pensions or trusts.^141,142

Part I and II for voluntary money moved after a job; Part II once own money passes employer's and 5%; Part III payouts and moves.

Read as a §402(b) trust: no Part I for contributions to your own account.¹⁴³ Part I can apply if, on the cautious course, voluntary money you could take when a job ends is then moved to a personal account, as the next paragraph says. No Part II or Form 3520-A for the part funded by your employer's money and your compulsory 5%. Part II and Form 3520-A can apply if your own money in a scheme exceeds that, each year for the part it funds, or, which is not settled, if a move is read as a payout.^68,79,144 Part III can apply if you receive a payout, and on the cautious course it covers amounts first made available in the year, even if you leave them in the scheme, offsets, the automatic move to a personal account and other moves, unless you report them as compensation income,^{107,108,100,145} and whether an amount made available then counts as your own money for Part II is not settled;⁷⁹ payouts from a part you own go on Part III, lines 24 and 27.¹⁴⁶ Money counted as made available in an earlier year and paid out later goes on Part III when it is paid, with a statement naming the year it was counted, whether or not it went on Part III that year: the count was a constructive receipt and the payout is the actual one, and line 24 covers what you receive actually or constructively, whether or not it is taxable; what was taxed when it was made available is basis by then, not compensation income you report, so the compensation exception does not take it off.^108,147,100 On the cautious course, a payout that mixes that money with growth or other money taxed only when it is paid goes on Part III in full, the part you report as compensation income included, since the exception covers a distribution you report as compensation income and part of this one is not.^108,100 No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules, and the income of a part you own is taxed to you each year.^81,148,149 If the trustee does not file Form 3520-A, you attach a substitute to your Form 3520, one for each scheme.^150,56

Voluntary money moved after a job ends, on the cautious course. Once voluntary money the scheme's rules let you take when a job ends, your own and your employer's vested part alike, is moved to a personal account, you are treated as owner of it: Part I for the move, in its year, while you are a U.S. person; Part II and Form 3520-A each year on it; and its payouts on Part III, lines 24 and 27. The money leaving your contribution account goes on Part III unless you report it as compensation income, except money counted as made available in an earlier year, which goes on Part III as above.^{57,80,144,146,100} That may overstate what you own; on the other reading the money keeps its mix, and no IRS guidance addresses it.⁷⁹ The strongest point against Part I is that the money stays inside a trust described in §402(b), which the Part I exception covers;¹⁴³ the cautious course still reports the move, as for Israel's funds, and that is not settled. On the same cautious course, which is not settled either, Part I also applies at your death as a U.S. citizen or resident, if any part of that personal account is then treated as owned by you or is in your gross estate: your executor reports it, whether or not the executor is a U.S. person.^151,143 Money you move instead into a new employer's contribution account, which takes new contributions, follows the shared rule on moves.⁹⁶

On a member's death the trustee pays the estate, not a nominee.¹⁵² Whether what a U.S. heir of a member who was not a U.S. person then receives is a bequest from a foreign estate, on Part IV, or a distribution from the scheme, on Part III, is not settled; the cautious course reports the whole payment on Part III, however it was funded, as the gifts section says.^153,154 If the member was a U.S. person, the estate reports the payment as the gifts section says.

If a scheme is not a trust, none of these apply, since Forms 3520 and 3520-A report foreign trusts.⁵⁷ An eligible individual whose account qualifies under the proposed regulations files none of them, and that is not settled.¹³² On our reading the exemption also spares your executor the report of your death, if you were an eligible individual and the plan qualified: it covers an eligible individual's transactions with, or ownership of, the trust, and an eligible individual can be someone who at any time was a U.S. citizen or resident.^155,156 No IRS guidance names executors. PFIC rules may apply to what the scheme invests in; this guide does not decide that. FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

ORSO schemes, named for the Occupational Retirement Schemes Ordinance, are retirement schemes set up voluntarily by employers for their employees.¹⁵⁹ The Occupational Retirement Schemes Ordinance covers a scheme in one or more instruments or agreements that pays benefits on termination of service, death or retirement,¹⁶⁰ and an employer may run or pay into one only if it is registered, exempted or set up by an Ordinance.¹⁶¹ Schemes that met the conditions before the MPF began could be exempted from it, and their employers must offer each new eligible employee a choice between the ORSO scheme and an MPF scheme.¹⁶² Benefits follow the scheme's own rules, and a member's vested benefit is measured as if the member had resigned that day.¹⁶³

Members of an MPF-exempted scheme can have minimum MPF benefits, which the scheme must preserve and, once the member is entitled to benefits, move to an MPF scheme.¹⁶⁴

A foreign trust where a Hong Kong scheme is governed by a trust; an offshore scheme turns on its own law and trustees.

A foreign trust, for a Hong Kong scheme governed by a trust. The Ordinance bars the employer, its associates and its employees from being the sole trustee of such a scheme, and requires the trustee to put the members' interests before its own;^165,166 the scheme's assets must be kept apart from the employer's and used only for the scheme.¹⁶⁷ Only a scheme governed by a trust can be exempted from the MPF.¹⁶⁸ That fits the U.S. test for a trust,⁴⁶ and a scheme domiciled in Hong Kong, governed by its law and run there, meets neither test for a domestic trust on our reading.^48,49

An offshore scheme is one domiciled outside Hong Kong.¹⁶⁹ If its trustees and court are in the United States it may be a domestic trust, and this block does not reach it.⁴⁸ An offshore scheme that is neither governed by a trust nor run as an insurance arrangement can be registered too;¹⁷⁰ such a scheme takes its own country's answers, or is a foreign trust if its fund is a trust, and this guide gives no answer for one without reading its documents. A scheme the Registrar has exempted from the Ordinance, such as an offshore scheme registered abroad, is outside the trusteeship and asset rules above.^171,172 On our reading it takes this block's answers if trustees outside the United States hold its fund, the next block's if an insurer runs it, and otherwise its own country's; check its documents.⁴⁸

A §402(b) employees' trust: employer money is taxed when vested; money you choose to pay in can make you owner of a part.

On our reading it is a §402(b) employees' trust: an employer pays in, and a trust created outside the United States escapes §402(b) only if it would otherwise meet §401(a).^60,61 Employer contributions are U.S. income to you when paid, to the extent vested, and the value of an interest that vests later is income in that year,^58,64,71 and the foreign earned income exclusion cannot cover them.⁶⁵ Money the scheme's rules require taken from your pay counts as your employer's on IRS counsel's Singapore advice, which is not precedent;⁶⁷ money you choose to put in is your own,⁶⁹ and once your own total exceeds the employer's you are treated as owner of the part it funds, if the grantor trust rules are otherwise met.⁷⁹ Payouts are taxed under §72 when paid or made available,^81,82 and a vested benefit you may take when a job ends is made available then.⁸⁴ A highly compensated employee in a scheme that fails the U.S. coverage tests includes the vested balance in income each year instead,¹⁰⁹ so a scheme for executives alone may raise that rule.

Rev. Proc. 2020-17 is unlikely: benefits are paid when a job ends. No IRS guidance addresses an ORSO scheme.

Rev. Proc. 2020-17 exempts an eligible individual from Forms 3520 and 3520-A for a retirement trust that meets its conditions,^111,112 and an employer's plan must also cover a wide range of employees, rank and file included.¹²⁹ An ORSO scheme pays on termination of service, its vested benefit measured as on resignation,^160,163 and leaving a job is not among the examples of permitted early payouts,¹²⁷ so Rev. Proc. 2020-17 is unlikely to cover one. Reporting is met only weakly: a registered scheme reports to Hong Kong's tax department only members who are tax residents of other reportable jurisdictions.^173,119 The proposed regulations may be relied on as the Form 3520 instructions describe, and their payout condition has the same words.^132,136 No IRS guidance addresses an ORSO scheme.

No treaty.

The United States has no income tax treaty with Hong Kong.¹³⁷

Part II and Form 3520-A once your own money exceeds your employer's; Part III for payouts unless reported as compensation.

Read as a §402(b) trust: no Part I for any contribution.¹⁴³ No Part II or Form 3520-A for the employer-funded part. Part II and Form 3520-A can apply if your own money exceeds your employer's, each year for the part it funds.^68,79,144 Part III can apply if you receive a payout, and on the cautious course it covers amounts made available, unless you report them as compensation income;^107,100,145 payouts from a part you own go on Part III, lines 24 and 27.¹⁴⁶ Money counted as made available in an earlier year and paid out later goes on Part III when it is paid, with a statement naming the year it was counted, whether or not it went on Part III that year: the count was a constructive receipt and the payout is the actual one, and line 24 covers what you receive actually or constructively, whether or not it is taxable; what was taxed when it was made available is basis by then, not compensation income you report, so the compensation exception does not take it off.^108,147,100 On the cautious course, a payout that mixes that money with growth or other money taxed only when it is paid goes on Part III in full, the part you report as compensation income included, since the exception covers a distribution you report as compensation income and part of this one is not.^108,100 Minimum MPF benefits moved to an MPF scheme, and other moves, follow the shared rule on moves at the end of this guide.⁹⁶ No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules.^81,148 If the trustee does not file Form 3520-A, you attach a substitute to your Form 3520.¹⁵⁰

A death benefit the scheme's rules pay straight to a U.S. nominee or dependant, not to the estate, is a distribution from a foreign trust, on Part III on the cautious course.¹⁰⁷ One paid to the estate and passed on to a U.S. heir of a member who was not a U.S. person is read as the gifts section says: on the cautious course the whole payment goes on Part III, however it was funded, which is not settled.^154,153

If the scheme is not a trust, none of these apply.⁵⁷ FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

An insurance arrangement is one made for an ORSO scheme with an authorized insurer that is responsible for managing the scheme,¹⁷⁴ and the insurer is the scheme's administrator.¹⁷⁵ Your employer may be the holder of the insurer's policy.¹⁷⁶

Not a trust: an insurer manages the scheme, and the scheme's assets are claims on that insurer.

Not a trust, on our reading. For a scheme run as an insurance arrangement, the Ordinance says the scheme's assets are the claims that may be made against the insurer under that arrangement,¹⁷⁷ and those claims need not be kept apart from the employer's own assets: the employer may hold the policy.¹⁷⁶ So no trustee takes title to property for you;⁴⁶ your benefits rest on an insurer's contract, and the Code treats insurance companies as corporations.¹⁷⁸ This site's guide to Germany reads direct insurance, a policy an employer takes out for its staff, the same way.

The strongest points against: the scheme's assets may be applied only for the scheme, and on the employer's bankruptcy assets equal to the members' past service liability stay out of its estate,^167,179,180 the kind of protection the IRS relied on in a private ruling that a foreign pension entity was a trust.¹⁸¹ On our reading that protects your claim but puts no property in a trustee's hands for you. A scheme that is itself governed by a trust holding the policy is in the block before this one.

Applies only to a trust; how your employer's premiums are taxed to you turns on policy terms this guide did not read.

§402(b) reaches an employer's contributions to an employees' trust,⁵⁸ so it doesn't apply to a contract. An employer's premiums for an annuity contract outside a U.S. qualified plan are your income under the rules for property transferred for services,¹⁸² and the ring-fence on bankruptcy sets the claim apart from the employer's creditors, which counts toward property under those rules.¹⁸³ But whether you or your employer holds the policy, and so how this applies, turns on documents we did not read, and this guide does not work it out.

Not needed for a contract.

Not needed: §6048 reaches only foreign trusts.⁵⁷

No treaty.

The United States has no income tax treaty with Hong Kong.¹³⁷

Nothing on Form 3520 or 3520-A.

No Part I, Part II, Form 3520-A, Part III, or Form 4970: Forms 3520 and 3520-A report foreign trusts, and on our reading this scheme is not one.^57,144,107 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

Teachers of grant and subsidized schools are covered by statutory provident funds and are exempt from the MPF.¹⁸⁴ The Grant Schools fund pays on a teacher's resignation, retirement, dismissal, end of contract or death,¹⁸⁵ and the Subsidized Schools fund is made up the same way, from teachers' contributions, government donations and investment income.¹⁸⁶ A teacher pays 5% of basic salary, deducted monthly,¹⁸⁷ and the government pays a donation of 5%, 10% or 15% of salary by years of service, credited to the teacher's account.¹⁸⁸ A teacher who leaves after 5 but under 10 years gets back their own money and 50% to 90% of the donations,¹⁸⁹ and the fund credits a 5% guaranteed dividend each year, which a government loan can underwrite.¹⁹⁰ We read the Grant Schools rules closely and compared the Subsidized Schools rules only in outline.

Not settled: a statutory fund with an account for each teacher, but no trustee named. Cautious: a foreign trust.

Not settled, and no IRS guidance addresses these funds. The fund keeps an account for each teacher and is invested for them,^187,191 which fits a trust's purpose,⁴⁶ and a foreign pension fund whose members could not assign their interests had its own private ruling as a trust.¹⁸¹ But the rules name no trustee: a board of control administers and controls the fund, and a treasurer appointed by the Director of Accounting Services keeps it.^192,193 With the question open, and a missed distribution on Part III costing the greater of $10,000 or 35% of it, capped at the amount,^194,195 this guide takes the cautious course of reading each fund as a foreign trust, governed by Hong Kong law and run there.^48,49 The U.S.-Hong Kong FATCA agreement lists both funds as exempt beneficial owners, which classifies nothing for Form 3520.¹⁹⁶

Cautiously, a §402(b) trust: the government donation is taxed as it vests, and your 5% never exceeds it.

On the cautious reading it is a §402(b) employees' trust: the government pays in for its teachers,^58,188 and a trust created outside the United States escapes §402(b) only if it would otherwise meet §401(a).⁶⁰ The donations vest on the rules' scale, all of them after 10 years, so they are income as they vest, and on later vesting the value of your vested interest then is included,^189,64,71 and the foreign earned income exclusion cannot cover them.⁶⁵ Your 5% is deducted from salary because the rules require it, so it counts as your employer's on IRS counsel's Singapore advice, which is not precedent;^67,187 where the rules let you choose to contribute, it is yours.^197,69 Either way your own money is at most 5% of salary and the donation at least 5%,¹⁸⁸ so your own money never exceeds it, and you own no part.⁷⁹ Payouts are taxed under §72 when paid or made available.⁸¹

Rev. Proc. 2020-17 is unlikely: the fund pays on resignation.

Rev. Proc. 2020-17 exempts an eligible individual for a retirement trust that meets its conditions,^111,112 but this fund pays when a teacher resigns after 5 years,¹⁸⁹ and leaving a job is not among the examples of permitted early payouts,¹²⁷ so it is unlikely to qualify; the proposed regulations' payout condition has the same words.¹³⁶

No treaty.

The United States has no income tax treaty with Hong Kong.¹³⁷

Part III for payouts unless reported as compensation; no Part II, since your own money never exceeds the donation.

Read as a §402(b) trust: no Part I for any contribution.¹⁴³ No Part II or Form 3520-A: on the rules read your own money never exceeds the government donation, so no part is yours.^68,79 Part III can apply if you receive a payout on leaving or retiring, unless you report it as compensation income.^107,100,145 On a teacher's death the fund pays the personal representative; what the estate passes on to a U.S. heir of a teacher who was not a U.S. person goes, on the cautious course, on Part III in full, as the gifts section says, which is not settled.^189,154,153 No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules.^81,148

If the fund is not a trust, none of these apply.⁵⁷ FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

Civil servants on pension terms are covered by statutory pension schemes and are exempt from the MPF.¹⁸⁴ Pensions, gratuities and allowances under the Pensions Ordinance and the Pension Benefits Ordinance are charged on and paid out of the general revenue,^198,199 and a pension cannot be assigned.²⁰⁰ A Civil Service Pension Reserve Fund exists to meet the pensions in the unlikely event that the government cannot meet them from general revenue.²⁰¹ We did not read the judicial officers' pension law.

Not a trust: pensions are paid from general revenue, and the reserve fund behind them holds nothing for you.

Not a trust, on our reading, and no IRS guidance addresses these pensions. A trust needs trustees who take title to property to protect or conserve it for the beneficiaries.⁴⁶ A pension here is charged on general revenue,^198,199 and the reserve fund is a government fund that backs the payments, keeps no account for any member and holds nothing for you.²⁰¹ This site's guide to Germany reads civil service pensions paid from public budgets, with reserves that relieve those budgets, the same way.

Does not apply on our reading: there is no trust.

§402(b) reaches an employer's contributions to an employees' trust,⁵⁸ and on our reading there is none. A promise with nothing set aside for you is not property under the rules for property transferred for services,¹⁸³ so on our reading nothing is U.S. income to you before you are paid.

Not needed.

§6048 reaches only foreign trusts.⁵⁷

No treaty.

Nothing defers or exempts U.S. tax on the pension.¹³⁷

Nothing on Form 3520 or 3520-A.

No Part I, Part II, Form 3520-A, Part III, or Form 4970: Forms 3520 and 3520-A report foreign trusts, and on our reading this pension is not one.^57,144,107 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

Some members have no employer money in a scheme. A self-employed person pays 5% of relevant income, for them their income worked out as the MPF regulations say,²⁰² from their own funds, for their own benefit,⁴ between levels of HK$7,100 and HK$30,000 a month, or HK$85,200 and HK$360,000 a year.²⁰³ Anyone with a contribution or personal account, or in an MPF-exempted ORSO scheme, may open a TVC account in any scheme that offers one,^17,204 and special voluntary contributions go straight to a scheme that offers them, without an employer.¹⁸ A personal account holding money moved from a former employer's account is not this block on the reading that the move is not a payout (the locked reading, in the notes on moves at the end of this guide), since that money keeps its mix: it is in the MPF block. A member who later has employer money in the same scheme, such as a self-employed person who takes a job with an employer in that master trust, moves to the MPF block, with a running total.

A foreign trust: the same scheme trust as for employees.

Which the Ordinance requires to be governed by a trust under Hong Kong law,^41,47 with a separate account for you.⁷ If it is not a trust, none of the answers here apply.⁵⁷

No employer pays in, so §402(b) taxes nothing to you; whether the scheme's Part I exception covers you is not settled.

§402(b) reaches an employer's contributions,⁵⁸ and there are none for you in this scheme, so it taxes nothing to you here. Your own money funds your account, so you are treated as owner of it, since its income is credited to you.^79,80

The argument against Part I is strong here. The exception tests the trust, not the member: it covers a trust described in §402(b),¹⁴³ a master trust scheme is by statute open to the employees of more than one employer and to the self-employed,⁵ and the compensatory-trust regulation speaks of a nonexempt employees' trust including one created on behalf of a self-employed individual.²⁰⁵ A private ruling found that a fund individuals could also join was a §402(b) trust,²⁰⁶ but it ruled only for members whose employer paid in more than they did.²⁰⁷ No IRS guidance says a member with no employer money is within the exception, so the cautious course reports each contribution you make;⁵⁷ a missed Part I can cost the greater of $10,000 or 35% of it, capped at the amount.^194,195

A government special contribution the MPFA pays into your account is not a transfer by you.⁷² On the cautious course it is still read as your own money; on the other reading the government is the grantor of that money and no one is treated as owning it, so a payout of income it earned in earlier years could carry Form 4970 tax, and that is not settled.^208,209

As for the MPF block: Rev. Proc. 2020-17 unlikely; the proposed regulations unlikely where the scheme takes SVC.

As for the MPF block, Rev. Proc. 2020-17 is unlikely, since TVC and special voluntary contributions are not tied to earned income and special voluntary contributions can be withdrawn at any time,^120,126,54 and the proposed regulations are unlikely for a scheme that takes special voluntary contributions and otherwise possible, not settled.^133,132 The employer condition does not apply where no employer pays in.¹²⁹

No treaty.

The United States has no income tax treaty with Hong Kong.¹³⁷

On the cautious course: Part I for what you pay in, Part II and Form 3520-A each year, Part III for payouts and moves.

On the cautious course, you are treated as owner of your account, because your own money exceeds any employer's for you and its income is held for you,^79,80 so Part II and Form 3520-A are due each year,¹⁴⁴ with a substitute if the trustee does not file,¹⁵⁰ and payouts and moves go on Part III, lines 24 and 27, as payouts to an owner.^107,146 Part I can apply if you contribute as a U.S. person: on the cautious course each contribution is a Part I transfer,⁵⁷ and one made within 5 years before your U.S. residency started goes on Part I for that year,²¹⁰ though the exception for a §402(b) trust may reach it, as the §402(b) step says.¹⁴³ A government special contribution is not your transfer, so it needs no Part I.⁵⁷ On the same cautious course, Part I also applies at your death as a U.S. citizen or resident, if any part of the account is then treated as owned by you or is in your gross estate, unless the exception for a §402(b) trust reaches the account, as it may: your executor reports it, whether or not the executor is a U.S. person.^151,143 No Form 4970 for what you own, because its income is taxed to you each year.¹⁴⁹ Form 4970 tax can apply if a payout carries out income that a government special contribution earned in earlier years, on the reading that the government, not you, owns it; that is not settled.²⁰⁹

On your death the trustee pays your estate, as the gifts section says.¹⁵² PFIC rules may apply to what the scheme invests in; this guide does not decide that. FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

A qualifying deferred annuity policy is an insurance policy certified by the Insurance Authority, whose policy holder is the legal holder of the policy,²¹¹ and its premiums are deductible within the same HK$60,000 yearly limit as TVC.¹²⁴ This block also covers other life, endowment, annuity and investment-linked policies with an insurer. We could not read the Insurance Authority's own pages.

Not a trust: a contract with an insurer, which holds the assets.

Not a trust, on our reading. A trust needs trustees who take title to protect or conserve property for beneficiaries,⁴⁶ and an insurer owns its assets and owes you a contract; the Code treats insurance companies as corporations.¹⁷⁸ The strongest authority the other way is the IRS's private ruling that a foreign pension entity was a trust,¹⁸¹ but that entity held assets for covered employees who could not assign their interests, not policies an insurer sells to the public. Under an investment-linked policy you may be treated as owning the assets behind it for U.S. tax, which makes no trust.²¹² Whether a policy meets the U.S. definition of life insurance, or is an annuity, is a separate question this guide does not decide.

Does not apply: no employer pays in, and a policy is not a trust.

§402(b) reaches only an employer's contributions to an employees' trust,⁵⁸ and a policy you buy is not one.

Not needed.

Since §6048 reaches only foreign trusts.⁵⁷

No treaty.

The United States has no income tax treaty with Hong Kong.¹³⁷

Nothing on Form 3520 or 3520-A. A policy's U.S. income tax is not decided here.

No Part I, Part II, Form 3520-A, Part III, or Form 4970: Forms 3520 and 3520-A report foreign trusts.^57,144,107 How a foreign policy is taxed in the United States is not decided here. PFIC rules may apply to what the policy invests in; this guide does not decide that. FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^157,158

Hong Kong's Trustee Ordinance says, since 1 December 2013, that a trust is not invalid only because the settlor reserves powers of investment or asset management,²¹³ and that a foreign law of inheritance or succession does not affect a transfer of movable property into a qualifying Hong Kong-law trust.²¹⁴ A trust taking effect from that date may last for an unlimited period.²¹⁵ Hong Kong charges profits tax on any person, a trustee included, carrying on a trade, profession or business in Hong Kong, on profits arising there, under rules separate from Form 3520,^216,217 and it has no capital gains or estate tax.²¹⁸ Employer share award schemes that hold shares for employees through a trustee are not covered by this guide.

A foreign trust, unless a U.S. court supervises it and U.S. persons control its substantial decisions.

An ordinary trust where the trustee holds property for the beneficiaries,⁴⁶ and a foreign trust where a trustee in Hong Kong administers it under Hong Kong law, since it then fails the court test, which alone makes it foreign, even where the trustee is a U.S. citizen.^48,49 A trust is domestic only on a day a U.S. court can supervise its administration and U.S. persons control all of its substantial decisions, counting everyone who can make one, not only the trustees.²¹⁹ Powers a settlor keeps, or a protector's consent rights, do not on our reading stop it being a trust; they go to who is owner, below, and where a foreign person holds one that is a substantial decision, such as a power to revoke the trust or to replace the trustee, it also keeps the trust foreign, even with a U.S. trustee.^220,221 A bare trust whose trustee only holds title for an adult entitled to the property may not be a trust for U.S. purposes,²²² but that ruling is narrow,²²³ so whether a bare trust is one is not settled, and the cautious course reports it as a trust. A bank or trust company that holds your own investments only to act on your instructions is not that kind of bare trust; it is an account, not a trust.²²² A settlor's reserved investment powers under Hong Kong law do not by themselves make the trustee a holder of bare title: the ruling does not reach a holder that may do more than hold title.^223,213

A U.S. person who funds it is owner when it has a U.S. beneficiary; a foreign settlor only in two narrow cases.

Who is treated as owner decides who files Part II and Form 3520-A. A U.S. person who transfers property to the trust is treated as owner of the part it funds for any year in which the trust has a U.S. beneficiary.²²⁴ Someone who funds the trust while not a U.S. resident and becomes one within 5 years is treated, for this rule and for Part I, as transferring that part of the trust on the day their U.S. residency starts.²¹⁰ A settlor who is not a U.S. person is treated as owner only if they can revoke the trust alone or with the consent of a related or subordinate party subservient to them, or if only they or their spouse can receive distributions during their life;²⁰⁸ reserving investment powers under Hong Kong law does not by itself do that.²¹³ Otherwise, unless another grantor trust rule makes a U.S. person owner,⁸⁰ no one is owner, and the trust is taxed as a separate, non-grantor trust.²²⁵

A trust has a U.S. beneficiary for the transferor rule if anyone has discretion to pay or benefit any person, unless its terms identify the class who may benefit and none of them is a U.S. person that year,²²⁶ even if nothing is paid to a U.S. person that year;²²⁷ a power to amend the trust to benefit a U.S. person counts, and so does a letter of wishes or other understanding that points to benefiting one, even one that says it is only a suggestion.²²⁸ Where a U.S. person funds the trust, the IRS may treat it as having a U.S. beneficiary unless that person shows it has none.²²⁹ A beneficiary who first became a U.S. person more than 5 years after the transfer is not counted,²³⁰ and a transferor whose trust gains a U.S. beneficiary is taxed that year on the income the trust kept for that part to the end of the year before, as an accumulation distribution with the interest charge.^231,232 A settlor who is not a U.S. person keeps the revocable-trust exception for a year only if they can take the property back alone, or with the consent of a related or subordinate party subservient to them, for at least 183 days of it; a power that needs anyone else's consent, such as an independent trustee's or protector's, does not count.^233,234 Once the exception fails for a year it is lost for good.²³⁵ Separately, a portion already treated as owned under §676, or under §677 other than its life insurance rule, on September 19, 1995 keeps that owner for the property it held that day, for as long as it stays so treated.²³⁶ A U.S. settlor of a trust with no U.S. beneficiary can still be owner under another rule, for example by keeping a power to take the property back,²³⁷ and a U.S. beneficiary who alone can take the property is owner of it.^238,208

When a settlor who was not a U.S. person dies, the revocable-trust and spouse-only exceptions end for that settlor's portion, because the person left with the power, even a surviving spouse, is not its grantor;²³⁹ a U.S. person who alone can take the property, or a U.S. person who funded the trust, can still be owner, and otherwise the portion is taxed as a non-grantor trust.^238,224,225 When a portion stops being owned by a U.S. person, the owner is treated, for the gain rule, as transferring it to a foreign trust that day.²⁴⁰ At death the gain is excused only if the trust's basis in the property is then reset to its value at death under section 1014(a), as where the owner could still revoke the trust;²⁴¹ otherwise the owner is treated as transferring it immediately before death and recognizes the gain.²⁴²

No relief.

The United States has no income tax treaty with Hong Kong.¹³⁷

Part I for whoever funds it, Part II and Form 3520-A for an owner, Part III for whoever receives a distribution.

A U.S. person who transfers property to the trust files Part I for that year.⁵⁷ A transfer to a foreign trust is treated as a sale, and you recognize any gain on what you transfer;²⁴³ a transfer is not, to the extent anyone is treated as owning the part it funds.²⁴⁴ Part I also applies on the death of a U.S. citizen or resident who was treated as owner of any part of the trust, or whose gross estate includes part of it, and to property that passes to the trust by reason of a U.S. person's death; the executor reports it, whether or not the executor is a U.S. person.¹⁵¹ The gain rule does not apply to property that passes to the trust by reason of a U.S. person's death, if its basis in that property is set under section 1014(a).²⁴¹ A U.S. owner files Part II and makes sure Form 3520-A is filed, or files a substitute, each year.^144,150 A U.S. beneficiary who receives a distribution files Part III for that year.¹⁰⁷ A distribution from a non-grantor trust that carries out income the trust kept in earlier years is an accumulation distribution, taxed with an interest charge on Form 4970.²⁰⁹ Form 4970 can also apply to a transferor taxed when the trust gains a U.S. beneficiary, as the owner step says.²³² Rev. Proc. 2020-17 does not apply: it covers only retirement trusts and medical, disability, or educational savings trusts.²⁴⁵

A distribution is any gratuitous transfer from the trust, whether or not it is a grantor trust and whether or not you are named as a beneficiary, including a credit card bill it pays or guarantees and a check written on its account.²⁴⁶ On the proposed rules, a payment from a company the trust owns to a U.S. person who is a grantor, owner or beneficiary of the trust, or related to one, is treated as a distribution from the trust, unless that person shows it is properly attributable to their own interest in the company.^247,132 A loan of cash or marketable securities, or use of trust property, to you or a related U.S. person goes on Part III whether or not it is taxable;²⁴⁸ it is treated as a distribution for income tax, except a loan made on a qualified obligation (a written loan in U.S. dollars, for 5 years or less, at an interest rate tied to the federal rate, for which you extend the IRS's time to assess and that you report each year) or use you pay the fair market value for within a reasonable time,^{249,250,251,252} and where a U.S. person funded the trust, the loan instead makes it a grantor trust, and it still goes on Part III.²⁵³

If you are the U.S. owner of the part that pays you, you complete only lines 24 and 27, and the rest of this paragraph does not apply to you.¹⁴⁶ Otherwise, with a complete Foreign Grantor Trust Beneficiary Statement you treat a payment as coming from the owner, so a gift from the owner is not your income;²⁵⁴ without one, the default method applies even to a distribution from a grantor trust.²⁵⁵ From a non-grantor trust you may use the actual method if you have a Foreign Nongrantor Trust Beneficiary Statement,²⁵⁶ and without one the default method applies: the part of this year's distributions above 1.25 times the average of the three years before is an accumulation distribution, taxed on Form 4970 with an interest charge figured on Form 3520's Schedule C, and the rest is ordinary income,^257,209,258 and once you use the default method you must keep using it in later years, except that in the year the trust ends you may use the actual method if you have the statement.²⁵⁹ In the trust's first year as a foreign trust, you stop Part III once you have entered how many years it has been foreign, so no accumulation distribution is figured that year.²⁶⁰ The statute treats the whole distribution as an accumulation distribution where adequate records are not given;²⁶¹ the default method is the IRS's relief from that, open if you can give the trust's distributions for the three years before,²⁶² and where there were none, it too makes the whole distribution an accumulation distribution.²⁵⁷ A foreign trust's distributable net income, the income its distributions carry out, includes its capital gains,²⁶³ and the exception for income kept before a beneficiary was born or turned 21 does not apply to it.²⁶⁴ FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.²⁶⁵

MPF schemes invest through approved pooled investment funds, each an insurance policy, an authorized unit trust or an authorized mutual fund,²⁶⁶ and such funds are also sold to investors directly. We did not read Hong Kong's securities law on collective investment schemes and open-ended fund companies, or a fund's trust deed.

Not a trust where its manager can vary its investments; then a foreign corporation if all investors have limited liability.

Not a trust for U.S. purposes where its manager can vary its investments: an investment trust with that power is not classified as a trust,⁵³ and a trust that runs a business is not one either.²⁶⁷ As a foreign entity, such a fund is treated as a corporation if all its investors have limited liability, unless it elects otherwise.²⁶⁸ A fund that cannot change its investments may be a trust; check the deed.

No owner: the grantor trust rules do not reach a corporation.

The grantor trust rules apply to trusts, so no one is treated as owner of a fund treated as a corporation; its investors hold shares in a foreign corporation.²⁶⁸ PFIC rules may apply to a fund you invest in; this guide does not decide that.

No treaty.

No treaty changes how the fund is classified or reported.¹³⁷

No Form 3520 or 3520-A for a fund treated as a corporation.

For a fund treated as a corporation: no Part I, Part II, Part III, or Form 3520-A, and no Form 4970, because Forms 3520 and 3520-A report foreign trusts.^57,144,107 A fund that is a trust is reported under the trust rules in the block before this one.⁵³ FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.²⁶⁵

When an MPF member dies, the balance must be claimed by the member's personal representative, under a grant of probate or letters of administration, or by the Official Administrator.²⁶⁹ Hong Kong's Trustee Ordinance extends its words trust and trustee to the duties incident to the office of a personal representative.²⁷⁰ We did not read the Probate and Administration Ordinance.

An estate, not a trust, on our reading. Whether a long administration is a trust is not settled.

An estate, not a trust, on our reading, unless the administration runs long: the Form 3520 instructions put what you receive from a foreign estate on Part IV as a bequest,¹⁵³ and the Code defines a foreign estate separately from a foreign trust.²⁷¹ The strongest point against is that a trust created by a will is one whereby trustees take title to property to protect or conserve it for the beneficiaries under the ordinary rules applied in probate courts,²⁷² and a long administration resembles one. Hong Kong's case for that reading is stronger than in countries where heirs take title at death: here personal representatives claim what is due to the estate, and Hong Kong law extends trust and trustee to their duties.²⁷⁰ IRS advice, which is not precedent, lists a trustee with legal title among a trust's elements.²⁷³ Whether a long administration is a trust is not settled, and no IRS guidance addresses it.

No owner analysis unless a long administration is read as a trust: an estate is not a trust.

Unless the administration runs long, there is no trust and so no owner analysis.¹⁴⁹ If a long administration were read as a trust, a deceased person who was not a U.S. person would not be treated as owner after death, so it would be taxed as a separate, non-grantor trust.^208,225

No relief, and Hong Kong has no estate duty for deaths from 11 February 2006.

No relief: the United States has no income tax treaty with Hong Kong,¹³⁷ and Hong Kong's estate duty applies only to deaths before 11 February 2006.²⁷⁴

Part IV for what you inherit; Part III if a long administration is a trust or, cautiously, the estate passes on a scheme benefit.

No Part I or Part II: you transfer nothing to a trust and own none.^57,144 What you inherit goes on Part IV if it passes the threshold, not on these parts.¹⁵³ If a long administration is read as a trust, a distribution to you goes on Part III,¹⁰⁷ and if it carries out income kept in earlier years, Form 4970 can apply.²⁰⁹ Part III can also apply, on the cautious course, to an MPF or other scheme's death benefit paid to the estate and passed on to you, in full, as the gifts section says.^154,275 FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.²⁶⁵