ITG FAQ #9 Answer-Can an Indian tribal government set up a 401(k) plan with contributions based on section 7873 income?
No. In order to serve as the basis for an individual's deferring amounts into a section 401(k) arrangement, "compensation" must be included in that individual's gross income. Section 7873 of the Code provides that fishing rights-related income is exempt from federal taxes, including federal income tax. As a result, it is not included in income and cannot serve as the basis for a tribal member to defer amounts into a section 401(k) arrangement.