Jump to content

Recommended Posts

Hello all knowledgeable and thinking people.   I was a signing actuary for a client and last Schedule SB I signed was for 2017.   Before signing 2018 SB I have departed from my employer and another actuary of the same firm has signed Schedule SB for 2018.  The Schedule C for 2018 has never reported that there was a change in Actuary and my perspective is that an Actuary is an individual and not the firm.  I have never received a notification from the client that my services as Enrolled Actuary have been terminated.  Here are my questions:

1)  What does it mean from the client perspective?  Do they need to fix it at least by formally informing me that my services have been terminated?  Do they have any exposure from not doing it correctly on 2018 Schedule C?  What are the potential ramifications?  I had (and still have) a very good relationship with the client and would like to minimize any potential negative consequences for them if there are any.

2)  What does it mean from my perspective as an individual Enrolled Actuary who has never been formally terminated?  Am I still formally their enrolled actuary?  Do I have any professional exposure here?   All thoughts are appreciated.

3) If I were to take over the actuarial work for this client and become their Enrolled Actuary "again" would I need to report the "interim" actuary being terminated?  Or would I just let it slide since I have never been "terminated" myself?

Any other thoughts and questions about this situation are appreciated as well.

Share this post


Link to post
Share on other sites

I don't think the rule is as black/white as you think.  Personal experience is that most view this as a change in actuarial firms.   The instructions state "Complete Part III if there was a termination in the appointment of an accountant or enrolled actuary".  An "accountant" has never been interpreted as an individual as accounting firms often change the entire audit team each year and I think the same argument can be made for the actuary.   I have seen some firms report internal changes, but I don't think it is very common.

1) No issue because the filing is not incorrect

2) No liability on your part.  The service agreement is with the firm, not the individual actuary.  Once you left the firm, you are no longer responsible.

3) If you retained the work at a different firm, I would show that as a change. 

However, this brings up an interesting question for small plan land.  TPAs that outsource actuarial work and hire independent people to review their work.  I guess I feel a little differently if the TPA changes from basement actuary A to spare bedroom actuary B.  That feels more like a change of actuary even though both might have signed using TPA's address and firm name. 

I was assuming you left one actuarial firm for another, but if you are an independent signing stuff for a TPA, I might have a different opinion.  Probably matters what your engagement letters say. 

 

  • Like 1

Share this post


Link to post
Share on other sites
On 7/4/2020 at 9:34 AM, Effen said:

An "accountant" has never been interpreted as an individual as accounting firms often change the entire audit team each year and I think the same argument can be made for the actuary.  

As someone who worked in an actuarial practice that was part of an accounting firm (although I am neither), I am of the very strong opinion that those are quite different even though they may seem similar. This is why - look at the signature on the audit report, it says "PricewaterhouseCoopers" (or maybe now it's just "pwc") not the individual audit partner's name, whereas the Schedule SB is the individual's signature. When that individual changes, even if the firm does not change, I believe it should be reported, and I have seen it done routinely.

Conversely, if you kept the work all along and went to a different firm or became self-employed, I do not think that is reported and again disagree with Effen, but less convincingly.

Share this post


Link to post
Share on other sites

From the instructions to Schedule C of Form 5500:

Quote

An enrolled actuary is by definition an individual and not a firm, and you must report when the individual is terminated.

The instructions do not defined "terminated" for this purpose. There are plenty of situations in which a different enrolled actuary might sign the forms for the plan without anything that one would reasonably consider a "termination" having taken place.

I don't have any answers for you, truphao, but I find it hard to imagine an IRS or DOL agent making an issue of this on audit. Ethically I don't believe you have any obligation to the plan sponsor if you are not currently being paid to provide services to them.

Share this post


Link to post
Share on other sites

Zeller, I am totally with you but I thought I would ask around to make sure I am not overlooking any professional issues.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...