Definition
An Enrolled Actuary is a professional actuary who has been accepted by the Internal Revenue Service (IRS) and the Joint Board for the Enrollment of Actuaries. Enrolled actuaries are authorized to perform a variety of tasks, including certifying the funding adequacy of pension plans. Their signature is specifically required on IRS Form 5500 to ensure that the pension plan complies with federal tax laws and regulations.
Examples
- Pension Plan Certification: An enrolled actuary ensures that a company’s pension plan is sufficiently funded and complies with regulatory standards.
- Form 5500 Filing: This form is required by the IRS and the Department of Labor, and an enrolled actuary must sign it to validate various actuarial statements.
Frequently Asked Questions
What qualifications does an enrolled actuary need?
An enrolled actuary must pass specified exams and meet experience requirements set by the Joint Board for the Enrollment of Actuaries. This often includes several years of professional actuarial experience in pension planning.
Can any actuary sign Form 5500?
No, only an actuary who is enrolled by the Joint Board for the Enrollment of Actuaries and accepted by the IRS can sign Form 5500.
What are the primary responsibilities of an enrolled actuary?
An enrolled actuary calculates the funding requirements of pension plans, prepares actuarial valuations, and ensures compliance with relevant statutes and regulations.
How often must a pension plan file IRS Form 5500?
A pension plan generally must file Form 5500 annually to report its financial condition, investments, and operations.
Are there continuing education requirements for enrolled actuaries?
Yes, enrolled actuaries must meet ongoing continuing education requirements to maintain their enrolled status.
Related Terms
Actuarial Science
Definition: Field of study that assesses risk in insurance, finance, and other industries through mathematical and statistical methods.
Defined Benefit Plan
Definition: A type of pension plan in which an employer promises a specified pension payment upon retirement, based on employee earnings and years of service.
Pension Plan
Definition: An arrangement to provide individuals with an income when they are no longer earning a regular income from employment, typically after retirement.
Form 5500
Definition: A report filed with the IRS and the Department of Labor, including information about employee benefits plans, to ensure compliance with ERISA.
Online References
- Internal Revenue Service (IRS) - Enrolled Actuary Information
- Employee Benefits Security Administration (EBSA) - Form 5500 Instructions
Suggested Books for Further Studies
- “Actuarial Mathematics for Life Contingent Risks” by David C.M. Dickson, Mary R. Hardy, and Howard R. Waters
- “Pension Mathematics for Actuaries” by Arthur W. Anderson
- “Fundamentals of Private Pensions” by Dan M. McGill and Donald S. Grubbs
Fundamentals of Enrolled Actuary: Actuarial Science and Pension Plan Basics Quiz
This detailed overview and quiz should help you better understand the role, responsibilities, and requirements of becoming an enrolled actuary.