Hi ,

The U.S. Counsel for the ORSO/402(b) upgrade "structure" we recommend, will be in Hong Kong for meetings with our clients, during the entire week of July 23, 2018. Please plan accordingly if you would like to meet with our team.

We're at your service, to meet or exceed your asset protection needs.

What is my reference? My reference is Statutory Law; which means the information that I am providing is not because I say so, it is because the law says so.

Often people tell me that they are not interested in tax because they do not avoid the payment of tax so let me bring your attention to this fact- International cash flows must be recognized reporting and tax compliant.

They must be on the financial grid or the cash flow is blocked.

In today's world of financial institution automatic exchange of financial information on cash flows a hiding no longer works.

When it comes to moving money cross borders, the various roads that were open in the past no longer function or are actually blocked by the enforcement of 200 countries. Old methods are history. They no longer work, and to use them in financial planning would be like attempting to drive forward by looking only in the rear view mirror.

What that means is the tax jurisdiction of the individual sender and the individual end beneficiary must be reported to tax authorities or the transfer is blocked.

We are going to look through the front window and into the future at a cross border financial freeway that is transparent, on the financial grid, regulated by government , registered in intergovernmental agreements and recognized globally by 200 governments. Financial freeway means it is not delayed, blocked or taxed.

My term for this financial freeway is Clean Nominee Bank Account. Do a google, everything you read about it, I wrote.

A Clean Nominee Bank Account is pre-qualified AML & KYC, is a Non Reporting Financial Institution category recognized in the USA FATCA, the OECD CRS, Intergovernmental Agreements, Double Tax Agreements and officially recognized on IRS Forms and by the US Treasury. That means the end beneficiary is exempt from reporting and recognized tax compliant. That means your cash flow is on a cross border financial freeway.

According to the IRS you can put your money anywhere in the world you want as long as you tell them about it.

Therefore on cash flows and accumulations/gains you need to answer two questions

1. what is my reporting position?
2. what is my tax liability?

According to the IRS everything is reportable and everything is taxable unless it is not

So, we look at what is not reportable and deemed tax compliant.

But first

Tax avoidance rules generally: If what you are doing has tax as the priority reason then tax authorities will disallow it.

Retirement plans are treated differently because the priority reason is your retirement plan and everyone needs an occupational retirement plan.

Occupational retirement plans are of two categories:

1. Deductible-limited contribution amount (IRC 401(k))
2. Excluded from income IRS 3520, IRS 8938. Size of contribution does not matter (IRC 402(b))
3. Qualified Occupational Retirement Plans are Excluded from Financial Institution reporting W-8BEN-E, line 29, box (b) or (e).

What is the difference between a savings account with a retirement plan label on it and a government regulated, registered and recognized occupational retirement plan?

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The Hong Kong ORS is arguably the most tax efficient pension structure available to high net worth individuals.

Hong Kong has established a rather unique vehicle, the Occupational Retirement Scheme (ORS), and its use is not restricted to Hong Kong. An ORS is capable of attracting pension assets from across Asia, Europe and North America. The ORS structure not only benefits from tax-free pension accumulation but it also works as a tax friendly repository, which is both creditor-proof and extremely flexible concerning the classes of assets it is allowed to hold.

Due to the attractive Hong Kong ORS tax regime and favorable use of double taxation agreements, one’s nationality and tax residency are not relevant to a scheme. Current rules allow for Income Tax and Capital Tax deferral that can operate as a perpetual Trust to assist estate and succession planning, and can accept most transferred pensions and/or registered plans with few restrictions. An ORS also allows a wide variety of assets to be held, giving an ORS trustee discretion to invest in a practically unfettered range of global asset classes.

Hong Kong has a straight forward, legitimate, long existent low tax system with attractive, genuine open pension planning for international and local clientele who wish to have safe/reliable capital to draw on when they retire.

While the effect of efficient pension planning is much lower taxes on your estate, this is not a scheme developed for tax avoidance. Instead, the Hong Kong pension regime will maximize the return on your wealth allowing for the efficient management of pension assets in order to benefit from double-taxation regulations, avoid overlapping taxes, and unnecessary taxation fees through poor future planning and unawareness of taxation law.

The real opportunity for the 402b is to be a start-up company plan in which the management and staff are all participating. The structure would hold the stock of the employees/management, would be pre-tax, and would be funded initially out of monthly employee contributions, and eventually out of performance-related options, grants or company matching payments (like a 401k often is).

The structure may invest in its own company stock, or even other investments because it is company plan, the costs of establishment should be low on a per member basis.

Members like one example who has significant assets and interest in more complex plans, could set up his own plan for those investments. But he is in a position to introduce these plans to the start-ups he helps set up. Furthermore, many of these existing investments he has are in options or zero-value grant shares. In other words, theses new assets really have no market value because the company is just starting up. Therefore, the tax consequences of moving these existing corporate assets into a 402b - a taxable event - might not cost a nickel in some cases, even if the "theoretical" value of the investment once the company meets its targets could be in excess of $1M.

This style of 402b is tax deferred on gains and accumulation. It is a foreign regulated, registered and recognized retirement plan that is also acknowledged in the Foreign Account Tax Compliance Act (FATCA) as exempt from withholding. It is recognized in the O.E.C.D. Common Reporting Standard Automatic Exchange of Information (AEOI) globally as tax rules compliant and exempt non-reporting Foreign Financial Institution and excluded for reporting account.

The money flow must go from the funder to the Anti Money Laundering (AML) Licensed and recognized 402(b) plan registered Occupational Retirement Scheme Overseas (ORSO) and US Global Intermediary Identification Number (GIIN)- regulated Trustee Account that is Automatic Exchange of Information (AEOI) tax rules compliant and exempt; non-reporting Foreign Financial Institution (FFI) and excluded.

So In a start-up environment, top managers are not really concerned about upfront tax liability at all. They would kill for something to protect them from the tax on the capital gains of future investments. Middle managers would be interested in pre-tax contributions out of their monthly pay-checks.

The 402b Opportunity is Now! This structure (type) can serve both classes of members, without challenging fundamental principles.