Indian Tribal Government Retirement Plans

by | May 15, 2023 | 401(a), 403(b), 457(b) Plans, Governmental Benefits, Plan Administration

This post discusses some of the interesting and special rules and laws that govern the retirement plans established by Indian tribal governments (ITGs).

Concerns over state and local government sovereignty caused Congress to exempt the plans of state and local governments, or instrumentalities of either, from all of ERISA’s labor law provisions (i.e., Titles I and IV), along with many of the Internal Revenue Code (Code) requirements for tax-qualified retirement plans, which are generally set forth in Code section 401(a). For example, governmental plans are, among other things, not subject to: the minimum coverage rules, nondiscrimination rules, top-heavy rules, joint and survivor rules, minimum participation rules, and ADP/ACP testing rules that private sectors must adhere to. In particular, ERISA’s “prudent expert” standard of care, which has been referred to as creating the highest duty known to law, does not apply to governmental plans.

Although the laws of the United States have evolved over many years to recognize Indian tribes as sovereign, it was not until the enactment of the Pension Protection Act of 2006 (PPA ’06) that Congress explicitly recognized that the plans of ITGs should be included in the definition of governmental plans for purposes of the above-mentioned exemptions.

What does this mean for the retirement plans of Indian tribes following the enactment of PPA ’06?

  • It is critical to recognize that PPA ’06 only exempted plans of ITGs – not retirement plans stemming from the tribes’ commercial (e.g., casinos) activities.
  • In order for an Indian tribal plan to be exempt as a governmental plan, substantially all of the participants in the plan must be employees who perform services that are (a) essential government functions and (b) not in the performance of commercial activities.
  • Because the tax and fiduciary/labor law rules are significantly different for retirement plans of ITGs and their commercial activities, it makes sense to segregate, design, and administer a tribe’s “governmental plans” apart from the retirement plans covering employees in its commercial activities.
  • The legal codes and case law of many tribes are still being developed. Due to the sovereignty of each tribe, its body of tribal law will be unique. In most cases, existing tribal laws do not address or provide adequate guidance concerning the fiduciary duties and responsibilities of the persons or entities that administer and oversee the tribal government’s retirement plans.
  • By default, many, if not most, of the duties and responsibilities of a “plan administrator” are located in the plan documents, trust documents, and plan servicing agreements that are provided to the tribe by its outside vendors and consultants.
  • Many of these documents utilize or contain ERISA language (because this is the easiest to draft). However, ITGs need to consider whether they want to adopt ERISA’s standards of care just because it has been offered to them – remember, ERISA does not apply to ITG plans.
  • Of course, if ITGs decide to incorporate ERISA-like responsibilities and standards of care into their plan documents, they need sufficient training and guidance to appreciate what they are taking on as a matter of contract.
  • Apart from the decision to include, or modify, ERISA’s standards of care in their plan documents, ITGs need to carefully consider the more general provisions of their contracts with plan servicers, such as: choice of law, venue, alternate requirements for dispute resolution (with vendors), indemnification, and remedies for breach.

If the plan documents and plan servicing relationships and agreements have not been independently reviewed in a number of years, there is a chance that they contain features that have been inserted for convenience sake, but not in the best interests of the tribe.

Jeff Chang is a partner at Best Best & Krieger LLP. He has four decades of experience skillfully evaluating benefit and retirement plan compliance to achieve maximum outcomes for public agency clients throughout California. He can be reached at or (916) 329-3685.

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