I have a client that was employed by a company registered in China. The company made pre-tax contributions on my client's behalf into a retirement plan "Provident Fund" mandated by the Chinese government. The client made a small amount of after tax contributions to the plan. The client has left this firm and has received a letter from his former employer telling him he can move the funds out of the "Provident Fund". The client will continue to live and work in China. The account has a balance of approximately $170,000.

Can the client transfer these assets into an IRA in the United States (and received all the benefits associated with a traditional IRA)?

Seems unlikely. An IRA is supposed to accept amounts from a tax-qualified plan. That seems to be directed at U.S. taxes.

It cannot be done as the plan is question was not subjected to the jurisdiction of the United States courts- which means it was not qualified under the internal revenue code etc.

Ok, my feelings have been confirmed on the rollover issue. Thanks for your responses.

Now I have another question, since the money cannot be rolled over, how is it taxed?? Is taxed as part of his U.S. return or should he file a Chinese return, since it is Chinese money???

Thanks again.

Definately tax as income in China- it will not have any effect on the US income tax return