8. Definition of disability — 0325 Publ 6088 (PDF)

Statement of Requirement: Code §§ 22(e)(3), 72(m)(7) and 415(c)(3)(C)

Sample Plan Language:

Disability means inability to engage in any substantial gainful activity by reason of any

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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, or to be of long continued and indefinite duration. The permanence and degree of such impairment shall be supported by medical evidence.

If elected by the employer in the adoption agreement, nonforfeitable contributions will be made to the plan on behalf of each disabled participant who is not a highly compensated employee within the meaning of section _____ of the plan.

(Note to reviewer: The blank should be filled in with the plan section number corresponding to LRM #11.)

Sample Adoption Agreement Language:

Contributions on behalf of disabled participants:

The employer will _____ will not _______(select whichever option the employer will use) make contributions on behalf of disabled participants on the basis of the compensation each such participant would have received for the limitation year if the participant had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled.

Such imputed compensation for the disabled participant may be taken into account only if the participant is not a highly compensated employee, and contributions made on behalf of such participant will be nonforfeitable when made.

Compensation will mean compensation as that term is defined in section _____ of the plan.

(Note to reviewer: The blank should be filled in with the plan section number that corresponds to the sample adoption agreement language at the end of LRM #31.)

(Note to reviewer: The above provisions are not required if the plan does not offer an employer the option of providing contributions on the basis of imputed compensation. However, a plan which provides for distributions because of disability must define disability in a nondiscriminatory manner.)