Skip to Content

Actuarial Services

Defined benefit plans often offer the largest deductions for funding retirement benefits. Contributions are determined using actuarial assumptions and retirement benefits stated in the plan document. 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
Email This Page