Vietnam

Tax-deferred employer plans

Vietnam's social insurance system (bao hiem xa hoi / BHXH) is a government-administered social insurance program. It includes retirement pensions, survivorship benefits, and other social benefits. The system is pay-as-you-go and is not a foreign trust under Treas. Reg. §301.7701-7: there are no segregated individual trust accounts. The exemption is available only to an ‘eligible individual’ under §5.02: someone who is compliant (or comes into compliance) with U.S. income-tax filing and has reported the plan’s contributions, earnings, and distributions as income to the extent U.S. law requires; a participant who never reported plan earnings cannot rely on it until they do.

Foreign workers in Vietnam (including U.S. persons) became subject to mandatory social insurance contributions starting in 2018, and remain covered under the Law on Social Insurance 2024 (in force 1 July 2025). Upon permanent departure, foreign workers may be entitled to a lump sum withdrawal.

Because BHXH is social insurance rather than a trust, it falls outside §6048 entirely and Rev. Proc. 2020-17 is not implicated. There is also no U.S.–Vietnam income tax treaty, so no treaty-based income tax deferral is available for any Vietnamese arrangement that is classified as a foreign trust; such arrangements would need to be evaluated against Rev. Proc. 2020-17's substantive conditions (which do not include a treaty requirement) and, absent an exemption, are reported under the usual §6048 rules (for a plan an employer contributes to, as the note at the end of this section explains).

For a plan an employer contributes to, a trust holding it is generally a nonexempt employees’ trust described in §402(b). §6048(a)(3)(B)(ii) excepts transfers to §402(b), §404(a)(4), and §404A trusts from Part I, the participant’s own contributions included, and §679 does not make the participant the owner (see the Reporting Guide’s employer-plan section). Payouts the participant reports as compensation income are excepted from Part III. If the participant’s own contributions ever exceed the employer’s, the participant is treated as the owner of the part those contributions fund (Treas. Reg. §1.402(b)-1(b)(6)), reports it on Part II and Form 3520-A each year it is owned, and is taxed on its income each year. In that count, what the participant chose to put in, salary sacrifice included, is the participant’s, and anything the plan’s rules required taken from pay is the employer’s, as the IRS chief counsel read a national retirement fund in 1997. The rest is taxed when it vests and, after that, when paid out (§402(b)(1), (2)).

Tax-deferred individual plans

Vietnam has a small but growing voluntary pension market. Some life insurance companies and fund managers offer supplementary retirement products.

Under Treas. Reg. §301.7701-7, whether these products are foreign trusts depends on whether they hold segregated assets. Insurance-based products (where the insurer holds assets in its general account) have a weaker trust argument. Fund-based products with segregated individual accounts have a stronger trust argument.

Rev. Proc. 2020-17 does not require a treaty. However, these are individual plans; §5.03(6) does not apply. Whether they meet §5.03(1)–(5) requires plan-specific analysis.

This segment of the market is still developing, and specific products should be evaluated on their own terms.

Gifts and inheritances

Vietnam is one of the most common source countries for gifts received by U.S. persons, given the large Vietnamese-American community (approximately 2.2 million people) with strong family financial ties to Vietnam.

If a U.S. person receives more than $100,000 in gifts or bequests in a year from one nonresident alien individual or foreign estate (adding together gifts from donors related to each other), Form 3520 Part IV reporting is required. Gifts from foreign corporations or foreign partnerships exceeding $20,573 (for 2026, indexed for inflation) are also reportable. Common scenarios include:

- Cash gifts from parents or family members in Vietnam - Inheritance of Vietnamese real property (land use rights, apartments, houses) - Gifts related to weddings, Lunar New Year (Tet), or other family occasions - Inheritance of Vietnamese bank accounts, gold, or business interests

Vietnam imposes a personal income tax on certain gifts and inheritances received by Vietnamese residents, but does not impose a separate gift or inheritance tax. The U.S. obligation is purely informational.

Vietnamese real property rights (land use rights, or quyen su dung dat) are structured differently from Western property ownership: the state owns all land, and individuals hold use rights. For Form 3520 purposes, inherited land use rights should be reported at fair market value.

Documentation should include the donor's identity, relationship, and country of tax residence. Convert Vietnamese dong at the rate prevailing when each amount is received, paid, or accrued; the IRS has no official exchange rate and generally accepts any posted rate used consistently, so its published yearly average rate is a common choice for amounts arising evenly across the year.

Penalties and practical notes

Failure to file Forms 3520/3520-A carries penalties under §6677: the greater of $10,000 or 35% of the gross reportable amount for certain Form 3520 failures (§6677(a)); 5% or $10,000 for Part II and 3520-A (§6677(b)).

The Vietnamese tax year is the calendar year, aligning with the U.S. No fiscal year conversion is needed.

Vietnamese-Americans who receive multiple smaller gifts from several family members in Vietnam should be aware that gifts from family members who are related to each other are added together toward the $100,000 threshold, so a series of smaller gifts from relatives can pass it.

Vietnam has foreign exchange controls that may limit the ability to transfer large sums internationally, but these restrictions do not affect the U.S. reporting obligation.