Actuarial Work Flow

[Andy the Actuary]

Int he good old days before the timing of accrued contributions was material and elections/certifications were timing dependent, you could complete the 2010 valuation now (with appropriate caveat) even though the accrued contributions had not been made. I might add that I've never had a client who failed to make the accrued contributions by 9/15.

Now, I find that client cases stay home, which means continued acquaintance efforts. Also, I can no longer invoice on a completed work basis without putting our Wheaten terrier out on the street with dark glasses and a box of pencils to generate some cash.

How are practitioners handling this craziness? E.g., are you waiting until 9/15 to complete the actuarial report providing estimates in the interim?

[SoCalActuary]

When I worked as a sole proprietor, it was very helpful to have an office-sharing arrangement with a tax practice.

Their cash flow was good in the first part of the year, while mine was good in the second half, and we managed our expenses accordingly.

[Effen]

Last year I marked most of the valuations "preliminary" because I knew something was going to change either due to an employer election, change of strategy, contribution date, or just my own clarifications. That caused a little turmoil with some auditors, but ultimately they all seem to accept the reports.

This year I took off the "preliminary" but added a list of caveats - assume you elect to do this and contribute that.....

Typically we are billing once the reports go out, but before the 5500 is done. That way at least we still have something to threaten them with if they don't pay - which has also become more of a problem in this economy. Obviously every client is a little different. Some we progress bill, some we pre-bill, but usually we are billing once/twice per year.

[Dougsbpc]

Generally, we complete the beginning of year valuation and communicate the minimum and maximum contribution. In that correspondence, we also describe the possibilities (increased minimum, elections etc). Then we send the client the valuation along with the bill.

We think it helps to provide a B/S and I/S as of the beginning of the year, reflecting the values one day earlier. This way we don't have to mess with any current year contribution accrual in the annual report. Along with the B/S and I/S is the beginning of year valuation unadjusted by the timing of contributions or elections. Also, the report contains a copy of the prior year 5500 and schedules. Follow up is sometimes needed for elections and notices to participants.

So far, this has worked for us. Our biggest problem is too much work which keeps us from completing next year's valuation as early as we would like.

[Blinky the 3-eyed Fish]

We used to send out detailed valuation reports once the valuation was done. Many are EOY vals. The biggest obstacle I have found is not knowing whether or not they will use the PFB to reduce the contribution or not, which of course can affect the shortfall base. To keep consistency in how we do work, we switched to sending out a simple letter with the min/max and will follow up with a valuation report when we prepare the annual filing.