Qualified Disability Benefit Protected?

[Snapper]

What is a Qualified Disability Benefit under IRC Sec. 411(a)(9)? An example would be appreciated. Is such a benefit considered an "ancillary benefit" that doesn't need to be "protected" under IRC Sec. 411(d)(6) or not an ancillary benefit (e.g., a "retirement-type benefit) that is protected under that IRC Section.

[Effen]

Many retirement plans offer unreduced benefits upon disability - meaning no early retirement reduction.  Sometimes they are even supplemented for a period. If the participant recovers, the disability payments stop (no one ever does).  If the participant dies, the disability benefit stops and the normal death benefit is paid to the beneficiary.  Once they participant hits NRA, the disability payments stop and the participant elects a retirement benefit.  The disability benefit is completely separate from the retirement benefit and is therefore considered to be "ancillary".  This benefit can be removed without violating 411(d)(6).

Other plans may provide a similar unreduced benefit, but the participant chooses a form of lifetime payment at the time of disability.  Not sure what happens if the participant recovers, but the participant in essence "retires" at their disability date.   In my experience this type of provision is very rare.   I believe this benefit would possibly be subject to 411(d)(6) since it is really a retirement benefit.

The benefits aren't always unreduced, but they are usually heavily subsidized.  These types of features are most common in hourly or bargained  plans.  

Hope that helps.

 

[Snapper]

Thank you.

[M_2015]

What if the disability retirement benefit provides a pre-normal retirement age supplemental payment, such as $150 per month, until the earlier of NRA or social security eligibility?  I interpret the 411(a)(9) definition as disregarding this small payment because it's less than social security, but am not entirely certain.    Thoughts? 

[Effen]

if you are asking if it is a protected benefit, I would say, no, it is not protected, assuming it has no impact on the participant's retirement benefit.