Managing Tribal Trusts: A Comprehensive Guide

Tribal trusts are a vital component of many Native American communities, providing important benefits to tribal members, such as healthcare, education, and housing. These trusts are often managed by employers who have a fiduciary responsibility to act in the best interests of plan participants. However, managing tribal trusts can be complex, with unique legal and regulatory requirements that must be met. In this blog post, we will provide a comprehensive guide for employers and plan participants on how to effectively manage tribal trusts. 

We’ll discuss the legal and regulatory framework for tribal trusts, offer best practices for managing these trusts, and highlight the challenges that employers and plan participants may face. Whether you’re an employer responsible for managing a tribal trust or a plan participant looking to maximize the benefits of the trust, this guide will provide valuable insights and practical advice to help you navigate this important area of tribal governance.

Understanding Tribal Trusts

Tribal trusts are specialized types of trusts established by Native American tribes for the benefit of their members. These trusts are created under federal law and are subject to unique legal and regulatory requirements. There are several types of tribal trusts, including land and resource trusts, education trusts, and health and welfare trusts. Tribal trusts are administered by tribal governments, with oversight from federal agencies. 

The creation and administration of tribal trusts must follow specific legal and procedural requirements, including consultation with affected parties and compliance with relevant laws and regulations. Understanding these legal and administrative requirements is crucial for effectively managing tribal trusts.

Responsibilities of Employers and Plan Participants

Employers and plan participants both have important responsibilities in managing tribal trusts.

Employer responsibilities for managing tribal trusts include ensuring compliance with legal and regulatory requirements, monitoring the trust’s performance, and providing plan participants with information about the trust. Employers must also establish clear communication channels with plan participants to ensure that they are aware of the benefits available to them and understand how the trust operates.

Plan participant responsibilities for managing tribal trusts include understanding the benefits available to them, keeping their contact and beneficiary information up to date, and reporting any changes in their circumstances that may affect their eligibility for benefits. Plan participants should also communicate any questions or concerns they have about the trust to their employer or the trust administrator.

Effective communication between employers and plan participants is crucial for ensuring that the trust is managed effectively. Employers should provide regular updates to plan participants about the trust’s performance, any changes to the benefits available, and any legal or regulatory requirements that may affect the trust. Plan participants, in turn, should provide their employers with accurate and up-to-date information about their eligibility for benefits and any changes in their circumstances that may affect their benefits.

How to Manage Tribal Trusts: Best Practices

Understand Your Fiduciary Responsibility

Employers who manage 401(k) plans have a fiduciary responsibility to act in the best interest of the plan participants. This means that employers must carefully select and monitor investment options, ensure that fees are reasonable, and provide participants with clear and accurate information about the plan.

Select Appropriate Investment Options

Employers must carefully select investment options for their 401(k) plans. This includes considering the risk profile of the plan participants and selecting a mix of investment options that is appropriate for their needs. Employers should also regularly review and monitor the performance of the investment options and make changes as needed.

Monitor Fees and Expenses

Employers must ensure that the fees and expenses associated with their 401(k) plans are reasonable. This includes reviewing the fees charged by investment providers and recordkeepers and negotiating lower fees when possible. Employers should also provide plan participants with clear and accurate information about the fees associated with the plan.

Provide Participant Education and Communication

Employers must provide plan participants with clear and accurate information about their 401(k) plans. This includes information about investment options, fees and expenses, and plan rules and regulations. Employers should also provide regular education and communication to help participants make informed decisions about their retirement savings.

Monitor Plan Performance

Employers must monitor the performance of their 401(k) plans to ensure that they are meeting the needs of their plan participants. This includes regularly reviewing plan data and participant feedback and making changes as needed.

Encourage Participation

Employers should encourage participation in their 401(k) plans to ensure that plan participants are adequately saving for retirement. This can include offering employer contributions, automatic enrollment, and education and communication campaigns.

Challenges in Managing Tribal Trusts

Managing tribal trusts can pose several challenges, including legal and regulatory challenges, communication challenges, and financial management challenges.

Legal and regulatory challenges may include complying with complex federal laws and regulations governing tribal trusts, as well as any state or local laws that may apply. There may also be challenges related to legal disputes or changes in legal requirements that can affect the trust’s operations.

Communication challenges may arise due to the need to communicate complex legal and financial information to plan participants, who may have varying levels of familiarity with the trust and its operations. Effective communication can be challenging, particularly if plan participants are spread out across a large geographic area or speak different languages.

Financial management challenges may include ensuring that the trust is properly funded and managed to meet the needs of plan participants over the long term. There may be challenges related to investment management, risk management, and financial reporting.

Addressing these challenges requires a proactive and collaborative approach by employers, plan participants, and trust administrators. By working together, stakeholders can identify and address potential issues before they become more serious problems and ensure that the trust continues to provide important benefits to tribal members.

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.