(b)lines Ask the Experts – Can Tribal Governments Sponsor 403(b)s?

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

Typically, no, with limited exceptions. The reason for this is that tribal governments are generally treated just like any other governmental entity for retirement plan purposes. As you may be aware, governmental entities (other than public schools with students and faculty) may not sponsor 403(b) plans, so the same restriction would apply to a tribal government. 

Therefore, any public schools that are associated with the tribal government would be treated as public educational organizations, which, by definition, may sponsor 403(b) plans. Thus, a tribal government may not sponsor a 403(b) plan for its employees, but an affiliated school could do so for its employees.

Finally, there is a grandfathering rule that allows tribal governments who purchased annuity contracts in a plan year beginning prior to January 1, 1995, to maintain 403(b) plans with respect to such contracts; however, no new contracts can be purchased.

We note that, unlike a state or local government, a tribal government may establish and sponsor a new 401(k) plan. 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.