Implications of IRS position on tribal plans

[Guest Kathleen Meagher]

In Rev. Proc. 2004-4, the Service announced that it would not issue determination letters approving tribal plans as governmental plans under Code section 414(d). The Service may be holding back on such rulings because of pending legislation that would amend the Code and ERISA to state affirmatively that tribal plans are treated as governmental plans.

What are people doing in the meantime--adopting and operating 401(a) plans to comply with the rules for non-governmental plans? Requesting DLs as non-governmental plans? Holding off on applying? Applying as governmental plans as letting the applications sit with the Service, as with cash balance plans?

My client had a new recordkeeper for its 401(k) plan, and many errors have been discovered. They never got a DL, so can't use EPCRS. We'd like to get a DL, but are somewhat baffled about the best approach.

We also have some nonqualified plans which would not be top-hat plans under ERISA, but that is probably a separate post.

Any thoughts or advice?

[mbozek]

Tribal governments are soverign nations, not local governments. There was a similar problem in the 1990's when tribal school districts adopted 403(b) plans. Congress fixed the problem by making the plans eligible for 403(b) status and a tax free rollover to a 401(k) plan. See section 1450(b) of the 1996 Tax act.