Home
Independent Actuaries, Inc. (IAI) is a vibrant group of talented professionals committed to delivering
incomparable service to our clients. IAI understands business owners and their individual diverse
requirements, so we are dedicated to designing the best plan to fit your specific retirement needs. We
invite you to experience IAI’s customized difference by contacting us today and set up a meeting with
one of our consultants. We look forward to working with you.
Announcement
Upcoming deadline for calendar year defined benefit plans! Annual 5500 reporting is due (with
extension) by October 15, 2010. Please make sure that your consultant has complete information to
finalize these forms for you by October 1st.
Corporate Social Responsibility
Independent Actuaries, Inc. is committed to conducting business with an eye on sustainability, both
environmentally and socially. We are making strides towards reducing our carbon footprint by limiting
paper and promoting alternative commuting arrangements. Employees are encouraged to volunteer
their time with organizations of their choice and we have a workplace matching program. Social
responsibility is not a onetime event or program; it’s woven into our corporate value and mission.
Client Forms
Are you looking for electronic versions of our forms? Current clients click here.
Newsletter Sign up
Would you like to receive periodic electronic newsletters about retirement plans topics? Click here to
sign up.
Our Services
We are the largest locally owned actuarial consulting firm in the Pacific Northwest with seven
credentialed actuaries and five credentialed consultants. We provide quality services in a wide variety
of areas. Our consultants come from a variety of backgrounds; if you are looking for services not listed
below, please contact us and if we can’t help you with our staff, we can point you in the right direction.
Actuarial Services
We assist clients and their advisors with a number of special actuarial projects such as cost projections
to aid in planning, projecting the cost implications of plan amendments, valuation of other employees
benefit plans (health and welfare plans, sabbatical leave plans, etc.). We also provide nondiscrimination
testing services.
Administration
Consulting Services
 General Consulting for Pension Plans – We assist our clients in evaluating their retirement programs.
We stay up-to-date on current developments and keep our clients informed about how those
developments affect their retirement plans.
 Actuarial Services for Pension Plans – We assist clients and their advisors with a number of special
actuarial projects such as cost projections to aid in planning, projecting the cost implications of plan
amendments, valuation of other employee benefit plans (health and welfare plans, sabbatical leave
plans, etc.). We also provide nondiscrimination testing services.
 Defined Benefit Plan Design – We specialize in the design of defined benefit plans. We listen closely
to our clients and the client’s advisors and then use our experience and proprietary software to
design the plan or plans that best meet the client’s goals. The options include traditional defined
benefit plans, floor offset arrangements, cash balance and pension equity plans.
 Cash Balance Plan Design and Administration – We offer the design and administration of cash
balance plans.
 Defined Contribution Plan Design – We are experts at designing and testing defined contribution plans
that utilize cross-tested allocation methods.
 Accounting and Reporting under the Accounting Standards Codification – We provide calculation and
reporting as required to comply with the Accounting Standards Codification for defined benefit
pension plans and postretirement health and welfare benefit plans. We also provide cost projections
on an accounting basis.
 GASB 25, 27, 43 and 45 Valuation and Reporting – For public sector clients, we provide calculation and
reporting as required to comply with Governmental Accounting Standards Board (GASB) Statements
25, 27, 43 and 45.
 Plan Implementation Services – We provide a full range of services needed to successfully implement
a qualified retirement plan. This includes preparation of plan documents for review by legal counsel,
the summary plan description and other supporting forms and documents, and IRS submission process
support. Where applicable, we can conduct employee meetings to introduce a plan.
 Plan Termination Services – We provide a full range of services needed to terminate a qualified
retirement plan. This includes evaluation of plan liabilities and evaluation of options to best
accomplish the termination, determination of individual employee benefits, preparation of
distribution forms for each plan participant and applicable government filings.
 Non-Qualified Plan Design and Consulting − Also known as executive deferred compensation plans, we
assist our clients in the design and administration of non-qualified pension plans.
GASB
The Governmental Accounting Standards Board (GASB) currently has three published
statements (25, 26 and 27) pertaining to the financial accounting and reporting of Pension
Benefits, and two published statements (43 and 45) pertaining to the financial accounting and
reporting of Other Post-Employment Benefits (OPEBs). The application of all of these
statements requires a valuation of the benefits by a qualified Actuary.
Most governmental employers in Oregon get the Statement, 25, 26 and 27 reporting information they
need through their participation in OPERS. However, with the new applicability of Statements 43 and 45,
these employers are having to take action in forming a team (including an Actuary) to address the
financial reporting of OPEBs.
Further, nearly every governmental employer in Oregon will have OPEBs to value and report. Oregon
Statute (ORS 243) requires that employers provide continuation of medical coverage to employees who
retire with eligibility for OPERS benefits at the same premium rates as charged to participants on
COBRA. Statements 43 and 45 say that the availability of this coverage (even if the premium is entirely
retiree paid) is an OPEB that must be valued.
Independent Actuaries, Inc. is well situated to help employers with their GASB reporting needs. Our
consultants can:

Help employers determine which benefits they provide should be valued under Statements 25,
26, 27, 43 and 45;

Value pension and OPEB benefits, and prepare exhibits to be disclosed on an employer’s
financial statements;

Provide consulting advice pertaining to the “pre-funding” of OPEBs through a qualified trust;

Assist with plan re-design studies and provide support for bargaining with employee groups.
Plan Termination
The process of terminating a tax-qualified plan is sometimes more complicated than the
year-to-year operation of the plan itself. The IRS regularly audits terminated plans. Failure
to correctly terminate a plan can result in the assessment of taxes and penalties. IAI
assists with the entire process from winding-up the operation of their plan to submitting
required IRS and PBGC paperwork and finally distributing the plan’s assets. And, if you are
audited, IAI can represent you before the IRS. IAI’s plan termination services include:

Preparation of amendments and resolutions (for review by legal counsel) to freeze or
terminate the plan

Preparation of plan amendments (for review by legal counsel) necessary to bring
plan into compliance prior to termination

Drafting §204(h) notices that inform participants of the intent to freeze or terminate a plan (for
review by legal counsel)

Drafting Notice of Intent to Terminate (for review by legal counsel) in compliance with PBGC
requirements.

Drafting employee benefit calculation and information notices

Completion of IRS Form 5310 and the final Form 5500

Completion of PBGC Form 500, Schedules EA-S and REP-S and required attachments

Calculation of final benefit amounts and preparation of distribution paperwork

Completion of Forms 1099-R and 945, if requested

Representation before IRS and PBGC auditors, if necessary
Types of Plans
Defined Benefit Plans
A qualified pension plan is one that satisfies certain provisions of the Internal Revenue Code,
and in return for doing so, enjoys certain tax benefits. These tax benefits include deduction of
contributions to the plan, exemption from tax for the investment earnings on plan investments
and deferral of taxation to participating employees until benefits are distributed. There are two
general types of qualified pension plans: defined benefit plans and defined contribution plans.
The two primary differences between defined benefit and defined contribution plans are:

In a defined benefit plan, the employer bears the investment risk. This means that good
investment returns lower the employer’s future costs and bad returns increase them. The
employee’s benefit is not affected. In a defined contribution plan, employees bear the
investment risk. Good returns increase their accounts and bad returns decrease them. The
employer’s cost is not affected.

The IRS applies limits to both types of plans. For a defined benefit plan, the limit applies to the
benefit ultimately paid out. For a defined contribution plan, the limit applies to the contribution
going in year-to-year.
These two differences result in three key advantages of a defined benefit plan:

Because it promises a benefit at retirement that is not a function of investment results, a
defined benefit plan is the most efficient way to provide a guaranteed level of retirement
benefit for employees. The plan can be designed to manage the work force by encouraging
early or later retirement, and the employer cost can be reduced by favorable investment
returns.

Because the IRS limits benefits, not contributions, and the plan promises benefits at a specific
age, a defined benefit plan can provide for a much larger tax deduction and accumulation of
retirement funds on a tax favored basis for the older business owner or key employee.

Investment losses in a defined contribution plan translate directly to less retirement savings. In
a defined benefit plan, investment losses result in additional employer contribution because the
promised benefit has not changed. Only in a defined benefit plan can you be certain of
achieving your retirement goal.
ABOUT CASH BALANCE PLANS
A cash balance plan is a defined benefit plan that looks like a defined contribution plan. The benefit
in a cash balance plan grows like an account in a defined contribution plan – each year an employer
contribution (the pay credit) is added to a participant’s account balance and the account balance
grows with interest (the interest credit). The interest credit isn’t tied to the actual investment
return for the plan; it is specified in the plan document. The account balance never loses value so
the investment risk and reward is absorbed by the employer, not the participant.
Because a cash balance plan is a defined benefit plan, the contribution for a participant (the pay
credit) can be substantially larger than the maximum contribution to a defined contribution plan –
depending upon the age of the participant as much as three or four times larger. A cash balance
plan can be designed so that, unlike a traditional defined benefit plan, key employees or business
partners with the same pay and service receive the same contribution and benefit payout from the
plan regardless of differences in their ages.
Cash balance plans provide a mix of the best features of defined benefit and defined contribution
plans:

Larger tax deductible contributions and therefore the faster accumulation of retirement
savings like a defined benefit plan.

A more understandable and predictable benefit formula that works like a defined
contribution plan.
And, a cash balance plan works great for the business owner who already sponsors a 401(k) plan. It
offers the potential to substantially increase the amount the owner can set aside each year with
little or no additional cost for other employees.
At Independent Actuaries, Inc., our consultants will:

Work with you to identify your retirement goals and determine whether a cash balance plan
is right for you.

Provide the annual administrative and actuarial services to maintain the qualified status of
your plan.

Prepare all the necessary documents and forms to wrap up the plan when you are ready to
retire.



Floor Offset Plans
A Floor Offset Plan is a special type of Defined Benefit plan where a minimum benefit guarantee,
or “floor” from a Defined Benefit and Defined Contribution plan combined. Often, these plans
can be designed so that the Defined Benefit plan benefits only the business owner and/or other
targeted employees and can be combined with an existing 401(k) plan. Please see [link to About
Defined Benefit Plans: Floor Offset]. We provide all the same support services for the Defined
Benefit portion of these plans as are described under Defined Benefit Plans, plus preparing all
the testing that is required to demonstrate that the combined plans comply with all legal and
regulatory requirements.

Defined Contribution Plan
Defined contribution plans are plans in which the annual contribution is generally allocated to
participants based on each participant's percentage of compensation. The allocation may be the same
percentage of pay for everyone or may vary by age or compensation level (within certain limits). Each
participant's account shares pro-rata in the earnings of the plan's investments. At retirement (or
termination of employment) the participant is entitled to the balance in his or her account (subject to
the vesting schedule.) There are various types of defined contribution plans; profit sharing, 401(k) profit
sharing plans, money purchase, and target benefit are the most common.
Good investment returns benefit the plan participants; poor investment returns are also passed on to
the participants. The investment return has no bearing on the amount of the required contribution to
the plan. However, the trustee is responsible for investing the plan's money in a prudent manner or for
making a prudent selection of investment options into which participants direct their own investments.
Types of Defined Contribution Plans
A profit sharing plan is a defined contribution plan with a discretionary employer contribution. Each
year the employer determines the amount of the contribution. It may be anywhere from 0% to 25% of
eligible compensation. The contribution may be allocated in one of many ways: pro-rata on eligible
compensation, integrated with Social Security, weighted on age and compensation (“age-weighted”) or
“cross-tested”. The “cross-tested” allocation method divides the participants into two or more groups,
with a different contribution percentage for each group. This type of allocation must pass a special test.
The “best fit” allocation method for an employer's objectives will depend on participant demographics.
A 401(k) profit sharing plan is the only plan that allows the participants to contribute some of their own
money into the plan. The “salary deferral” is a portion of the participant's salary that is put into the plan
rather than paid to the participant. This deferral is not subject to income tax, but is subject to Social
Security tax. The 401(k) profit sharing plan may also have an employer matching contribution, and / or a
profit sharing contribution. The profit sharing contribution in a 401(k) profit sharing plan may be
allocated in any manner described above, including the “cross-tested” method. The 401(k) profit
sharing plan must also meet additional non-discrimination requirements.
A money purchase plan is a profit sharing plan with a required contribution. Generally, the required
contribution is a percentage of eligible compensation (up to 25% of eligible compensation).
A target benefit plan is a defined contribution plan with some defined benefit plan features. The
contribution for each participant is based on a benefit formula (rather than a percentage of
compensation), the participant's compensation, age, and some actuarial factors.
NON – QUALIFIED PLANS
(Executive Deferred Compensation Plans)
Independent Actuaries, Inc. works closely with employers to develop and maintain non-qualified plans
that conform to applicable laws while providing valuable tools for retaining and rewarding management
and other highly compensated employees.
IAI’s non-qualified plan consulting services include:

Consulting/design services for new plans and amendments to existing plans

Drafting of plan documents, amendments and enrollment forms for review by legal counsel

Determination of top-hat plan eligibility/avoiding application of Title I of ERISA to your plan

Review of existing plan document language for compliance with IRC §§ 409A, 457(b), 457(f) and
related regulations, as well as relevant ERISA provisions

Review of existing plan operation for compliance with relevant statutes and regulations

Assistance and recommendations to correct documentation and operational failures
We take care of the technical aspects of the plan so you can focus on achieving the goals you have set
out for the plan.