Plan in America

Now, I would like to talk about the differences between Mandatory Provident Fund in Hong Kong and 401 (k) Plan in America. The MPF System was set up as the second pillar of retirement protection under the World Bank’s three-pillar retirement protection approach. Also, 401(k) Plan is the plan for retirement savings contributions for employees. There are 6 differences including age, duration of working, taxes deduction, contribution percentage, year to get the money and the loan for employees.

First is age, for MPF, all employees and self-employed persons who are 18 years old, are covered by the MPF System. Moreover, for 401 (k) Plan, all employees and self-employed persons are required reach 21 years old or above to join the 401 (k) Plan.

Second is duration of working, there are no any restrictions for employees in the MPF Scheme. When the employee joins the company, he or she has to open the MPF account for the retirement. However, 401 (k) Plan required employees to work 1 year or above in a company, then he/she can join this scheme.

Third is taxes deduction, it is subject to limits for MPF, employees' and self-employed persons' mandatory contributions, and employers' mandatory contribution for employees are tax deductible. Furthermore, there are 2 alternative of 401 (k) Plan, employees can pay taxes every year like MPF Scheme. Or they can pay taxes after get the money which is around 60-70 years old.

Forth is contribution percentage, MPF is 5%, and 401(k) Plan is 7%. Moreover, in MPF Scheme, employees can get the money after 65 years old for the use of retirement. In 401(k) Plan, employees can get the money between 60-70 years old. There would be a penalty if they want to get the money before 60 or after 70 years old.

Finally one is the loan, in 401(k) Plan, if you use the money to acquire a home; you must pay the loan back over five years or less. If you borrow the money

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