What an Actuary Does for a Defined Benefit Plan

An enrolled actuary turns a defined benefit plan's promised benefits, participant records, and asset information into actuarial funding calculations. For a business owner, the practical question is what work you will receive, which data supports it, and who acts on the results. Request a written scope with deliverables, responsible people, and dates before treating an illustration as an approved payment instruction.

This guide provides a handoff and acceptance checklist. Our funding estimate guide addresses why amounts change; this article explains how to obtain and review the professional work behind those amounts.

Confirm the professional and the engagement

The IRS overview of pension actuaries explains their role in calculating required employer contributions. An enrolled actuary has met the Joint Board's standards and received approval to perform actuarial services required under ERISA. Ask who will perform the work, who will sign the applicable actuarial certification, and who answers questions afterward.

An administration firm may include actuarial services in a broader engagement. Obtain the actual scope rather than assuming the firm's name identifies every responsible person. Specify whether the engagement covers initial design illustrations, annual valuation, benefit calculations, amendment analysis, or termination work. Ask which services require separate authorization and fees.

Prepare the inputs the actuary needs

Use one dated submission packet. Ask the actuary and administrator for their required format, then assemble the plan document and amendments, employee census, compensation and service records, asset statements, and contribution payment records. Identify ownership changes and other employer relationships for professional review.

Separate confirmed facts from unresolved questions. A missing hire date, an unreconciled bonus, or a deposit posted after the statement date belongs on an exception list. Name the person who will investigate it and attach supporting records. Do not silently substitute an estimate because the annual meeting is approaching.

Retain both the source export and the submitted version. A later correction should show what changed, who confirmed it, and which report version now applies. Send employee information through an appropriate secure channel; the meeting agenda only needs to describe open issues.

Ask for a usable deliverable package

The IRS defined benefit plan guide identifies the enrolled actuary's funding and Schedule SB signing role. Ask the provider to confirm the reporting requirements applicable to your plan and who prepares, signs, and submits each item. A signed actuarial schedule and a filed annual return are separate handoff steps.

Requested deliverable	Owner's acceptance question
Dated illustration or valuation	Which plan year, valuation date, population, plan provisions, and asset information were used?
Funding explanation	Which figure is required, which is projected, and what assumptions or unresolved facts limit reliance?
Payment instructions	What amount, timing, contribution designation, and confirmation does the provider need?
Actuarial certification and reporting handoff	Who signs, who files, and who confirms successful submission where required?
Open-action register	Which corrections or decisions remain, who owns them, and when must they be resolved?

Request an explanation of important assumptions and the effect of foreseeable changes. The goal is a decision you can understand and reproduce with the advisers. Avoid treating every number appearing in a report as a recommended contribution or a deductible amount.

Keep the actuary, CPA, and administrator connected

Use the engagement letters to allocate responsibilities. A practical arrangement might have payroll supply service and pay records, the administrator coordinate census and plan operations, the actuary perform valuation work, and the CPA reconcile business records and evaluate tax reporting. Firms combine services differently; confirm the actual arrangement in writing.

Ask the CPA and actuary to reconcile contribution timing, compensation inputs, and tax treatment before the return is prepared. Ask the administrator to identify required participant communications and filing tasks. The owner should know who approves a payment and who checks that the trust received it. Delegating a calculation does not itself complete the cash transfer.

Hypothetical: close an asset-record exception

Illustrative bookkeeping reconciliation: These invented numbers demonstrate a data handoff, not a valuation, client result, funding requirement, investment return assumption, or deduction calculation. Assume no opening receivable and no other asset movements during the period. The investment movement excludes the fees shown separately below.

Trust cash and investment rollforward	Amount
Opening statement balance	$420,000
Contributions recorded by the trust	$78,000
Investment movement before separately listed fees	$12,000
Fees paid from the trust	($3,000)
Reconciled closing statement balance	$507,000

The arithmetic is $420,000 plus $78,000 plus $12,000 less $3,000, totaling $507,000. Suppose the business ledger instead records $90,000 of contributions. The $12,000 difference requires investigation; the business ledger alone does not prove that the trust received it.

If a bank confirmation shows the remaining $12,000 arrived after the statement date, retain that confirmation and the later trust statement. Ask the actuary how the payment should be reflected for the relevant valuation and funding purposes. Do not add it to the earlier statement balance or assign its plan year without that review.

Review the work and close the loop

For plans subject to ERISA, the Department of Labor's service-provider guidance calls for monitoring reports, performance, and fees after selection. Put a recurring review on the calendar and resolve unanswered questions before approving reliance on a report.

Keep the final report, corrected inputs, approval record, payment confirmations, and filing acknowledgments together. Record what events require another conversation: changes in staff, compensation, ownership, retirement plans, or the intended payment schedule. Use our business-owner checklist to connect these deliverables with the broader adoption decision.

TaxBowl's tax team can organize the accounting and tax handoff with your plan professionals. Bring the engagement scope and latest records so the meeting ends with named responsibilities and a dated action list.