Questions to Ask When Choosing an Actuary For Your Cash Balance Plan

Cash Balance Plans can provide rapid accumulation of benefits and significant tax deductions. Accurate and timely administration of a Cash Balance Plan is critical to the success of the plan, so it’s imperative to enlist the right team of professionals. The following questions can help you through the process when choosing an actuary for your Cash Balance Plan:

1. How long has the firm administered Cash Balance Plans?

Watkins Ross has administered Cash Balance Plans for 19 years.

2. What size plan do you typically administer?

Watkins Ross specializes in small Cash Balance Plans with less than 100 participants. Our attention to detail and the specialized service we provide to high-income business owners is something we continue to strive to improve upon.

3. Who will complete the actuarial work for your Cash Balance Plan?

David Paauwe, MSPA, EA is Co-President of Watkins Ross and has been with the firm since 1999. David is credited with building our Cash Balance Plan line of business. When you choose Watkins Ross as your Cash Balance Plan actuary, you work directly with David and his colleagues on the cash balance team.  

4. What are your fees?

Watkins Ross fees are not contingent on the size of the plan’s asset pool or the amount of the deduction generated from the annual contribution to the plan. Instead, our fees are based on the number of plan participants and are based on a fee for service model.

5. Does the actuarial firm also manage the plan’s assets?

At Watkins Ross, we believe it is in the client’s best interest to separate the functions of actuarial work and managing the plan’s assets. Because of this independence, Watkins Ross clients are not steered towards certain financial advisors or investment products.

6. Who will maintain and implement the plan’s document?

Due to the complexities of cash balance plans, we encourage our clients to seek outside legal counsel for legal compliance of the plan document. Similar to investment advice, we believe it’s in the best interest of the clients to have an ERISA attorney to work with for legal issues that may arise. Although it may seem more convenient, many firms try to utilize a “bundled” approach and provide actuarial, legal and investment expertise. Watkins Ross is focused on providing the best actuarial service to their clients and work with legal counsel and investment advisors.

7. What is the ownership structure of the actuarial firm?

Watkins Ross is 100% employee owned which means all of our employees have a financial stake in the future of Watkins Ross. We believe that ownership translates into increased engagement with our clients and low employee turnover.

Please contact David Paauwe, MSPA, EA at dpaauwe@watkinsross.com if you would like to discuss implementing a Cash Balance Plan. You can also let us know here if you have someone in your personal network that would like to discuss Cash Balance Plans.

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