Disability benefits in a cash balance plan

[Jakyasar]

Hi

I am having my first disability request in my entire career and a bit challenging to understand.

This is for a cash balance plan, 2 years old.

Document has a few options for benefits but do not see "lump sum". The only other option could be under "Other" which I am checking with the vendor.

The participant in question is an owner/HCE and unfortunately not much time left to live so no coming back to work. He is age 63+. He checks all the requirements of being disabled, unfortunately.

Currently on disability however still part of the company i.e. not officially terminated, at least that is what I am told. Still a 5%+ owner but no salary.

No interest credit as provided annual at EOY. It is a fixed rate so no interim adjustments.

From all the material I could find, looks like, can pay him his lump sum now, correct? He is already 100% vested.

I am assuming, being an HCE, I still have to perform 110% test, correct?

Anything else I am not thinking of/missing?

Thank you

[david rigby]

Meeting the definition of disability is one thing.  Does he also have a distributable event? 

Hint: you wrote, "not officially terminated".  Read the document.

[Jakyasar]

I did and trying to determine if one exists (possibly may take the in-service route as age 63+).

I am assuming 110% rule still applies as it is not related to the disability issues?

[CuseFan]

110% rule applies regardless and would apply to beneficiary if this unfortunate situation becomes a death benefit.

[Jakyasar]

Thank you for confirming, very sad situation.

[truphao]

What about amending the plan to allow in-service?  I do not think there is a way around 110%.

[Jakyasar]

Already discussed the option but thank you. 

[Luke Bailey]

On 2/11/2022 at 3:12 PM, Jakyasar said:

Currently on disability however still part of the company i.e. not officially terminated, at least that is what I am told. Still a 5%+ owner but no salary.

Whether someone has terminated from employment or not is a question of facts and circumstances. If he is no longer being paid by the company for his services, his activities may be supervisory in his role as a shareholder.