Tribal Trust Management Guide

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In many Native American communities, tribal trusts play a crucial role in providing essential benefits such as healthcare, education, and housing to tribal members. These trusts are typically overseen by employers who bear the fiduciary duty of acting in the best interests of plan participants. However, managing tribal trusts can be intricate due to their unique legal and regulatory landscape. This article aims to provide employers and plan participants with a comprehensive guide on effectively managing tribal trusts.

Understanding Tribal Trusts

Tribal trusts represent specialized forms of trusts established by Native American tribes to benefit their members. Governed by federal law, these trusts are subject to distinct legal and regulatory stipulations. They encompass various types, including land and resource trusts, education trusts, and health and welfare trusts, all administered by tribal governments with federal agency oversight. Compliance with specific legal and procedural requirements, including consultation with affected parties and adherence to relevant laws and regulations, is paramount for the creation and administration of tribal trusts.

Roles in Tribal Trust Management: Employers and Participants

Both employers and plan participants shoulder crucial responsibilities in managing tribal trusts. Employers are tasked with ensuring compliance with legal and regulatory mandates, monitoring trust performance, and furnishing plan participants with pertinent information. Clear communication channels between employers and plan participants are essential to ensure awareness of available benefits and comprehension of trust operations. Plan participants, on the other hand, must comprehend the benefits accessible to them, maintain up-to-date contact and beneficiary details, and promptly report any alterations in circumstances affecting benefit eligibility. Open communication with employers or trust administrators regarding queries or concerns is encouraged.

Managing Tribal Trusts: Best Practices

Understand Your Fiduciary Responsibility

Employers overseeing 401(k) plans bear the fiduciary duty to act in the best interests of participants, necessitating careful selection and monitoring of investment options, reasonable fee management, and provision of accurate plan information.

Select Appropriate Investment Options

Employers must meticulously choose investment options, considering participants’ risk profiles and ensuring a suitable mix of investments. Regular performance reviews and adjustments are advisable.

Monitor Fees and Expenses

Employers should ensure the reasonableness of fees associated with 401(k) plans, negotiating lower fees when possible and providing transparent fee information to participants.

Provide Participant Education and Communication

Clear and accurate information regarding 401(k) plans, including investment options, fees, and regulations, should be imparted to participants, supplemented by regular educational initiatives to aid informed decision-making.

Monitor Plan Performance

Regular scrutiny of plan performance, coupled with participant feedback assessment, enables employers to make necessary adjustments to meet participants’ needs effectively.

Encourage Participation

Initiatives such as employer contributions, automatic enrollment, and communication campaigns are instrumental in promoting plan participation, ensuring participants are adequately prepared for retirement.

Challenges in Managing Tribal Trusts

Managing tribal trusts presents various challenges, encompassing legal and regulatory complexities, communication hurdles, and financial management issues. Addressing these challenges requires proactive collaboration among employers, plan participants, and trust administrators to identify and mitigate potential issues effectively.

In conclusion, effective management of tribal trusts demands a deep understanding of legal and regulatory frameworks, diligent oversight, transparent communication, and proactive engagement from all stakeholders. At RWM Financial Group, we are dedicated to supporting tribal sovereignty and assisting tribes in achieving their financial objectives through a comprehensive suite of services tailored to their unique needs.

Learn More About Our Tribal Services

At RWM Financial Group, we are committed to upholding independence, excellence, and supporting tribal sovereignty to help achieve your tribe’s financial goals. Our extensive range of services include but are not limited to:

  • Tribal Council Retirement Plans, 401(k) Investment Management (both ERISA and Non-ERISA)
  • Children’s Trust Investment Management
  • Fiduciary Investment Management, Discretionary and Non-Discretionary Investment Management
  • Investment Monitoring
  • And,  Detailed Reporting

We also provide services such as Investment Committee Education, Tribal Member Financial Education, Third-Party Administrator assistance and Provider Liaison, 401(k) Provider Request for Proposal, Participant Education, and Financial Wellness Program, Onsite Meetings, and Retirement Plan Enrollment Assistance. Our team is dedicated to providing exceptional service and building long-lasting relationships with our clients.

The purpose of RWM Financial Group is to promote plan success via our knowledgeable team and a robust set of tools. By working with us, you can help put your employees on the path working toward a secure retirement. Learn more about our services, here.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

2024 Compliance Calendar

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Stay ahead of deadlines with help from our annual Compliance Calendar. If you have any questions about deadlines or the information requested, please get in touch with us to review today!

Download the 2024 Compliance Calendar

RWM Financial Group is committed to providing solutions and support for yours and your employees’ retirement. Here’s a handy checklist to keep your retirement plan running smoothly:

  • Review plan documents: Ensure all information is up to date and compliant with current regulations. Don’t let any outdated policies slip through the cracks!

  • Communicate with participants: Engage your employees by sharing important updates, educational resources, and reminders about upcoming deadlines. Let’s keep them informed and motivated!

  • Evaluate investment options: Take a close look at your plan’s investment lineup. Are there any adjustments needed to align with participants’ goals? Let’s ensure a diverse and appealing selection.

  • Assess plan fees: Scrutinize the fees associated with your plan. Can any be renegotiated or reduced? It’s time to optimize your plan’s cost-effectiveness!

  • Conduct plan audits: Regular audits are crucial to maintaining compliance and identifying any potential issues. Stay ahead of the game and ensure your plan is in tip-top shape.

  • Enhance financial education: Empower your employees with financial literacy tools and resources. Help them make informed decisions for a secure retirement future.

RWM Financial Group takes pride in our roles as your Plan Advisors; we are dedicated to you, your plan, and your employees. We are here to support you every step of the way.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

Financial Wealth for Mental Health – 

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Creating Financial Education for Tribal Communities

Financial wealth for mental health—it’s a mouthful to say and it’s something that is so important, yet often overlooked. Financial stability is one of the key ingredients in having a good mental health outlook on life. Why? Because when you’re worrying about money, you’re not worrying about anything else. 

Financial education is vital for tribal communities who have been historically marginalized and left out of mainstream financial conversations. When tribal communities have access to financial education, they see improvement in their mental health, overall wellness, and economic status. 

In this blog, we’ll explore how financial literacy is the key to unlocking financial stability and mental health for tribal communities. 

Current Financial Landscape for Tribal Communities

It’s no secret that tribal communities have been dealt a hard hand when it comes to financial stability. From being forced to move off of their ancestral lands to being shut out of mainstream financial institutions, tribal communities have had to create their own unique financial systems. This has led to higher rates of poverty and financial insecurity within these communities. 

In fact, according to a report by the Federal Reserve, American Indian and Alaska Native households have a median income that is just 60% of the national median. This financial insecurity can lead to higher levels of stress and anxiety, which can impact mental health.

According to a report by the Financial Industry Regulatory Authority (FINRA), “nearly half of American Indian and Alaska Native adults say they don’t have enough money to live comfortably, and four in 10 say they are not saving enough for retirement.” The same report found that only 40 percent of AI/AN adults feel “very” or “somewhat” confident in their ability to manage their finances.

Contributing Factors

There are many factors that contribute to financial instability and poor mental health in tribal communities. Some of these include historical trauma, systemic racism, and lack of access to resources. 

Many tribal members live in poverty and do not have access to traditional banking services. As a result, they often turn to high-interest payday loans and other forms of predatory lending. This can lead to a cycle of debt that is difficult to break free from. Financial education can help tribal members make better decisions about their money and avoid costly mistakes.

Barriers

There are several barriers to financial education in tribal communities. One barrier is a lack of accessible and culturally relevant resources. Financial education materials that are not culturally relevant or understandable can be ineffective. 

Another barrier is a lack of trust in financial institutions. Many individuals in tribal communities have had negative experiences with banks and other financial institutions. This can make it difficult to build trust and open up about finances. Finally, a lack of financial literacy among adults can make it difficult to teach children and youth about money management.

Financial education can help to mitigate some of these factors by providing tribal communities with the tools and knowledge they need to build financial stability. Financial education can also help to improve mental health by teaching people how to manage their money in a way that is beneficial for their overall wellbeing.

Steps to Creating Financial Wellness 

Establish Financial Literacy

Start with the basics. Financial literacy is key. This means having a clear understanding of money, how it works, and what it can do for you.

It’s crucial to increase financial literacy. This can be done through financial education programs that are specific to the needs of tribal communities. Financial literacy will empower individuals within these communities to make sound financial decisions and build wealth over time.

Provide Access to Financial Education

Create opportunities for financial education. This can be done through online resources, community events, or even one-on-one conversations.

Increasing access to financial institutions and products can be done by working with financial institutions to create products that are accessible and tailored to the needs of tribal communities. It’s important that these products are culturally relevant and meet the unique financial needs of these communities.

Financial education teaches people about: 

  • Money Management
  • Budgeting
  • Saving and investing

And covers topics like: 

  • Credit and debit
  • Loans
  • Interest Rates
  • Financial goal setting
  • Home ownership
  • Financial scams and fraud

Financial education can be taught in formal settings like schools or community organizations. And it can also be taught informally through conversations between family and friends.

Another solution is to provide Financial Literacy Ambassadors in each tribe. These Financial Literacy Ambassadors would be responsible for delivering financial education to adults and children in the community.

Help Make it Easy

Make sure that financial education is “user-friendly” and easy for everyone to grasp. This means breaking down complex concepts and making them understandable for everyone. Most importantly, financial education should be culturally relevant. This means that it should be tailored to the specific needs of the community.

Final Thoughts

Creating financial education and wellness for tribal communities is so important because it can have a ripple effect of positive change. When tribal communities are financially stable, they are able to invest in their mental health, overall wellness, and economic status. This creates a cycle of positive change that can lift up an entire community. Financial literacy is the key to unlocking this potential. By providing access to financial education, we can help tribal communities thrive.

We at RWM Financial Group, specialize in working with tribal communities and offering tribal services. We are committed to the independence, excellence, and pursuit of your tribe’s sovereignty and financial goals. Reach out to our team to learn more.

How to Overcome Common HR Challenges in Your Tribal Organization’s Retirement Plan Pt. 2

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In the first part of this blog, we explained some of the standard HR and benefits challenges your tribal organization can avoid in your retirement plan efforts, including working with a financial advisor and tightening up your retirement loan policy. In part two, we explain how critical education is to the overall success of your plan and participants.

As a plan administrator, you have a fiduciary responsibility to provide adequate retirement plan education. In addition to the compliance risk a lack of education can pose, additional challenges arise when you don’t have a comprehensive education strategy. When overlooked, these challenges can cause issues for your participants and headaches for your HR and benefits team. Let’s discuss how you can improve your plan’s education to serve more people in your organization.

Challenge #1 A Lack of Plan Education Resources

When there is a lack of general plan education, employees will seek out assistance, generally from the HR and benefits team. This can put your team in a difficult position since they can’t offer thorough or professional advice regarding retirement planning. Organizations with successful retirement programs include essential information and guidance in retirement materials and sometimes even provide access to a third-party professional for additional help. When you’re building your retirement plan, education should be a critical step in your rollout. Consider what other resources, reminders, marketing materials, or access participants need to stay on track, enroll on time, and ultimately contribute toward their retirement success. Keep in mind, your education materials may shift depending on the employee’s position and salary.

Challenge #2 No Tracking System

Another common challenge is when tribal organizations have not established a tracking system for their retirement plan education. Perhaps you’ve provided resources to address the first challenge, but you don’t have a metric to measure their effectiveness. One way to measure is by looking at your plan’s participation and contribution rates. If they’re not performing as well as expected, you may consider what parts of your program materials or employee presentations need to be improved or offer more clarity to engage your employees.

Challenge #3 Missing Beneficiary Information

We often see tribal organization retirement plans with missing or partial beneficiary information. Many employees may feel pressured to choose an individual as a beneficiary when asked or may not know pertinent personal information and end up forgetting to designate one at a later time. However, with proper education, employees will better understand the ramifications of not listing a beneficiary. For example, upon their passing, an estate executor may distribute their savings against their desired wishes, or their surviving heirs may be subject to a lengthy and costly probate process. A regular review and additional marketing push around this critical step can also reduce the stress the HR team may experience when facilitating subsequent steps with an appropriate next of kin.

Challenge #4 Low Plan Participation Rate

A low plan participation rate is a clear indication that something is missing from your retirement plan execution. A lack of education, clarity, and resources can leave employees feeling confused or even uninterested in the valuable benefits available to them. We know you care about your employees, and clear and thorough education can help you guide them, with a focus on their retirement well-being and future confidence. Consider how you can engage your employees so they’re more inclined to participate and how you can encourage them to ask questions so you can identify gaps in their understanding.

Challenge #5 Contributions Below the Employer Match

An employer match is a valuable feature every eligible employee should know about in your retirement plan. It is why when we often see contributions lower than the employer match, it’s generally indicative of a lack of plan education. When employees understand the details of their plans and how contributing less than the employer match leaves free money on the table, an increase in contribution rates generally follows. When you see lower contribution elections, evaluate how you can emphasize this feature in your initial and ongoing presentations and marketing.

Many factors contribute to a successful retirement plan, but robust education can address several challenges you and your participants may encounter. Partnering with a specialized professional can help you identify the areas of your education strategy that need improvements, measure your plan’s success, and offer ongoing education resources to participants—in addition to reducing stress and frustration in your HR department. We’ve been helping North American tribes build effective education strategies into retirement plans for over 20 years. Contact us to learn how we can help you promote your plan’s success.

How to Overcome Common HR Challenges in Your Tribal Organization’s Retirement Plan Pt. 1

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As a human resources representative or benefits coordinator for a tribal organization, the implementation and management of your retirement plan generally fall within your responsibility. However, if your retirement plan and employee participation rates aren’t performing the way you would have hoped—or if you’re swamped with more work than expected—there may be areas within your plan that require some attention. This two-part blog post will explain the typical HR and benefits challenges we’ve encountered when working with tribal organizations and how you and your team can avoid or overcome them.

Challenge #1 Not Having Two Independent Retirement Plans

When a tribe doesn’t have two independent retirement plans, one for government employees and another for commercial, or enterprise, employees, a few issues can arise for the HR team. Retirement plans for government and commercial employees are subject to different regulations, such as ERISA and IRS compliance. When these plans aren’t properly established, the HR department faces the challenges of managing compliance issues, inefficient processes and systems, and potential risks to the organization.

With two plans created from the onset, it’s much easier for HR to coordinate employment transfers between their government and commercial entities, which frequently occur in tribal organizations. Plan documents and policies will establish how to handle the transfers while addressing compliance requirements. We recommend consulting with a plan advisor who can review your current plans and determine how your plan may be improved and what options are available to you.

Challenge #2 Having a Poor Retirement Loan Policy

Borrowing against a retirement plan may be an option available to your employees. This benefit can be especially helpful when your employees need it most, with unexpected financial hardship or unanticipated expense. However, when employees don’t use the option as a last resort, it can quickly become detrimental to the HR team and employees. For example, when misused, an employee may have multiple small loans outstanding at the same time. Employees are often unaware of or disregard the high cost of processing these types of loans and the tax penalties that may arise if they don’t pay them back within the set terms.

While it may feel convenient to use the retirement account as a revolving ATM, the high administrative costs—and the additional paperwork for the HR team—may not benefit the employee in the long term. Communicating the fees to process these types of loans and providing education regarding how retirement plan savings grow over time may help employees avoid dipping into their funds for nominal withdrawals.

Challenge #3 Not Partnering with a Financial Advisor

Any organization, including tribes, look for ways to minimize operating costs. As a result, we often see tribal organizations take on the implementation and management of retirement plans independently without the help of a financial advisor and to the disadvantage of their employees and organization.

Internally managing your plan is commendable. However, keep in mind that you could overlook many regulations and requirements in your retirement plan if you’re not working with a professional specialized in tribal organizations. Additionally, a third-party professional can help you identify areas of your program at risk, resolve compliance issues, monitor your investments, act as a liaison with your plan provider, provide employee education, and more. This assistance and guidance have the potential to take these responsibilities off of your HR and benefits team so they may focus on other employee needs.

Challenge #4 Not Investing Sufficiently in a Retirement Plan

No one can argue that providing healthcare benefits to your employees is critical to their peace of mind and well-being. However, in tribal organizations, we often see how HR and benefit coordinators invest more into healthcare and leave little or no resources for their retirement programs. When allocating little time, effort, and funds to the financial well-being of employees, tribal organizations often experience a lack of retirement benefit awareness, and lower contribution and participation rates among employees. We suggest working with a specialized professional who can explain the potential long-term benefits and help avoid the risks of insufficiently investing in your retirement programs, such as how a successful plan can contribute to your employees’ financial future and overall well-being.

Challenge #5 A Lack of Plan Education

Proper plan education among employees is the foundation to any successful retirement plan that supports them in their financial goals and future. Insufficient education, however, is the primary reason for various challenges tribal organizations face within their retirement benefits efforts. In part two of this blog post, we explain the issues that could arise related to plan education and how to avoid them for your organization and employees.

Retirement plans can be complex within tribal organizations, and managing your program requires a level of seasoned experience to help ensure you’re addressing compliance requirements while supporting your employees and tribal organization. Learn how we’ve helped North American tribes build effective and cost-efficient retirement plans for over 20 years, or contact our team to discuss your plan’s details and how we may help you optimize your program.