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Actuarial Services

Defined benefit plans often offer the largest deductions for funding retirement benefits. Individual participants in 401(k)/profit sharing plans are limited to $54,000 in 2017. The defined benefit limit is as high as $215,000. Tax deduction often pays for cost of staff benefits. In most cases a defined benefit pension plan must be funded each year regardless of business profits. Sometimes a range of contributions is allowed, which gives some flexibility in contributions. Changes in interest rates, investment experience, and employer demographics can alter the funding pattern of a plan.

Traditional Defined Benefit

  • A traditional defined benefit plan bases monthly retirement benefits on a formula stated in the plan document. The formula is often an amount earned for each year of service.  The amount is based on a specific dollar or a percentage of compensation.
  • Contributions are actuarially determined each year based on the projected benefits at retirement and the current value of the plan account. The annual minimum required contribution must be deposited within 8-1/2 months of the plan year end to avoid penalty.
  • When a distribution is payable upon termination or retirement, the normal form of benefit is a monthly annuity. If the participant is married, the normal form is a joint and survivor annuity. 

Cash Balance

  • A cash balance plan is a type of defined benefit pension plan which looks like a defined contribution plan. Each participant’s benefit is expressed in the form of a (hypothetical) individual account. The accounts are credited annually with amounts specified in the plan document. 
  • Although contribution credits are specified in the plan document, actual contributions are determined actuarially. Contributions are not discretionary, as they are in a profit sharing plan, and they must be deposited within 8-1/2 months of the plan year end to avoid penalty.
  • When a distribution is payable upon termination or retirement, the normal form of benefit is a monthly annuity. In lieu of the annuity, the participant may elect a lump sum distribution. If the participant is married, a joint and survivor annuity option must also be offered and the spouse must consent to any optional form of payment, including the lump sum.

Annual Actuarial Services

  • Review of employee census data to determine eligibility under the terms of the plan
  • Prepare actuarial valuation to determine contribution costs
  • Compliance testing including:
    • Minimum participation
    • Benefit limits
    • Coverage
    • Top heavy determination and required minimum benefit
    • Deduction limits
  • Review and update participant vesting and prepare participant benefit statements
  • Calculate and certify the plan Adjusted Funding Target Attainment Percentage
  • Prepare Form 5500 with related schedules including Schedule SB and Annual Funding Notice

Optional Administrative Services

  • Calculate contributions for self employed individuals
  • General nondiscrimination testing for cash balance plans and combination defined benefit and defined contribution plans

Other Services

  • Prepare annual PBGC premium filing forms
  • Prepare comprehensive valuation booklet
  • Actuarial computations for accounting requirements
  • Actuarial cost impact studies for plan amendments, law changes, collective bargaining negotiations, etc
  • Calculate participant retirement and deferred vested benefits
  • Calculate required minimum distributions
  • Assist with benefit distributions
  • Form 1099-R preparation

Installation Services

  • Prepare actuarial analysis
  • Prepare plan document
  • Prepare Summary Plan Description
Not FDIC Insured Not Bank Guaranteed May Lose Value
Not Guaranteed by any Government Agency Not a Bank Deposit
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