An enrolled actuary is licensed by the Joint Board for the Enrollment of Actuaries, set up under ERISA, to perform actuarial work for pension plans. IRC 6059 requires a defined benefit plan to have an actuarial report each year, prepared and signed by an enrolled actuary.
For a one-person cash balance plan, the actuary's yearly work includes:
- valuing the plan: its funding target, normal cost and assets
- setting the range, from the minimum required contribution to the maximum deductible contribution
- checking the account against the 415(b) limit
- completing and signing Schedule SB
- certifying the plan's funded percentage, which decides whether a lump sum can be paid in full
Some assumptions are prescribed by law, such as the segment rates and the mortality table. Others, such as the expected retirement date, are the actuary's judgment. At Maxed, software does the calculations and an independent enrolled actuary reviews and certifies them. The actuary's work is part of what a cash balance plan costs.