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April 24, 2001
This Week, Ted Tackles: I have a 401(k) and want to roll it over to an IRA. If I transfer to my current employer's European office and give up U.S. residency, can I do this? ... Can you explain why a tribal entity offering a 401(k) plan may or may not have to file an IRS Form 5500?
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Question: I have a 401(k). I want to roll it over into a
traditional IRA and convert that into a Roth IRA. IRS rules state that I must leave the
company I work for before this is possible. What if I remain an employee but no longer
work in the United States and no longer have any U.S. income?
I'm thinking of making a permanent transfer to my firm's
European office and for tax purposes I will no longer be a U.S. resident.
TB: Regardless of where you live, as
long as you are an employee of this company you have not terminated employment.
A change in your status so that you are no longer able to contribute to the plan won't
make you eligible to roll over your money. Similarly, a change in employment status, such
as from hourly to salaried, which may change your eligibility to contribute isn't a
situation that opens the door to let you withdraw or roll over money accumulated in the
plan.
Question: Can you explain why a tribal entity may or may
not have to file an IRS Form 5500 (the annual report required to be filed by employee
benefit plans) if it offers a 401(k) plan?
TB: I have read the instructions for
Form 5500; they include an explanation of who must file and what plans are exempt from
filing. All pension-benefits plans covered by the Employee Retirement Income Security Act
(ERISA) are required to file this form except for those listed as being excluded from this
filing.
I have read the list of excluded plans and none seem to specifically apply to tribal
entities. I can't find anything in the instructions to indicate that tribal entities
should be treated any differently from other organizations.
Let me put this in perspective. Historically, there have been special provisions in ERISA
for church plans. Plans maintained by church entities may elect to be covered under ERISA
but they are not required to do so. Churches that elect to have ERISA coverage must file a
Form 5500. The special provisions covering church plans are in the instructions for filing
Form 5500.
The instructions also cover plans outside the United States
that are maintained primarily for nonresident aliens, and plans that cover residents of
Puerto Rico, the U.S. Virgin Islands, Guam, Wake Island or American Samoa. The fact that
these areas are addressed and tribal plans aren't leads me to conclude that tribal plans
need to file the form. That is, unless the Department of Labor overlooked tribal plans
when they prepared the instructions for this form.
You can call the IRS at 1.877.829.5500 if you want to further check this matter. I have
never worked with plans that cover tribal entities. I would like to hear from someone who
has if he or she has information showing that these plans are in fact exempt from filing a
Form 5500.
Ted Benna, creator of the first 401(k) retirement savings
plan, will answer your most intriguing questions every Tuesday. With over 30 years of
experience as an employee benefits consultant, Ted is a nationally recognized expert on
benefits issues. He has authored two books, Helping Employees Achieve Retirement Income
Security and Escaping the Coming Retirement Crisis, and is President of the
401(k) Association. Ted is a frequent speaker at meetings of 401(k) plan sponsors and
participants. His articles and comments have appeared in numerous publications, including The
New York Times and The Wall Street Journal.
 Read Ted Benna's Biography
Ted's Table Archives
The information provided here is intended to help you understand the general issue and
does not constitute any tax, investment or legal advice. Consult your financial, tax or
legal advisor regarding your own unique situation and your company's benefits
representative for rules specific to your plan.
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