Termination of Enrolled Actuary

[Effen]

I have heard several conflicting opinions regarding changing enrolled actuaries.

Is it considered a change of enrolled actuaries if:

1) A different actuary inside the same firm signs the Sch. B.

1b) If 1 is "no", what if it's a national firm and the work moves from the NY office to the LA office, so that a completely different group of people work on the case?

2) The actuary leaves one firm and joins another, but retains the case.

[MGB]

A change in the person signing the Schedule B is a change in enrolled actuary, period. It doesn't make any difference is they are in the same firm or not.

The confusion arose (and is still out there) because of cryptic language in the instructions for 5500, Schedule C that says: "in case the service provider is not an individual, report when the service provider (not the individual) has been terminated."

In order to properly understand this statement, one needs to realize that the "service provider" of an enrolled actuary is ALWAYS an individual. The firm that employs the enrolled actuary is NOT the service provider, the individual is. The firm is not the signator of the Schedule B, the individual is.

On the other hand, the service provider of an audit is not the individual, it is the audit firm. An audit report is signed by the firm, not the individual.

So, the statement in the instructions about changing individuals within the service provider can only apply to auditors.

Jim Holland and others within the IRS also take the above stance. The Academy has repeatedly requested clearer rewording of this, but it hasn't happened yet.

In your (1), this is a change in the service provider that must be reported on Schedule C.

In your (1b), this depends on who signs the Schedule B after the shift. If the signature changes, it is a change; it is as simple as that. (Or, given that people's signatures can change, e.g., marriage, or for lack of writing for months while typing on a computer, the real issue here is "has the enrollment number changed that is listed on the Schedule B?")

In your (2), this would not be a change in service provider.

[Blinky the 3-eyed Fish]

Effen, you don't say for what purpose your question pertains. Is it for the Sch C as MGB addresses or for Rev. Proc. 2000-40?

The criteria for that promulgation as set in section 4.03 Approval for Takeover Plans is:

"(2) There has been both a change in the enrolled actuary for the plan and a change in the business organization providing actuarial services to the plan."

[WDIK]

For some reason, the title of this thread struck me funny (maybe it's lack of sleep), but I would answer:

1) When he/she does a poor job;

2) When his/her fees are too high;

[Effen]

Thank you all. MGB hit it on the head. I seemed to remember reading something long ago (early 80's) that mentioned that changing actuaries within a firm was not technically a change. When Blinky mentioned 2000-40, I realized that I may have been confusing it with the rules relating to changing funding methods.

[flosfur]

For some reason, the title of this thread struck me funny (maybe it's lack of sleep), but I would answer:

1) When he/she does a poor job;

2) When his/her fees are too high;

Are any actuarial fees too high or even high?

[WDIK]

flosfur: Yes. Our competitor's fees are too high (though ours never are.)