411(d)(6) anti-cut back rules-Are disability benefits protected?

[Guest April J]

I'm reviewing a 401(k) plan that includes a disability retirement provision. Disability is defined as the inability to meet the requirements of the Participant's "customary employment" ... Can this definition be changed to inability to "engage in any substantial gainful activity"... without violating Code Section 411(d)(6) anti-cut back rules? Certainly the inability to perform one's assigned job would result in disability faster than exploring whether the participant can perform any gainful activity. The question is whether disability benefits under a retirement plan are protected similar to early retirement benefits?

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AJM

[This message has been edited by April J (edited 06-04-99).]

[Wessex]

I am assuming that the plan permits distribution upon disability. As such, I believe it would be a 411(d)(6) protected benefit that probably wouldn't fall within the 2 or 6 month exception for change in timing.

Under many plans, disability while employed is also a full vesting event. In that case, a change in the definition of disability would thus be a change to the vesting schedule and subject to election by those with three or more years of service.

I also think that disability for purposes of 401(k) distributions is a defined term. Unfortunately, I do not remember the Code provision or the actual definition.

[This message has been edited by Wessex (edited 06-04-99).]