Tribal Government 401(k)

[Guest SSaunders]

The tribe I am working with already has a 401(k) plan for its employees. Can the tribe set up another plan within its present 401(k) plan for only members of the Tribal Council (who are also salaried employees) using non-elective employer contributions?

[Carol V. Calhoun]

I haven't researched this one in depth. However, under Notice 99-40, nondiscrimination rules are scheduled to go into effect for governmental plans, other than state and local government plans, typically beginning in the plan year beginning in 2001. Although the current year's tax bill would have changed that result, prospects for any tax bill passing this year are looking dim. I would therefore be concerned about this arrangement, if it resulted in discrimination in favor of the prohibited group.

[Guest Nancy Bonnett]

Carol, Your answer seems to assume that a native american tribe is a "government" for purposes of section 457. It isn't. A nonqualified plan could probably be established for the council, in much the same way as one would be established for a board of directors or a "select group of management or highly compensated employees".