401(k) Plan -- Disabled Participant Issues

[chris]

Tax exempt organization employs disabled individuals (blind persons) to do various types of work. Organization wants to set up a 401(k). Any special issues to be aware of? The only thing that comes to mind is possibly no full vesting upon a participant's becoming disabled (since all participants are such from day one). Any reasons why it wouldn't be possible to set up a 401(k) in this situation? Thanks for the help.

[Brian Gallagher]

The definition of disabled should be in the paln document. From our document, a disabled participant is one who:

"is unable to engage in substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months."

So, if the blind people are performing their jobs, they wouldn't be considered disabled under the plan.

Of course, you are free to come up with the plan's definition of "disabled" to suit your own needs. Just be sure to get that determination letter.