Tribal Government Public School

[oldman63]

A Tribal Governmental K-12 Public School wishes to establish a 401(k) plan.  I don't believe they can.

PPA 2006 expanded the definition of governmental plans to include a plan established or maintained by an Indian Tribal government for its employee’s performing “governmental functions”, but not to include those employees performing commercial activities (e.g., workers in a hotel, casino, or convenience store)  Essential governmental functions would be considered those functions customarily performed by state and local governments if: (1) There are numerous State and local governments with general taxing powers that have been conducting the activity and financing it with tax-exempt governmental bonds, (2) State and local governments with general taxing powers have been conducting the activity and financing it with tax-exempt governmental bonds for many years, and (3) the activity is not a commercial or industrial activity. 

Tribal governments can establish a money purchase plan or profit sharing plan for its “commercial” employees, not a 401(k), enabling it to comply with the applicable qualification rules under Code Section 401(a) for plans applicable to nongovernmental plans. 

An Indian Tribal Government is considered a “State” for 403(b) purposes, per Code Section 7871(a)(6)B), that they can offer a 403(b) program but only to employees of their educational institutions.

Is my assessment correct?

[John Feldt ERPA CPC QPA]

Perhaps see IRC Section 7871: Essential governmental function. For purposes of this section, the term "essential governmental function" shall not include any function which is not customarily performed by State and local governments with general taxing powers."

[HollyB]

A tribal government can't have a 401(k) for employees providing government services (such as K-12 school employees, police and fire employees, courthouse employees, etc.), but it can have a 403(b) for some of those employees (e.g., the school employees).  It also can have a governmental profit sharing plan for these employees with a pre-tax pick-up by the tribe of mandatory employee contributions, which mimics a 401(k) plan to a great extent.  Those options apply to the tribe employees providing government services because the tribe is treated like a state government employer with respect to those employees.  It can have a 401(k) for its employees providing commercial services (such as casino workers) because it's treated like a private employer with respect to employees providing non-governmental/commercial services.