5500 Preparer's Manual for 2012 Plan Years
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The Joint Board for the Enrollment of Actuaries has issued final regulations that update the eligibility requirements for enrolled actuaries to perform actuarial services for ERISA-covered pension plans. The eligibility conditions include enrollment and continuing education requirements, professional standards for performing actuarial services, and rules and procedures for taking disciplinary actions.
Comprehensive regulations were last issued in 1988. Proposed rules were issued in September 2009. These final regulations adopt the proposed rules with certain modifications. They are effective on May 2, 2011.
Eligibility for initial enrollment
Individuals applying for enrollment must satisfy requirements for qualifying experience, basic actuarial knowledge, and pension actuarial knowledge. The regulations provide two ways of satisfying the experience requirement. Within the 10-year period immediately preceding the date of the application, the applicant must have completed either: (1) at least 36 months of certified responsible pension actuarial experience, or (2) at least 18 months of certified responsible pension actuarial experience if the applicant has a total of 60 months of certified responsible actuarial experience.
Application for renewal
An enrolled actuary seeking to renew his or her enrollment must file an application for renewal of enrollment between October 1, 2010 and March 1, 2011, and between October 1 and March 1 of every third year thereafter. The regulations continue to provide that the effective date for renewal of enrollment for individuals who are currently enrolled (and in active status) and who file complete renewal applications by the March 1 due date will be the April 1 immediately following the March 1 due date.
The regulations retain the general requirement that an enrolled actuary earn 36 hours of continuing professional education during each full enrollment cycle. An enrollment cycle is the three-year period from January 1, 2011, to December 31, 2013, and every three-year period thereafter.
The regulations require at least 18 hours of continuing professional education in core subject matter during the enrollment cycle that ends December 31, 2010, for all enrolled actuaries enrolled during the entire cycle. Thereafter, for actuaries who have already been enrolled for at least one full enrollment cycle before the start of a new enrollment cycle, the regulations provide that only 12 of the 36 hours of required continuing professional education during the new enrollment cycle must consist of core subject matter.
"Core" subject matter is defined as program content and knowledge that is integral and necessary to the satisfactory performance of pension actuarial services and actuarial certification under ERISA and the Internal Revenue Code. The regulations specify that core subject matter includes all materials included on the syllabi of any of the pension actuarial examinations offered by the Joint Board during the current enrollment cycle and the enrollment cycle immediately preceding the current enrollment cycle. "Non-core" subject matter is defined as program content designed to enhance the knowledge of an enrolled actuary in matters related to the performance of pension actuarial services.
Waivers of continuing education requirements
The final regulations permit the Joint Board's Executive Director to waive all or part of an enrolled actuary's continuing professional education requirement. An enrolled actuary seeking such a waiver must submit a request for a waiver to the Executive Director. This request must contain evidence sufficient to demonstrate that the enrolled actuary made every effort throughout the enrollment cycle to participate in one or more qualifying programs that would have satisfied the continuing professional education requirements. The proposed regulations would have imposed a deadline on the waiver application. However, the final rules provide that the enrolled actuary seeking to rely on a waiver must receive the waiver from the Executive Director before filing an application for renewal of enrollment.
The Executive Director is authorized to maintain a roster of individuals who are in "inactive" status, in addition to rosters of individuals who are duly enrolled and those whose enrollment has been suspended or terminated. The regulations also give the Executive Director explicit permission to publish any or all of the rosters, including display on the Joint Board's web site, to the extent permitted by law.
The regulations provide that while an individual remains on the roster of inactive enrolled actuaries, such person may not indicate to others that he or she is an enrolled actuary and is not eligible to perform actuarial services as an enrolled actuary under ERISA or the Code. Rules are provided describing how inactive enrolled actuaries who wish to return to active status may file an application for renewal of enrollment.
Standards of conduct
The final regulations add a new requirement that an enrolled actuary "shall perform actuarial services only in accordance with all of the duties and requirements for such persons under applicable law and consistent with relevant generally accepted standards for professional responsibility and ethics."
The final regulations also modify the rules regarding conflicts of interest and adopt rules similar to the rules contained in Circular 230 that apply to those practicing before the IRS. Accordingly, the regulations provide that, unless an exception applies, an enrolled actuary cannot perform actuarial services for a client if the representation involves a conflict of interest. A conflict of interest exists if either: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the enrolled actuary's responsibilities to another client, a former client, or by a personal interest of the enrolled actuary. Notwithstanding the existence of a conflict of interest, the enrolled actuary may represent a client if: (1) the enrolled actuary reasonably believes that the enrolled actuary will be able to provide competent and diligent representation to each affected client, (2) the representation is not prohibited by law, and (3) each affected client waives the conflict of interest and gives informed consent, at the time the existence of the conflict of interest is known by the enrolled actuary.
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