n-07-67.pdf

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# Part III - Administrative, Procedural and Miscellaneous

## Extension of Transition Relief for Indian Tribal Government Plans

Notice 2007-67

### I. Purpose

The purpose of this notice is to extend the transitional relief provided to plans of Indian
tribal governments and certain related entities under Notice 2006-89, 2006-43 I.R.B.
772, to the date that is six months after guidance is issued under § 414(d) of the Code,
as amended by section 906 of the Pension Protection Act of 2006, on the determination
of whether a retirement plan maintained by an Indian tribal government is a
governmental plan with the meaning of § 414(d) of the Code.

### II. Background

Section 414(d) of the Code provides that a "governmental plan" includes a plan
established and maintained for its employees by the Government of the United States,
by the government of any State or political subdivision thereof, or by any agency or
instrumentality of any of the foregoing. Certain plans of Indian tribal governments
(ITGs) are also governmental plans under § 414(d). Specifically, section 906(a)(1) of
the Pension Protection Act of 2006 (PPA '06) amended § 414(d) with respect to ITG
plans to provide that:

The term 'governmental plan' includes a plan which is established and
maintained by an Indian tribal government (as defined in section
7701(a)(40)), a subdivision of an Indian tribal government (determined in
accordance with section 7871(d)), or an agency or instrumentality of
either, and all of the participants of which are employees of such entity
substantially all of whose services as such an employee are in the
performance of essential governmental functions but not in the
performance of commercial activities (whether or not an essential
government function).

The provisions of section 906 of PPA '06 apply to plan years beginning on or after
August 17, 2006 (PPA's date of enactment). For example, an ITG plan with an October
1 to September 30 plan year is a governmental plan under § 414(d) as amended by
PPA '06 only if it satisfies this definition in operation beginning on October 1, 2006.

Notice 2006-89 provides that the Service and Treasury anticipate issuing guidance on §
414(d) as amended and that, until such guidance is issued, an ITG plan will be treated
as satisfying the requirements to be a governmental plan under § 414(d) if it complies
with those requirements based on a reasonable and good faith interpretation of the

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amendment made by section 906(a)(1) of PPA '06. Section III.B. of the notice provides
certain approaches that, if taken by September 30, 2007, permit separate plans to be
established for commercial ITG employees and for other ITG employees who perform
essential governmental functions (governmental ITG employees) under the reasonable
and good faith compliance standard. Section III.E. indicated that the relief provided in
Section III applied pending the issuance of further guidance relating to § 414(d),
including the amendment made by section 906(a)(1) of PPA '06. The notice also
invited comments from the public on whether additional transition issues need to be
addressed.

### III. Extension of Transition Relief under Notice 2006-89

Since the issuance of Notice 2006-89, the Service and Treasury have continued to
consult with Indian tribal government representatives. Based on those consultations
and the comments received in response to Notice 2006-89, and until future guidance is
issued, the transition relief provided under Notice 2006-89 is hereby revised so that the
date "September 30, 2007" in Section III.B. of Notice 2006-89 is replaced with "the date
that is six months after guidance is issued under § 414(d) of the Code, as amended by
section 906 of the Pension Protection Act of 2006, on the determination of whether a
retirement plan maintained by an ITG is a governmental plan with the meaning of §
414(d)."

This extension is conditioned on the plans involved not being amended, for periods
before the extended date, to reduce benefits unless the reduction: (i) does not vary
based upon whether the participant is a governmental ITG employee or a commercial
ITG employee, or (ii) is made to the plan for commercial ITG employees and is the
minimum reduction necessary to satisfy the requirements of the Code. If a reduction
occurs that does not meet either of these conditions, the extension provided under this
notice ends on the date the reduction goes into effect.

### IV. EFFECT ON OTHER DOCUMENTS

Notice 2006-89 is modified.

## DRAFTING INFORMATION

The principal author of this notice is Diane S. Bloom of Employee Plans, Tax Exempt
and Government Entities Division. For further information regarding this notice, please
call the Employee Plans customer assistance service Monday through Friday between
8:30 a.m. and 4:30 p.m. Eastern time at (877) 829-5500 (a toll-free number) or email
RetirementPlanQuestions@irs.gov.