Performance of Actuarial Services Under the Employee Retirement Income Security Act of 1974, 48030-48043 [E9-22454]

Download as PDF 48030 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service. (3) Reporting Requirements: For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the Office of Management and Budget (OMB) has approved the information collection requirements and has assigned OMB Control Number 2120–0056. Related Information ˆ (h) Refer to MCAI Agencia Nacional de Aviacao Civil (ANAC) Brazilian ¸˜ Airworthiness Directive AD No.: 2009–09– 01, dated September 3, 2009, and Phenom by Embraer Service Bulletin No. 500–55–0001, dated July 24, 2009, for related information. Issued in Kansas City, Missouri, on September 15, 2009. Scott A. Horn, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E9–22642 Filed 9–18–09; 8:45 am] BILLING CODE 4910–13–P JOINT BOARD FOR THE ENROLLMENT OF ACTUARIES 20 CFR Part 901 [REG–159704–03] RIN 1545–BC82 Performance of Actuarial Services Under the Employee Retirement Income Security Act of 1974 srobinson on DSKHWCL6B1PROD with PROPOSALS AGENCY: Joint Board for the Enrollment of Actuaries. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed amendments to 20 CFR part 901 relating to the enrollment of actuaries under section 3042 of the Employee Retirement Income Security Act of 1974 (ERISA). The proposed amendments would update the eligibility requirements for performing actuarial services for ERISA-covered employee pension benefit plans, including the continuing education requirements, and the standards for performing such actuarial services. The proposed amendments would affect employee pension benefit plans and the actuaries providing actuarial services to those plans. DATES: Written or electronic comments must be received by November 20, 2009. ADDRESSES: Send written comments to: CC:PA:LPD:PR (REG–159704–03), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand- VerDate Nov<24>2008 18:48 Sep 18, 2009 Jkt 217001 delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–159704–03), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC or sent electronically via the Federal eRulemaking Portal at http:// www.regulations.gov (IRS REG–159704– 03). FOR FURTHER INFORMATION CONTACT: Patrick McDonough, Executive Director, Joint Board for the Enrollment of Actuaries, (202) 622–8229 (not a tollfree number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collections of information referenced in this notice of proposed rulemaking were previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545–0951, relating to Enrolled Actuaries under Employee Retirement Income Security Act of 1974, published on September 7, 1988, in the Federal Register (53 FR 34484). There are no proposals for substantive changes to this collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background This document contains proposed amendments to 20 CFR Part 901 under section 3042 of the Employee Retirement Income Security Act of 1974 (88 Stat. 829), Public Law 93–406 (ERISA). Section 3042 of ERISA provides that the Joint Board for the Enrollment of Actuaries (Joint Board) shall, by regulations, establish reasonable standards and qualifications for persons performing actuarial services with respect to plans subject to ERISA and, upon application by any individual, shall enroll such individual if the Joint Board finds that such individual satisfies such standards and qualifications. Section 3042 also provides that the Joint Board may, after notice and an opportunity for a hearing, suspend or terminate the enrollment of PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 an individual who fails to discharge his duties under ERISA or who does not satisfy the requirements for enrollment. Consistent with section 3042, the Joint Board has promulgated regulations at 20 CFR part 901, addressing eligibility for enrollment, requirements for continuing education of enrolled actuaries, professional standards for performance of actuarial services under ERISA, bases for disciplinary actions and the procedures to be followed in taking those actions. Comprehensive regulations regarding section 3042 were last issued in 1988 (53 FR 34484). The Joint Board has determined that the regulations need to be updated to reflect changes in the law and in industry practice. In addition to these proposed regulations, final regulations relating to user fees for the initial enrollment and reenrollment as an enrolled actuary were published in the Federal Register on December 21, 2007 (72 FR 72606). In anticipation of amending the Joint Board regulations, the Joint Board issued a Request for Information (RFI) which was published in the Federal Register on June 30, 2004 (69 FR 39376). The RFI specifically requested comments as to whether, and to what extent, changes should be made to the regulations in the following five areas: 1. Procedures and conditions for enrollment and reenrollments; 2. Continuing professional education (CPE) requirements; 3. Waivers of the CPE requirements; 4. Types of enrollment statuses (active, inactive, and retired); and 5. Standards of conduct. Eight comments were received. The current regulations prescribe various rules regarding the enrollment and reenrollment of actuaries. Section 901.13 of the regulations provides that an individual applying for enrollment must satisfy requirements for: (1) Qualifying experience; (2) basic actuarial knowledge; and (3) pension actuarial knowledge. Basic actuarial knowledge may be demonstrated by passing a Joint Board examination (or an examination acceptable to the Joint Board) regarding basic actuarial mathematics and methodology, or by earning a degree pertaining to actuarial mathematics from an accredited college. Pension actuarial knowledge must be demonstrated by passing a Joint Board examination (or an examination acceptable to the Joint Board) in actuarial mathematics related to pension plans. Under section 901.11, an enrolled actuary must reenroll once every three years. To qualify for reenrollment an actuary must complete a minimum of 36 E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules hours of continuing education credit within the preceding three year period.1 Of these 36 hours, at least one-half must consist of core subject matter, which is subject matter directly related to the performance of actuarial services under ERISA or the Internal Revenue Code (Code). The remaining hours may consist of non-core subject matter. The regulations provide examples of both core and non-core subject matter. The regulations provide that the Executive Director of the Joint Board may review the CPE records of an enrolled actuary to verify compliance with these rules. The regulations also provide that the continuing education must be provided as part of a ‘‘qualifying program’’ conducted by a ‘‘qualifying sponsor.’’ A qualifying program is (1) a ‘‘formal program’’ (which requires the attendance of at least three individuals engaged in substantive pension service), (2) a correspondence or individual study program, or (3) a program utilizing teleconferencing. A qualifying sponsor is an accredited educational institution, an organization recognized by a State licensing body, or an organization recognized by the Joint Board under a sponsor agreement in effect for a given enrollment cycle. A qualifying sponsor must ensure that the CPE program satisfies various requirements regarding subject matter and administration, including recordkeeping. A separate provision applies to the recordkeeping requirements for the enrolled actuary. In addition to attending CPE programs, an enrolled actuary may earn CPE credits by serving as an instructor or speaker at a CPE program, publishing articles on topics directly related to the CPE requirements, serving on a Joint Board advisory committee, participating in the preparation of Joint Board examinations, passing examinations sponsored by recognized organizations, or by passing a Joint Board pension law actuarial examination. These alternative means for earning CPE credits are subject to various requirements and limitations. In the event an enrolled actuary applies for renewal but fails to comply with the applicable requirements, the regulations provide that the enrolled actuary shall be notified of his or her failure and given an opportunity to provide additional information. If the enrolled actuary fails to provide any additional information (or fails to apply for reenrollment) the actuary will be placed in inactive status for a period of 1 The regulations also include transitional rules for reenrollment cycles prior to 1993. This summary refers to the rules currently applicable. VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 three years (beginning on the date that renewal would have been effective) and will be ineligible to perform services as an enrolled actuary during this time. An individual placed in inactive status must file an application for renewal and satisfy the requirements for renewal within three years or his enrollment will terminate. If an individual’s enrollment is terminated, it can only be reestablished by satisfying the requirements for initial enrollment. The regulations also provide that an individual may request placement in an inactive retirement status during which time the actuary will be ineligible to perform services as an enrolled actuary. An individual placed in this status may be reinstated by completing the required CPE credits for the applicable period. Section 901.20 of the regulations prohibits an enrolled actuary from performing actuarial services under various circumstances including when the actuary is not qualified to perform the service, where the actuary has reasonable grounds to believe his or her services will be used in a fraudulent manner, or where there is a conflict of interest. The section also requires that an enrolled actuary must exercise due care, skill, and diligence in providing his or her pension actuarial services and proper utilization of the enrolled actuary designation. Explanation of Provisions The submitted comments and the related proposed changes to the regulations may be divided into the five categories of the RFI. A. Procedures for Enrollment and Reenrollment Various comments were received regarding the materials covered by the enrolled actuary examinations. Several comments supported broadening the scope of the material to include matters unrelated to defined benefit plans, such as the funding of post-retirement medical and life insurance benefits within the meaning of Code sections 419 and 419A. To the extent that an enrolled actuary may need to practice before the IRS in these areas, one comment suggested that an enrolled actuary should be permitted to work together with a qualified health actuary. In contrast, another comment suggested focusing the examinations exclusively on pension actuarial issues under ERISA and the Code. Some comments called for a stronger emphasis on the selection of actuarial assumptions. One such comment acknowledged that the subject is not easily tested, but made suggestions as to how this could be done. PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 48031 Another comment proposed eliminating requirements for the examinations to cover specific materials and instead have the regulations grant the Joint Board the authority and flexibility to prescribe relevant and current topics. There were also suggestions regarding the process and form of testing. One comment suggested that focusing each examination question on a single concept (instead of multiple concepts as is done currently) would enable a candidate to avoid losing credit for an entire question if he/she responds correctly to all but one of the concepts being tested. It was also suggested that the regulations allow more flexibility in the number of exams and that they clarify any time limit for their completion. One comment recommended the use of computer-based testing and other emerging alternative testing procedures, and coordination of changes in the Joint Board examinations with related examinations offered by recognized organizations. There was general agreement among the comments in keeping the current qualifying experience requirement unchanged although one comment suggested that the regulations require that an applicant’s actuarial experience be certified by an enrolled actuary. No changes are made under the proposed regulations to the materials covered by either the basic actuarial examination or to the examination for pension actuarial knowledge. The Joint Board believes that the provisions of the current regulations regarding the general form and structure of the examinations, as updated from time to time, are adequate. The proposed regulations, however, would require that the pension actuarial examination must be completed within the ten-year period immediately preceding the date of application for initial enrollment. The Joint Board believes such a requirement is needed because of the frequent changes in pension law and a need for an enrolled actuary to have current knowledge of pension requirements.2 On the other hand, because the material in the basic actuarial examination is generally mathematical in nature and is not affected by changes in pension law, a similar rule for the basic actuarial examination would not apply. With respect to computer-based testing, the Joint Board acknowledges 2 This rule would be applied prospectively. Accordingly, the successful completion of a pension actuarial examination prior to the effective date of this regulation will be recognized for ten years after such effective date. E:\FR\FM\21SEP1.SGM 21SEP1 48032 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules srobinson on DSKHWCL6B1PROD with PROPOSALS that new technologies can serve many uses. The Joint Board believes, however, that the language in the current regulations would not preclude the use of computer-based testing and does not believe it is necessary to amend the regulations to specify the format for taking examinations. With respect to qualifying experience, the proposed regulations would require that all actuarial and pension actuarial experience be certified in writing by individuals with knowledge of the individual’s experience. If the individual’s supervisor is not an enrolled actuary, the pension actuarial experience must be certified by both the supervisor and an enrolled actuary with knowledge of the individual’s pension experience. As in the current regulations, the qualifying experience must have been completed within the last 10 years before the application for enrollment. B. CPE Requirements Several comments were received regarding the distinction between core and non-core subject matter. One comment suggested that the distinction between core and non-core subject matter be eliminated for purposes of meeting CPE requirements as the distinction does not serve a useful purpose in a rapidly evolving financial marketplace and regulatory environment. The comment added that, assuming these core/non-core categories were kept, additional guidance should be provided as to what constitutes core and non-core credit subject matter. Other comments suggested that the list of core subject matter be expanded to include such topics as pension accounting, Code sections 419, 419A and 420, risk theory, and finance. Another comment specifically supported adding pension accounting, but objected to counting investment topics as core topics. Another comment recommended including various additional topics in an expanded list of acceptable non-core topics such as defined contribution plans, Social Security and Medicare benefits, pension valuation software programming, other accounting, risk management and new emerging topics in actuarial practice. Another comment recommended replacing the core/non-core classification with three new categories: (1) Retirement plan rules under ERISA and the Code (including, but not limited to, sections 401 through 420), (2) funding issues in relation to defined benefit plans, and (3) actuarial ethics. This comment also suggested requiring at least 45 hours of CPE credit (with a minimum of three hours in funding VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 issues and in actuarial ethics) and granting the Joint Board the authority to designate additional mandatory areas of CPE. One comment recommended that the definition of ‘‘core’’ subject matter should continue to be focused on pension actuarial services under ERISA and the Code and opposed any expansion of the definition of core subject matter. Some comments suggested distinguishing between CPE credits required early in an actuary’s career, where core courses may be necessary to help cement the actuary’s understanding of actuarial principles, and credits needed later in an actuary’s career. One comment suggested, for example, that 18 hours of core CPE credit be required for the first two enrollment cycles and that 12 hours of core credit be required in subsequent enrollment cycles. It was also suggested that a minimum of three hours of ethics be required. Many comments, particularly from sponsors of CPE programs, requested flexibility in the use of the web and other alternatives to formal meetings. For example, some suggested that computer-based self-study or distance learning programs and webcasts should be included as qualifying CPE programs. A number of comments sought additional guidance from the Joint Board regarding the use of webcasts and self-study programs to earn CPE credits. The issues raised in this regard included the need for appropriate safeguards and mechanisms to validate participation by the actuary. In recognition that future technological advances are almost certain to occur, another comment recommended that the regulations be revised to allow a qualifying sponsor to apply to the Joint Board for approval to use those technologies. The comment also suggested that the regulations specifically give the Joint Board the authority to permit the use of those emerging technologies, with acceptance of the technology being communicated via a public announcement without requiring the Joint Board to further update the regulations. One comment recommended permitting actuaries to attest in their professional capacities to their completion of continuing education credit, and the establishment of an appropriate audit process to oversee compliance with the rules. The comment further recommended that the Joint Board undertake random audits of CPE records to ensure compliance with the attestation requirement. Similarly, another comment recommended an enrolled actuary should be required to certify that he/she has satisfied certain PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 CPE requirements and to provide information regarding whether or not he/she has been disciplined or is under disciplinary review by any professional body. One comment suggested that the requirement that a formal program be attended by at least three individuals engaged in substantive pension service may be satisfied, in the case of programs viewed simultaneously at multiple locations via teleconference, web cast, conference call or other similar technology, if the total combined audience at all locations contains at least three such individuals. Several comments recommended various electronic means to retain records and to streamline the application process. One comment recommended that a qualifying sponsor be required to keep electronic copies of the session materials, but make them accessible to the Joint Board should they need to be reviewed or audited for content. Another comment recommended that the Joint Board provide for on-line renewal of enrollment and an on-line process for an actuary to respond to an audit of his/her CPE credits. A third comment recommended that all records be maintained electronically and that CPE credit hours be provided and stored electronically, enabling the Joint Board to have access to the credit hours earned by actuaries at all times and reducing the volume of hard copy recordkeeping. One comment recommended extending the enrollment cycle to 5 years with an increase in the required CPE credits to 60 hours, including a minimum of 8 hours in each year of the cycle. Another comment suggested that the current CPE requirement (36 credit hours over a three year cycle) is appropriate, with some possible refinements such as either reducing the credits that could be earned for each hour as a presenter and increasing the current limit on such credits as a portion of total CPE; allowing CPE credits as a co-author (if not the primary author); or withholding session credit to an attendee for inattentive or disruptive conduct. One comment suggested that the regulations should provide guidance on renewal of approval for qualifying sponsors. There were a few comments that suggested changing the enrollment cycle for qualifying sponsors so as not to be coterminous with the enrolled actuary enrollment cycle or to increase the number of years in the sponsor enrollment cycle. Another comment suggested the regulations be amended to allow the Joint Board to periodically publish a list of qualifying sponsors in E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules order to facilitate a search for programs that are eligible for CPE credits. The Joint Board continues to believe that an important thrust of CPE should be core subject matter that is directly related to pension actuarial services under ERISA and the Code, an area in which an enrolled actuary must maintain minimum competencies at all times. The Joint Board also believes that there are other relevant non-core topics that enhance the knowledge of enrolled actuaries and keep them current in matters related to the performance of pension actuarial services. The proposed regulations would provide a revised definition of ‘‘core’’ subject matter which the Joint Board believes will be helpful in distinguishing between core and non-core subject matter. The lists of core and non-core subject matter are generally unchanged, but the proposed regulations would provide that all materials included on the syllabi of any of the pension actuarial examinations offered by the Joint Board during the current and immediately preceding enrollment cycles would constitute core subject matter. The Joint Board also invites further comments in this area. With respect to CPE programs, the proposed regulations would clarify the permissible forms of qualifying programs. The regulations would also retain the use of alternative means for completion of CPE, but continue to limit the portion of total CPE that may be earned under these alternative approaches. The regulations would also add a provision that awards CPE credits to a co-author of a publication or a person listed as a major contributor to a publication. The proposed regulations would also clarify the responsibilities of program sponsors by requiring that those who submit requests to the Executive Director to be recognized as qualifying sponsors include sufficient information in their requests to establish that their programs would satisfy the applicable requirements for qualifying programs. The Joint Board agrees that new technologies allow enrolled actuaries and qualifying sponsors more flexibility in their choices of form and delivery of CPE programs and should be reflected when granting CPE credits. However, new technologies also raise new challenges regarding verification of attendance and completion of CPE under certain programs. Therefore, the proposed regulations would allow qualifying programs to include both formal programs as well as correspondence or individual study programs (including audio and/or video taped programs) and teleconferencing VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 (including web casts) provided that the qualifying program meets certain requirements with regard to verification of attendance and measurement of completion. The Joint Board also agrees that recordkeeping provisions under the current regulations should be updated. The proposed regulations would amend the recordkeeping requirements to place more reliance on qualifying sponsors to maintain records of the course content since they generally maintain records of that content in any event. The enrolled actuaries will now be required only to retain certificates of completion and/or instruction as evidence of satisfaction of CPE requirements. In addition, the proposed regulations would expressly allow the Joint Board to request CPE records from the enrolled actuary and the qualifying sponsor. The regulations do not reflect any changes in the method used to provide information to the office of the Executive Director. However, the Board is willing to consider web-based applications or other technology for this information in the future. With respect to the renewal cycle and required CPE credits, the Joint Board continues to believe that the current three-year renewal period is appropriate. The Board, however, proposes to delay the start date for the renewal cycle for qualifying sponsors by one year after the renewal cycle for enrolled actuaries in order to ease the administrative demands on the Executive Director and his staff, and to facilitate renewals by qualifying sponsors. The proposed regulations would also retain the current requirement for a total of 36 hours of CPE (half of which must be core subject matter) for the initial three-year enrollment renewal cycle, for individuals who renew on a timely basis. Recognizing, however, that experienced actuaries generally do not need to focus on core topics as much as newly enrolled actuaries, the proposed regulations would reduce the number of core CPE credits required after the enrolled actuary’s initial enrollment renewal from 18 required core hours to 12 required core hours. The Joint Board also believes that enrolled actuaries should maintain high professional standards and thus proposes a new requirement that a minimum of two hours of core CPE be allocated to ethical standards in each enrollment cycle. Topics that would meet this requirement include (but are not limited to) discussions of professional codes of conduct, professional responsibilities, and any of the topics addressed in PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 48033 section 901.20 of these proposed regulations. The Joint Board believes that formal programs should continue to play a prominent role in fulfilling CPE requirements because of the additional learning opportunities that occur in face-to-face interactions with other enrolled actuaries. Therefore, no change is proposed to the current requirement that a formal program must have at least three individuals in attendance who are engaged in substantive pension service. Furthermore, the proposed regulations would add a new requirement that a minimum of one-third of the required total CPE credits must be in the form of formal programs. The proposed regulations would also retain current limits on the maximum number of CPE credits that can be obtained under alternative CPE programs, such as authoring published articles (25 percent), as a percentage of total CPE per enrollment cycle. Under the proposed regulations, however, college courses will no longer be available as an alternative program for purposes of fulfilling CPE requirements (unless they meet the requirements of a qualifying program) due to the practical difficulties in evaluating course curricula and the qualifications of the instructors. Despite the elimination of the specific list of conditions that would support a waiver, circumstances such as extended active military duty will continue to constitute strong evidence of the type of extraordinary circumstances that would justify a waiver. C. Waivers of the CPE Requirements One comment suggested expanding the list of conditions for which a waiver from CPE requirements may be granted to include parental leave. Another comment recommended that applications for a waiver of the CPE requirements be accepted during the normal enrollment renewal process, subject to the Joint Board’s discretion to accept late filings. A third comment did not perceive problems with the current waiver process and standards. There were no other specific recommendations regarding this issue except in conjunction with proposals regarding changes in enrollment status. The Joint Board believes that it is essential for practicing actuaries to keep their knowledge current, particularly given the frequent changes in pension law, court decisions, and other factors that affect an enrolled actuary’s practice. Accordingly, and in light of the expanded varieties of acceptable CPE programs, the proposed regulations would eliminate the list of reasons for E:\FR\FM\21SEP1.SGM 21SEP1 48034 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules srobinson on DSKHWCL6B1PROD with PROPOSALS which a CPE waiver may be granted and provide instead that a waiver from the CPE requirements may be granted only under extraordinary circumstances and only upon submission of evidence that every effort was made during the entire renewal cycle to complete such requirements. Despite the elimination of the specific list of conditions that would support a waiver, circumstances such as extended active military duty will continue to constitute strong evidence of the type of extraordinary circumstances that would justify a waiver. D. Enrollment Status Several comments were directed to the status for ‘‘inactive retirement’’ which may be elected by an actuary. One comment suggested that the Joint Board allow for some flexibility in the renewal process in order to reduce the need for individuals to request inactive retirement status and to ensure a minimal period of disruption of actuarial services to plans and employers. For example, it was recommended that any CPE credit hours completed between December 31 (or the end of the enrollment period by which CPE credits must be earned for that period) and the date the application for renewal is filed be permitted to be used to satisfy the CPE requirement for renewal of enrollment effective April 1. Thus, the comment stated that an enrolled actuary who files an application for renewal after March 1 due to delayed completion of the CPE requirement should be eligible to perform services as an enrolled actuary 30 days after the application filing date unless notified otherwise by the Joint Board. However, these delayed CPE credits would not be permitted to be applied to another enrollment cycle. Under the current regulations, an actuary in inactive retirement status is ineligible to perform services as an enrolled actuary, but the actuary may be reinstated by completing the ‘‘required continuing professional education credits for the applicable enrollment cycle’’ regardless of how long the actuary was inactive. Several comments stated that this status, and the requirements for reinstatement, were unclear. Some comments suggested that inactive retirement status be available for no more than three consecutive three-year enrollment cycles, but that if the individual has been retired for less than three three-year enrollment cycles, the actuary would be allowed to ‘‘back fill’’ any missing CPE requirements. One comment recommended that the regulations be revised to extend inactive status to six years (or a maximum of two VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 three-year enrollment cycles). The comment stated that three years is too short since an enrolled actuary often leaves the workforce for child-rearing or other reasons, and should not be discouraged from resuming his/her career. Another comment recommended that the regulations be clarified to specify more clearly the CPE requirements for reinstatement as of various points of time during the following three-year cycle, and the relationship of those CPE requirements with the requirements for ongoing renewal after reinstatement. One comment suggested special catch-up requirements where an individual would have to ‘‘back fill’’ any missing CPE requirements (for example, 108 hours of CPE credits would be required for an actuary who had missed two enrollment renewal cycles, with 36 credits required for each inactive enrollment cycle plus 36 credits required for the enrollment cycle immediately preceding the date on which the individual returns to active status). The comment suggested that any individual who fails to complete the necessary back fill would need to follow current reenrollment procedures. The comment further stated that, depending on the circumstances, a waiver of some CPE requirements may be permitted for an enrolled actuary going from inactive to active status. The Joint Board agrees that the current rules relative to the different inactive statuses warrant simplification. The proposed regulations would limit enrollment statuses to only two categories, ‘‘active’’ or ‘‘inactive,’’ with special provisions for reinstatement depending on the length of the period during which an enrolled actuary is in inactive status and for those situations where an actuary’s status is terminated for cause. An enrolled actuary who timely renews his/her enrollment would be in active status. An enrolled actuary who fails to meet requirements for timely renewal of enrollment would be in inactive status. While in inactive status, an enrolled actuary would be prohibited from performing pension actuarial services under ERISA and the Code. The Joint Board also believes that the longer an actuary has been in inactive status, the less likely it is that he/she has kept up with current developments or had the current work experience necessary to competently function as an enrolled actuary. The proposed regulations would increase the CPE requirements and/or add experience requirements for reenrollment for actuaries in inactive status, with more stringent requirements applying to those PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 who have been inactive for a longer period of time. Under the proposed regulations, an individual who applies for reenrollment during his or her first inactive enrollment cycle would need to complete 36 hours of CPE (including CPE credits from the immediately preceding enrollment cycle) in order to qualify for reenrollment. An individual who applies during the second inactive enrollment cycle would need to complete 48 hours of CPE (counting only those credits earned during the first and second inactive enrollment cycles) and must also have 18 months of certified responsible pension actuarial experience since the start of the first inactive cycle. An individual who applies during the third active enrollment cycle would need to complete 60 hours of CPE (counting only those credits earned during the second and third inactive enrollment cycles) and have 18 months of certified responsible pension actuarial experience since the start of the second inactive cycle. The proposed regulations present some examples to illustrate these changes. Furthermore, the proposed regulations would limit the time that an enrolled actuary can be in inactive status and remain eligible to apply for reenrollment. If the enrolled actuary does not qualify and apply for reenrollment after being in inactive status for three enrollment cycles, he or she would be placed in terminated status and would have to meet the requirements for initial enrollment (including the applicable examination requirements) in order to be reinstated as an enrolled actuary. Notwithstanding these general rules for reenrollment from inactive status, any application for reenrollment from termination status due to disciplinary reasons would be subject to special consideration by the Executive Director. An individual placed in inactive status prior to the effective date of the final regulations would be deemed to have been placed in inactive status on that date and thus considered to be in his/ her first inactive enrollment cycle on that date for purposes of determining the requirements for a return to active status. E. Standards of Conduct One comment states that the Joint Board has not been very active in investigating and disciplining enrolled actuaries whose performance does not meet applicable standards. One comment suggested that the Joint Board consider utilizing the Actuarial Board for Counseling and Discipline as an independent contractor to investigate E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules complaints. Alternatively, it was recommended that the Joint Board either require an enrolled actuary to become a member of a professional actuarial organization as a condition of enrollment (thereby subjecting the member to the Actuarial Code of Professional Conduct (Code of Conduct) to which all the major actuarial organizations in the U.S. and Canada subscribe), or incorporate the Code of Conduct into the regulations. Another comment stated that, unlike other professionals, an enrolled actuary is not compelled to operate within certain standards by the underlying threat that failure to do so will result in the loss of his/her license to practice in the profession. Even if an enrolled actuary is a member of an actuarial organization and subject to that organization’s disciplinary procedures, this comment suggested that the Joint Board not rely on these organizations in this area, but rather that the Joint Board more actively utilize its current authority under ERISA to supervise and evaluate the provision of actuarial services and to discipline enrolled actuaries. This comment also suggested that the Joint Board periodically publish information regarding the nature and types of complaints received, the number of actuaries disciplined and the nature of the discipline. This comment indicated that publicizing such information would reassure the public that complaints are being acted upon and encourage compliance with the applicable standards. Another comment recommended that the Board coordinate with other actuarial or governmental bodies, for example, the IRS or PBGC, so that if any other body finds that an enrolled actuary has violated the standards of conduct, performance or practice relating to the performance of actuarial services, including all applicable regulations and revenue rulings, the respective body will refer the offending individual to the Joint Board for possible suspension or termination of his/her enrollment. One comment reiterated a concern that actuaries who do not have significant credentials in the health tax area should not be encouraged to engage in unqualified practice under the Code, or in an area where they do not meet the qualification standards in accordance with the Code of Conduct. The commentator recommended that the Joint Board outline those areas where the enrolled actuary may rely on the expertise of another actuary and any qualifications needed for those other actuaries as appropriate. VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 One comment stated that the standards of performance of actuarial services set forth in current regulations are adequate. The comment suggested, however, in the event the Board were to decide that these standards need to be expanded, that any differences from the Code of Conduct be kept to a minimum or, wherever possible, any expanded regulatory standards should incorporate the applicable parts of the Code of Conduct. In light of the responses to the RFI regarding actuarial standards of performance, the proposed regulations would clarify existing provisions in this area and add some new provisions. Specifically, the proposed regulations would add a new general standard that would require enrolled actuaries to perform actuarial services in accordance with all applicable laws and the relevant standards of professional responsibility and, as under the current regulations, require that enrolled actuaries not perform any actuarial services where those services may be used in a fraudulent manner. The proposed regulations would also provide that an enrolled actuary must report any material violation of this section by another enrolled actuary to the Executive Director of the Joint Board. For example, an enrolled actuary that replaces another enrolled actuary as a plan’s actuary and discovers that the previous actuary had signed a Schedule B that listed plan contributions that the previous actuary knew had not been made would be required to report this violation to the Executive Director. The proposed regulations would also modify the rules regarding conflicts of interest. The regulations currently provide that in any situation in which an enrolled actuary has a conflict of interest with respect to the performance of actuarial services, the actuary shall not perform such services until full disclosure of the conflict has been made to the affected parties. The proposed regulations would add that such disclosure must be made in writing and that the affected parties must agree in writing to the enrolled actuary performing the services. The proposed regulations would also provide that the actuary must reasonably conclude that his or her ability to act impartially is not impaired by the conflict and the performance of such services is not prohibited by law. The current regulations also provide that an enrolled actuary must exercise due care, skill, prudence, and diligence to ensure that all actuarial assumptions are reasonable in the aggregate and that all calculations are accurately carried out. To reflect changes made in the law PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 48035 made by the Pension Protection Act of 2006, Public Law 109–280, the proposed regulations would provide that an enrolled actuary must exercise sufficient due care, diligence, skill, and prudence as is required to ensure that all actuarial assumptions are reasonable individually and in combination. The proposed regulations would also require that all calculations not only be accurately carried out but also properly documented. The proposed regulations would also expressly expand the due diligence requirement into other areas. For example, the proposed regulations would require that an enrolled actuary must exercise due diligence in preparing documents to be filed with Federal and State entities and in determining the correctness of oral and written representations to those entities and to clients. This section of the proposed regulations follows section 10.22(a) of the regulations governing practice before the IRS (Circular 230) except to include other agencies where enrolled actuaries typically file documents or make representations in connection with the performance of pension actuarial services. The proposed regulations would also include other provisions similar to those in Circular 230 regarding solicitations of employment. For example, the current regulations provide that an enrolled actuary shall not advertise his or her status as an enrolled actuary in any solicitation related to the performance of actuarial services and shall not employ or share fees with any individual who so solicits. The proposed regulations would modify this prohibition by adding a rule similar to that in section 10.30(a)(1) of Circular 230 by providing that an enrolled actuary may not use any form of public or private solicitation containing a false, fraudulent, or misleading claim. Also, as provided in section 10.30(a)(2) of Circular 230, the proposed regulations would provide that an enrolled actuary may not make uninvited solicitations of employment if the solicitation violates Federal or State law and any lawful solicitations must clearly identify the solicitation as such and, if applicable, identify the source of the information used in choosing the recipient of the solicitation. The proposed regulations would also include provisions similar to those in Circular 230 regarding the prompt disposition of pending matters and the return of client records, except the Circular 230 rules would be modified for purposes of these regulations to reflect the fact that enrolled actuaries deal with government entities in E:\FR\FM\21SEP1.SGM 21SEP1 48036 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules addition to the IRS. Thus, as under section 10.23 of Circular 230, the proposed regulations would provide that an enrolled actuary may not unreasonably delay the prompt disposition of any matter before the IRS, but the proposed regulations would extend the rule for these purposes to matters before the Department of Labor, the PBGC and other applicable Federal and State entities. Similarly, the proposed regulations would adopt provisions similar to those in section 10.27 of Circular 230 regarding the return and retention of client’s records, but they would define ‘‘records of the client’’ for these purposes to include documents related to legal obligations in addition to Federal tax obligations. The provisions of these proposed regulations would not modify the Circular 230 regulations but would apply rules to enrolled actuaries in addition to those already applicable under Circular 230. The Joint Board believes that the current structure and procedures for the disciplining of enrolled actuaries are adequate and consistent with Federal statutes and so is not proposing any changes to the existing regulations in this regard. The Joint Board emphasizes that anyone, including other members of the profession and plan officials and participants, can make referrals to the Executive Director regarding any suspicious activity or conduct that may warrant further investigation or discipline. The Joint Board is also considering in a separate action amending the application forms for enrollment and renewal to require additional information that may be relevant to standards of performance, including any record of violations of the law or prior misconduct, and requests comments in that regard. srobinson on DSKHWCL6B1PROD with PROPOSALS Proposed Effective/Applicability Date These regulations are proposed to generally apply 30 days after the date these regulations are published as final regulations in the Federal Register. However, section 901.11 regarding the enrollment of actuaries would apply to the enrollment cycle beginning January 1, 2011, and ending December 31, 2013, and to all subsequent enrollment cycles. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and therefore the Regulatory Flexibility Act (5 U.S.C. VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 chapter 6) does not apply. This notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Requests for Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The Joint Board specifically requests comments on the clarity of the proposed regulations and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register. Drafting Information The principal author of these regulations is Carolyn Zimmerman, IRS Employee Plans, Tax Exempt and Government Entities Division. However, other personnel from the Joint Board and the IRS participated in their development. List of Subjects in 20 CFR Part 901 Regulations Governing the Performance of Actuarial Services under the Employee Retirement Income Security Act of 1974. Proposed Amendments to the Regulations Accordingly, 20 CFR part 901 is proposed to be amended as follows: PART 901—REGULATIONS GOVERNING THE PERFORMANCE OF ACTUARIAL SERVICES UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 Paragraph 1. The authority citation for part 901 continues to read in part as follows: Authority: These rules are issued under authority of 88 Stat. 1002; 29 U.S.C. 1241, 1242. See also 5 U.S.C. 301; 31 U.S.C. 330; and 31 U.S.C. 321. Par. 2. Section 901.0 is amended by revising the second sentence to read as follows: § 901.0 Scope. * * * Subpart A of this part sets forth definitions and eligibility to perform actuarial services; subpart B of this part PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 sets forth rules governing the enrollment of actuaries; subpart C of this part sets forth standards of performance to which enrolled actuaries must adhere; subpart D of this part sets forth rules applicable to suspension and termination of enrollment; and subpart E of this part sets forth general provisions. Par. 3. Section 901.1 is amended by: A. Adding new paragraph (d)(5). B. Revising paragraph (g). C. Adding new paragraphs (i), (j) and (k). The revisions and additions read as follows: § 901.1 Definitions. * * * * * (d) * * * (5) Selection of assumptions. * * * * * (g) Enrolled actuary means an individual who has satisfied the standards and qualifications set forth in this part and who has been approved by the Joint Board for the Enrollment of Actuaries (the Joint Board), or its designee, to perform actuarial services required under ERISA or the regulations. * * * * * (i) Certified responsible actuarial experience means responsible actuarial experience of an individual that has been certified in writing by the individual’s supervisor. (j) Certified responsible pension actuarial experience means responsible pension actuarial experience of an individual that is certified in writing by the individual’s supervisor if the supervisor is an enrolled actuary. If the individual’s supervisor is not an enrolled actuary, the pension actuarial experience must be certified in writing by both the supervisor and an enrolled actuary with knowledge of the individual’s pension actuarial experience. (k) Enrollment cycle means the three year period from January 1, 2011, to December 31, 2013, and every three-year period thereafter. Par. 4. Section 901.10 is amended by revising paragraph (a) to read as follows: § 901.10 Application for enrollment. (a) Form. As a requirement for enrollment, an applicant shall file with the Executive Director of the Joint Board (the Executive Director) a properly executed application on a form or forms specified by the Joint Board, and shall agree to comply with these regulations and any other guidance as required by the Joint Board. A reasonable nonrefundable fee may be charged for each application for enrollment filed. * * * * * E:\FR\FM\21SEP1.SGM 21SEP1 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules Par. 5. Section 901.11 is amended by: A. Revising the first sentence of paragraph (a). B. Revising paragraphs (c) and (d). C. Revising paragraphs (e) introductory text, (e)(1) and (e)(2)(i). D. Revising the last sentence of paragraph (e)(2)(ii). E. Adding new paragraphs (e)(2)(iv), (v), and (vi). F. Removing paragraph (e)(3). G. Revising paragraphs (f)(1) introductory text, and (f)(1)(i). H. Revising the second sentence of paragraph (f)(1)(ii), and paragraph (f)(1)(iv). I. Revising paragraph (f)(2). J. Adding paragraph (f)(3). K. Revising paragraph (g). L. Removing the last two sentences of paragraph (h)(2). M. Removing paragraph (l). N. Redesignating paragraphs (i), (j), and (k) as paragraphs (j), (k), and (l), respectively. O. Adding and reserving new paragraph (i). P. Revising newly redesignated paragraphs (j) and (k). Q. Revising the first sentences of newly redesignated paragraphs (l)(1) and (l)(2), and the second sentence of newly redesignated paragraph (l)(3). R. Revising newly redesignated paragraphs (l)(4), (l)(5), (l)(6), and (l)(7), and the first sentence of newly redesignated paragraph (l)(9). S. Revising paragraph (n). T. Adding new paragraphs (o) and (p). The revisions and additions read as follows: srobinson on DSKHWCL6B1PROD with PROPOSALS § 901.11 Enrollment procedures. (a) Enrollment. The Joint Board shall enroll each applicant it determines has met the requirements of these regulations, and any other guidance as required by the Joint Board, and shall so notify the applicant. * * * * * * * * (c) Rosters. The Executive Director shall maintain rosters of all actuaries who are duly enrolled under this part and of all individuals whose enrollment has been suspended or terminated, or who are in inactive status. The Executive Director may publish any or all of these rosters, including display on the Joint Board’s Web site, to the extent permitted by law. (d) Renewal of enrollment. To maintain active enrollment to perform actuarial services under ERISA, each enrolled actuary is required to have his/ her enrollment renewed as set forth herein. (1) All enrolled actuaries must file an application for renewal of enrollment on the prescribed form between October 1, VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 2010, and March 1, 2011, and between October 1 and March 1 of every third year thereafter. (2) The effective date of renewal of enrollment for individuals who file complete renewal applications by March 1 is the April 1 immediately following the date of application. The effective date of renewal of enrollment for individuals who file complete renewal applications after March 1 is the date the notice of renewal is mailed to that individual by the Joint Board. (3) Forms required for renewal may be obtained from the Executive Director. (4) A reasonable non-refundable fee may be charged for each application for renewal of enrollment filed. (e) Condition for renewal: Continuing professional education. To qualify for renewal of enrollment, an enrolled actuary must certify, on the form prescribed by the Executive Director, that he/she has completed the applicable minimum number of hours of continuing education credit required by this paragraph (e) and satisfied the recordkeeping requirements of paragraph (j) of this section. (1) Transition rule for renewal of enrollment effective April 1, 2011. (i) A minimum of 36 hours of continuing education credit must be completed between January 1, 2008 and December 31, 2010. Of the 36 hours, at least 18 must consist of core subject matter; the remainder may be non-core subject matter. (ii) An individual who receives initial enrollment in 2008 or 2009 must satisfy the following requirements by December 31, 2010: Those enrolled during 2008 must complete 24 hours of continuing education; those enrolled during 2009 must complete 12 hours of continuing education. At least one-half of the applicable hours must consist of core subject matter; the remainder may consist of non-core subject matter. For purposes of this paragraph (e), credit will be awarded for continuing education completed after January 1 of the year in which initial enrollment was received. (iii) An individual who receives initial enrollment during 2010 is exempt from the continuing education requirements until the next enrollment cycle, but must file a timely application for renewal. (2) For renewal of enrollment effective April 1, 2014, and every third year thereafter. (i) A minimum of 36 hours of continuing education credit must be completed between January 1, 2011 and December 31, 2013, and between January 1 and December 31 for each three year period subsequent thereto. PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 48037 (ii) * * * For purposes of this paragraph (e), credit will be awarded for continuing education completed after January 1 of the year in which initial enrollment was received. * * * * * (iv) For an individual who was initially enrolled before January 1, 2008 (and who has therefore completed at least one full enrollment cycle as of January 1, 2011), at least 12 hours of the 36 hours of continuing education required for each enrollment cycle must consist of core subject matter; the remainder may consist of non-core subject matter. (v) For an individual who was initially enrolled on or after January 1, 2008, at least 18 hours of his or her 36 hours of continuing education required for the first full enrollment cycle must consist of core subject matter. Thereafter, for such individuals, for each subsequent enrollment cycle at least 12 hours of the 36 hours must consist of core subject matter. In each instance, the remainder may consist of non-core subject matter. (vi) As part of the core subject matter required for each enrollment cycle, an individual must complete a minimum of two hours of continuing education credit relating to ethical standards. (f) Qualifying continuing education— (1) In general. To qualify for continuing education credit an enrolled actuary must complete his/her hours of continuing education credit under a qualifying program, within the meaning of paragraph (f)(2) of this section, consisting of core and/or non-core subject matter. In addition, a portion of the continuing education credit may be earned under the provisions of paragraph (g) of this section. In any event, no less than 1⁄3 of the total hours of continuing education credit required for an enrollment cycle must be obtained by attending in person a formal program or programs, within the meaning of paragraph (f)(2)(ii)(A) of this section. (i) Core subject matter is 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. Such core subject matter includes the characteristics of actuarial cost methods under ERISA, actuarial assumptions, minimum funding standards, titles I, II, and IV of ERISA, requirements with respect to the valuation of plan assets, requirements for qualification of pension plans, maximum deductible contributions, tax treatment of distributions from qualified E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS 48038 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules pension plans, excise taxes related to the funding of qualified pension plans and standards of performance (including ethical standards) for actuarial services. Core subject matter includes all materials included on the syllabi of any of the pension actuarial examinations offered by the Joint Board during the applicable enrollment cycles. For this purpose, the applicable enrollment cycles are the current enrollment cycle and the enrollment cycle immediately preceding the current enrollment cycle. (ii) * * * Examples include economics, computer programming, pension accounting, investment and finance, risk theory, communication skills, and business and general tax law. * * * * * (iv) The same course of study cannot be used more than once within a given 36-month period to satisfy the continuing education requirements of these regulations. A program or session bearing the same or a similar title to a previous one may be used to satisfy the requirements of these regulations if the major content of the program or session differs substantively from the previous one. (2) Qualifying Program—(i) In general. A qualifying program is a course of learning that— (A) Is conducted by a qualified sponsor, within the meaning of paragraph (f)(3) of this section; (B) Is developed by individual(s) qualified in the subject matter; (C) Covers current subject matter; (D) Includes written outlines or textbooks; (E) Is taught by instructors, discussion leaders, and speakers qualified with respect to the course content; (F) Includes means for evaluation by the Joint Board of technical content and presentation; (G) Provides a certificate of completion, within the meaning of paragraph (f)(3)(iv) of this section, to those who have successfully completed the program; and (H) Provides a certificate of instruction, within the meaning of paragraph (f)(3)(v) of this section, to those who have served as instructors, discussion leaders, or speakers. (ii) Types of qualifying programs. Qualifying programs may be formal programs, correspondence or individual study programs, and teleconferencing: (A) Formal programs. Formal programs are programs that meet all of the requirements of paragraph (f)(2)(i) of this section and also require physical attendance by at least three individuals engaged in substantive pension service VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 in addition to the instructor, discussion leader, or speaker. (B) Correspondence or individual study programs (including audio and/or video taped programs). Correspondence or individual study programs are programs completed on an individual basis by the enrolled actuary. Such programs are qualifying programs if they meet all of the requirements of paragraph (f)(2)(i) of this section and also provide a means for measuring completion by the participants (for example, a written examination). (C) Teleconferencing. Teleconferencing or other communications technologies (including webcasting) are qualifying programs if they meet all of the requirements under paragraph (f)(2)(i) of this section and either— (1) Include a sign-on/sign-off capacity or similar technique to verify attendance; or (2) Provide a means for measuring completion by the participants (for example, a written examination). (3) Qualifying sponsors—(i) In general. Qualifying sponsors are organizations recognized by the Executive Director whose programs offer opportunities for continuing professional education in subject matter within the scope of this section. A sole proprietor shall not be treated as a qualifying sponsor for purposes of this section. (ii) Sponsor agreements. Organizations requesting qualifying sponsor status shall file sponsor agreement requests with the Executive Director and furnish information in support of such requests as deemed necessary for approval by the Executive Director. Such information shall include sufficient information to establish that all programs designated as qualifying programs offered by the qualifying sponsor will satisfy the requirements of paragraph (f)(2) of this section. (iii) Sponsor enrollment cycle. Qualifying sponsor agreements will remain in effect for no more than one sponsor enrollment cycle. The Executive Director shall publish the names of such sponsors on a periodic basis. (A) For sponsor agreements effective on or after January 1, 2008, and before January 1, 2012, the applicable sponsor enrollment cycle will end December 31, 2011. (B) For sponsor agreements effective on or after January 1, 2012, the applicable sponsor enrollment cycle will be three years and will begin on January 1 and end on December 31 at the end of the three year period. Each such three year period is a ‘‘sponsor PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 enrollment cycle.’’ The sponsor enrollment cycle is not affected by when during the enrollment cycle the sponsor agreement became effective. For example, for sponsor agreements effective on or after January 1, 2012 and before January 1, 2015, the applicable sponsor enrollment cycle will end December 31, 2014. The subsequent sponsor enrollment cycle will begin January 1, 2015, and end December 31, 2017. (iv) Certificates of completion. Qualifying sponsors shall furnish to each attendee successfully completing a program presented by such qualifying sponsor a certificate listing the following information: (A) The name of the attendee. (B) The name of the sponsoring organization. (C) The title, location, and speaker(s) of each session attended. (D) The dates of the program completed. (E) The total credit hours claimed and the total core and non-core credit hours claimed. (v) Certificates of instruction. Qualifying sponsors shall furnish to each instructor, discussion leader, or speaker, a certificate listing the following information: (A) The name of the instructor, discussion leader, or speaker. (B) The name of the sponsoring organization. (C) The title and location of the program. (D) The dates of the program. (E) The total credit hours claimed and the total core and non-core credit hours claimed for the program. (g) Alternative means for completion of credit hours—(1) In general. In addition to credit hours completed under paragraph (f) of this section, an enrolled actuary may be awarded continuing education credit under the provisions of this paragraph (g). (2) Serving as an instructor, discussion leader or speaker. (i) Four credit hours (that is, 200 minutes) of continuing education credit will be awarded for each 50 minutes completed as an instructor, discussion leader, or speaker at a qualifying program which meets the continuing education requirements of paragraph (f) of this section. (ii) The credit for instruction and preparation may not exceed 50 percent of the continuing education requirement for an enrollment cycle. (iii) Presentation of the same material as an instructor, discussion leader, or speaker more than one time in any 36month period will not qualify for continuing education credit. A program E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules will not be considered to consist of the same material if a substantial portion of the content has been revised to reflect changes in the law or practices relative to the performance of pension actuarial service. (iv) Credit as an instructor, discussion leader, or speaker will not be awarded to panelists, moderators, or others who are not required to prepare substantive subject matter for their portion of the program. However, such individuals may be awarded credit for attendance, provided the other provisions of this section are met. (v) The nature of the subject matter will determine if credit will be of a core or non-core nature. (3) Credit for publications. (i) Continuing education credit will be awarded for the creation of peerreviewed materials for publication or distribution with respect to matters directly related to the continuing professional education requirements of this section. Credit will be awarded to the author, co-author, or a person listed as a major contributor. (ii) One hour of credit will be allowed for each hour of preparation time of the material. It will be the responsibility of the person claiming the credit to maintain records to verify preparation time. (iii) Publication or distribution may utilize any available technology for the dissemination of written, visual or auditory materials. (iv) The materials must be available on reasonable terms for acquisition and use by all enrolled actuaries. (v) The credit for the creation of materials may not exceed 25 percent of the continuing education requirement of any enrollment cycle. (vi) The nature of the subject matter will determine if credit will be of a core or non-core nature. (vii) Publication of the same material more than one time will not qualify for continuing education credit. A publication will not be considered to consist of the same material if a substantial portion has been revised to reflect changes in the law or practices relative to the performance of pension actuarial service. (4) Service on Joint Board advisory committee(s). Continuing education credit may be awarded by the Joint Board for service on (any of) its advisory committee(s), to the extent that the Joint Board considers warranted by the service rendered. (5) Preparation of Joint Board examinations. Continuing education credit may be awarded by the Joint Board for participation in drafting questions for use on Joint Board VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 examinations or in pretesting its examinations, to the extent the Joint Board determines suitable. Such credit may not exceed 50 percent of the continuing professional education requirement for the applicable enrollment cycle. (6) Examinations sponsored by professional organizations or societies. Individuals may earn continuing professional education credit for achieving a passing grade on proctored examinations sponsored by a professional organization or society recognized by the Joint Board. Such credit is limited to the number of hours scheduled for each examination and may be applied only as non-core credit provided the content of the examination is core or non-core. No credit may be earned for hours attributable to any content that is neither core nor noncore. (7) Joint Board pension examination. Individuals may establish eligibility for renewal of enrollment for any enrollment cycle by— (i) Achieving a passing score on the Joint Board pension examination, as described in § 901.12(d)(1)(i), administered under this part during the applicable enrollment cycle; and (ii) Completing a minimum of 12 hours of qualifying continuing education by attending a formal program during the same applicable enrollment cycle. This option of satisfying the continuing professional education requirements is not available to those who receive initial enrollment during the enrollment cycle. * * * * * (i) [Reserved] (j) Recordkeeping requirements—(1) Qualified sponsors. A qualified sponsor must maintain records to verify satisfaction of the requirements of this section. Such records must be retained for a period of six years following the end of the sponsor enrollment cycle in which the program is held. In the case of programs of more than one session, records must be maintained to verify completion of the program and attendance by each participant at each session of the program. Copies of any certificates of completion and certificates of instruction issued to the participants in each program must be retained. (2) Enrolled actuaries—(i) Qualifying program credits as student. To receive continuing education credit for completion of hours of continuing education credits under paragraph (f) of this section, an enrolled actuary must retain all certificates of completion evidencing completion of such hours for PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 48039 the three-year period following the end of the applicable enrollment cycle. (ii) Qualifying program credits as teacher or instructor. To receive continuing education credit for completion of hours earned under paragraph (g)(2) of this section, an enrolled actuary must retain all certificates of instruction evidencing completion of such hours for the three year period following the end of the applicable enrollment cycle. (iii) Credit for publications. To receive continuing education credit for a publication under paragraph (g)(3) of this section, the following information must be maintained by the enrolled actuary for the three year period following the end of the applicable enrollment cycle: (A) The name of the publisher. (B) The title and author of the publication. (C) A copy of the publication. (D) The date of the publication. (E) The total credit hours claimed and the total core and non-core credit hours claimed. (iv) Other credits. To receive continuing education credit for hours earned under paragraphs (g)(4) through (g)(7) of this section, an enrolled actuary must retain sufficient documentation to establish completion of such hours for the three-year period following the end of the applicable enrollment cycle. (k) Waivers. (1) Waiver from the continuing education requirements for a given period may be granted by the Executive Director only under extraordinary circumstances, and upon submission of sufficient evidence that every effort was made throughout the renewal cycle to complete such continuing education requirements through any one or more of the various qualifying programs offered by one or more of the qualified sponsors. (2) A request for waiver must be accompanied by appropriate documentation. The individual will be required to furnish any additional documentation or explanation deemed necessary by the Executive Director. (3) The individual will be notified by the Executive Director of the disposition of the request for waiver. If the waiver is not approved, and the individual does not otherwise satisfy the continuing education requirements within the allotted time, the individual will be placed on a roster of inactive enrolled individuals. (4) A request for waiver must be filed no later than the last day of the renewal application period. Those who are granted waivers are required to file timely applications for future renewal of enrollment. E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS 48040 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules (l) * * * (1) Compliance by an individual with the requirements of this part shall be determined by the Executive Director. * * * (2) The Executive Director may require any individual, by first class mail sent to his/her mailing address of record with the Joint Board, to provide copies of any records required to be maintained under this section. * * * (3) * * * A request for review and the reasons in support of the request must be filed with the Joint Board within 30 days of the date of the notice of failure to comply. (4) Inactive status. (i) An individual who has not filed a timely application for renewal of enrollment, who has not made a timely response to the notice of failure to comply with the renewal requirements, or who has not satisfied the requirements of eligibility for renewal will be placed on a roster of inactive enrolled actuaries for a period up to three enrollment cycles from the date renewal would have been effective. (ii) An individual in inactive status will be ineligible to perform pension actuarial services as an enrolled actuary under ERISA and the Internal Revenue Code. During such time in inactive status or at any other time an individual is ineligible to perform pension actuarial services as an enrolled actuary, the individual shall not in any manner, directly or indirectly, indicate he or she is so enrolled, or use the term ‘‘enrolled actuary,’’ the designation ‘‘E.A.,’’ or other form of reference to eligibility to perform pension actuarial services as an enrolled actuary. (iii) An individual placed in inactive status may return to active status by filing an application for renewal of enrollment (with the appropriate fee) and providing evidence of the completion of all required continuing professional education hours for the enrollment cycle and satisfaction of any applicable requirements for qualifying experience under paragraph (l)(7) of this section. If an application for return to active status is approved, the individual will be eligible to perform services as an enrolled actuary and to practice before the Internal Revenue Service effective with the date the notice of approval is mailed to that individual by the Joint Board. (5) Time for return to active enrollment. (i) An individual placed in inactive status must file an application for return to active enrollment, and satisfy the requirements for return to active enrollment as set forth in this section, within three enrollment cycles of being placed in inactive status. The name of such individual otherwise will be removed from the inactive VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 enrollment roster and his/her enrollment will terminate. (ii) For purposes of paragraph (l)(5)(i) of this section, an individual placed in inactive status prior to the effective date of these regulations will be deemed to have been placed in inactive status on the effective date of these regulations. (6) An individual placed in inactive status may satisfy the requirements for return to active enrollment at any time during his/her period of inactive enrollment. If only completion of the continuing education requirement is necessary, the application for return to active enrollment may be filed immediately upon such completion. If qualifying experience is also required, the application for return to active enrollment may not be filed until the completion of both the continuing education and qualifying experience requirements set forth in this subsection. Continuing education credit under this subsection may not be used to satisfy the requirements of the enrollment cycle in which the individual has been placed back on the active roster. (7) Continuing education requirements for return to active enrollment from inactive status. (i) During the first inactive enrollment cycle: 36 hours of the qualifying continuing education requirement from the prior enrollment cycle as set forth in paragraph (e)(2) of this section, without regard to paragraph (e)(2)(ii) or (e)(2)(iii) of this section, must be completed. Any hours of continuing education credit from the immediately prior enrollment cycle may be applied in satisfying this requirement. (ii) During the second inactive enrollment cycle: Four-thirds of the qualifying continuing education requirements as set forth in paragraph (e)(2) of this section (that is, 48 hours), without regard to paragraph (e)(2)(ii) or (e)(2)(iii) of this section, plus eighteen months of the qualifying experience requirements set forth in § 901.12(b)(1), must be completed since the start of the first inactive enrollment cycle. Any hours of continuing education credit from the first inactive enrollment cycle may be applied in satisfying this requirement. (iii) During the third inactive enrollment cycle: Five-thirds of the qualifying continuing education requirements as set forth in paragraph (e)(2) of this section, (that is, 60 hours), without regard to paragraph (e)(2)(ii) or (e)(2)(iii) of this section plus eighteen months of the qualifying experience requirements set forth in § 901.12(b)(1), must be completed since the start of the second inactive enrollment cycle. Any PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 hours of continuing education credit from the second inactive enrollment cycle may be applied in satisfying this requirement. No hours from the first inactive enrollment cycle may be applied in satisfying this requirement. * * * * * (9) An individual who has certified in good faith that he/she has satisfied the continuing education requirements of this section will not be considered to be in non-compliance with such requirements on the basis of a program he/she has attended later being found inadequate or not in compliance with the requirements for continuing education. * * * * * * * * (n) Verification. The Executive Director or his/her designee may request and review the continuing education records of an enrolled actuary, including programs attended, in a manner deemed appropriate to determine compliance with the requirements and standards for the renewal of enrollment as provided in this section. The Executive Director may also request and review the records of any qualified sponsor in a manner deemed appropriate to determine compliance with the requirements of paragraphs (f)(3) and (j)(1) of this section. (o) Examples. The following examples illustrate the application of the rules of paragraph (l)(7) of this section: Example 1. (i) Individual E, who was initially enrolled before January 1, 2008, completes 5 hours of core continuing education credit and 10 hours of non-core continuing education credit between January 1, 2011, and December 31, 2013. Accordingly, effective April 1, 2014, E is placed on a roster of inactive enrolled actuaries and is ineligible to perform pension actuarial services as an enrolled actuary under ERISA and the Internal Revenue Code. (ii) E completes 7 hours of core continuing education credit and 14 hours of noncore continuing education credit between January 1, 2014, and May 24, 2016. Because E has completed 12 hours of core continuing education and 24 hours of non-core continuing education during the last active enrollment period and the initial period when on inactive status, E has satisfied the requirements for reenrollment during the first inactive cycle. Accordingly, E may file an application for return to active enrollment on May 24, 2016. If this application is approved, E will be eligible to perform pension actuarial services as an enrolled actuary under ERISA and the Internal Revenue Code, effective with the date of such approval. (iii) Because E used the 21 hours of continuing education credit earned after January 1, 2014, for return from inactive status, E may not apply any of these 21 hours of core and non-core continuing education credits towards the requirements for renewed E:\FR\FM\21SEP1.SGM 21SEP1 srobinson on DSKHWCL6B1PROD with PROPOSALS Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules enrollment effective April 1, 2017. Accordingly, E must complete an additional 36 hours of continuing education (12 core and 24 non-core) prior to December 31, 2016, to be eligible for renewed enrollment effective April 1, 2017. Example 2. (i) The facts are the same as in Example 1 except E completes 2 hours of core continuing education credit and 8 hours of non-core continuing education credit between January 1, 2014, and December 31, 2016. Thus, because E did not fulfill the requirements for return to active status during his first inactive cycle, E must satisfy the requirements of paragraph (l)(7)(ii) of this section in order to return to active status. (ii) Accordingly, in order to be eligible to file an application for return to active status on or before December 31, 2019, E must complete an additional 38 hours of continuing education credit (of which at least 14 hours must consist of core subject matter) between January 1, 2017, and December 31, 2019, and have 18 months of responsible pension actuarial experience during the period subsequent to December 31, 2013. (iii) Note that the 5 hours of core continuing education credit and the 10 hours of non-core continuing education credit that E completes between January 1, 2011, and December 31, 2013, are not counted toward E’s return to active status and are also not taken into account toward the additional hours of continuing education credit that E must complete between January 1, 2017, and December 31, 2019, in order to apply for renewal of enrollment effective April 1, 2020. Example 3. (i) The facts are the same as in Example 1 except E completes 2 hours of core continuing education credit and 8 hours of non-core continuing education credit between January 1, 2014, and December 31, 2016, and 12 hours of core continuing education credit and 24 hours of non-core continuing education credit between January 1, 2017, and December 31, 2019. Thus, because E did not fulfill the requirements for return to active status during his first or second inactive cycles, E must satisfy the requirements of paragraph (l)(7)(iii) of this section in order to return to active status. (ii) Accordingly, in order to be eligible to file an application for return to active status on or before December 31, 2022, E must complete an additional 24 hours of continuing education credit (of which, at least 8 hours must consist of core subject matter) between January 1, 2020, and December 31, 2022, and have at least 18 months of responsible pension actuarial experience during the period subsequent to December 31, 2016. (iii) Note that the total of 15 hours of continuing education credit that E completes between January 1, 2011, and December 31, 2013, as well as the 10 hours of continuing education credit between January 1, 2014, and December 31, 2016, are not counted toward E’s return to active status and are not taken into account toward the additional hours of continuing education credit that E must complete between January 1, 2020, and December 31, 2022, in order to be eligible to file an application for renewal of enrollment active status effective April 1, 2023. Example 4. (i) Individual F, who was initially enrolled July 1, 2012, completes 1 VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 hour of core continuing education credit and 2 hours of non-core continuing education credit between January 1, 2012, and December 31, 2013. Accordingly, effective April 1, 2014, F is placed on a roster of inactive enrolled actuaries and is ineligible to perform pension actuarial services as an enrolled actuary under ERISA and the Internal Revenue Code. (ii) F completes 5 hours of core continuing education credit and 4 hours of non-core continuing education credit between January 1, 2014, and October 6, 2014. Because F has not completed the required 6 hours of core and 6 hours of non-core continuing education during F’s initial enrollment cycle, F is not eligible to file an application for a return to active enrollment on October 6, 2014, notwithstanding the fact that had F completed such hours between January 1, 2012, and December 31, 2013, F would have satisfied the requirements for renewed enrollment effective April 1, 2014. (iii) Accordingly, F must complete an additional 24 hours of continuing education (12 hours of core and 12 hours of non-core) during his/her first inactive enrollment cycle before applying for renewal of enrollment. Example 5. The facts are the same as in Example 4 except that F completes 17 hours of core continuing education credit and 16 hours of non-core continuing education credit between January 1, 2014, and February 12, 2015. Accordingly, because as of February 12, 2015, F satisfied the continuing education requirements as set forth in paragraph (e)(2) of this section without regard to paragraph (e)(2)(ii) thereof, F may file an application for return to active enrollment status on February 12, 2015. (p) With the exception of paragraphs (e)(1) and (f)(3)(iii), this section applies to the enrollment cycle beginning January 1, 2008, and all subsequent enrollment cycles. § 901.12 [Removed] Par. 6. Section 901.12 is removed. § 901.13 [Redesignated as § 901.12] Par. 7. Section 901.13 is redesignated as § 901.12. Par 8. Newly redesignated § 910.12 is amended by revising the section heading and paragraphs (a), (b), (d), and (e). The revisions read as follows: § 901.12 Eligibility for enrollment. (a) In general. An individual applying to be an enrolled actuary must fulfill the experience requirement of paragraph (b) of this section, the basic actuarial knowledge requirement of paragraph (c) of this section, and the pension actuarial knowledge requirement of paragraph (d) of this section. (b) Qualifying experience. Within the 10-year period immediately preceding the date of application, the applicant shall have completed either— (1) A minimum of 36 months of certified responsible pension actuarial experience; or PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 48041 (2) A minimum of 60 months of certified responsible actuarial experience, including at least 18 months of certified responsible pension actuarial experience. * * * * * (d) Pension actuarial knowledge. (1) The applicant shall demonstrate pension actuarial knowledge by one of the following: (i) Joint Board pension examination. Successful completion, within the 10year period immediately preceding the date of the application, to a score satisfactory to the Joint Board, of an examination, prescribed by the Joint Board, in actuarial mathematics and methodology relating to pension plans, including the provisions of ERISA relating to the minimum funding requirements and allocation of assets on plan termination. (ii) Organization pension examinations. Successful completion, within the 10-year period immediately preceding the date of the application, to a score satisfactory to the Joint Board, of one or more proctored examinations which are given by an actuarial organization and which the Joint Board has determined cover substantially the same subject areas, have at least a comparable level of difficulty, and require at least the same competence as the Joint Board pension examination referred to in paragraph (d)(1)(i) of this section. (2) For purposes of this section, applicants who have successfully completed an examination pursuant to either paragraph (d)(1)(i) or (d)(1)(ii) of this section prior to the effective date of these regulations, will be deemed to have completed such examination on the effective date. (e) Form; fee. An applicant who wishes to take an examination administered by the Joint Board under paragraph (c)(1) or (d)(1) of this section shall file an application on a form prescribed by the Joint Board. Such application shall be accompanied by payment in the amount set forth on the application form. The amount represents a fee charged to each applicant for examination and is designed to cover the costs for the administration of the examination. The fee shall be retained whether or not the applicant successfully completes the examination or is enrolled. * * * * * Par. 9. Section 901.20 is amended as follows: A. Revising paragraphs (b), (d), (e), and (f). B. Redesignating paragraphs (g) and (h) as paragraph (k) and (l), respectively, and adding new paragraphs (g) and (h). E:\FR\FM\21SEP1.SGM 21SEP1 48042 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules C. Reserving paragraph (i). D. Adding new paragraphs (j) and (m). The revisions and additions read as follows: § 901.20 Standards of performance of actuarial services. srobinson on DSKHWCL6B1PROD with PROPOSALS * * * * * (b) Professional duty. (1) An enrolled actuary shall perform actuarial services only in a manner that is fully in accordance with all of the duties and requirements for such persons under applicable law and consistent with relevant standards of professional responsibility and ethics for actuarial practice. (2) An enrolled actuary shall not perform actuarial services for any person or organization which he/she believes, or has reasonable grounds to believe, may utilize his/her services in a fraudulent manner or in a manner inconsistent with law. (3) An enrolled actuary, upon learning of another enrolled actuary’s material violation of this section, shall report the violation to the Executive Director. * * * * * (d) Conflicts of interest. In any situation in which an enrolled actuary has knowledge of an actual or potential conflict of interest with respect to the performance of actuarial services, he/ she shall not perform such actuarial services unless— (1) He/she has conducted a good faith evaluation of the circumstances giving rise to the conflict and reasonably concludes that his or her ability to act fairly is unimpaired; (2) The representation by the enrolled actuary is not prohibited by law; and (3) Full disclosure of the conflict has been made, in writing, to all present and known prospective principals whose interest would be affected by the conflict, including the plan trustees, any named fiduciary of the plan, the plan administrator thereof and, if the plan is subject to a collective bargaining agreement, the collective bargaining representative, and all such principals have expressly agreed, in writing, to such enrolled actuary performing the actuarial services. (e) Assumptions, calculations and recommendations. (1) The enrolled actuary shall exercise due care, skill, prudence and diligence when performing actuarial services under ERISA and the Internal Revenue Code. In particular, in the course of preparing a report or certificate stating actuarial costs or liabilities, the enrolled actuary shall ensure that— (i) The actuarial assumptions are reasonable individually and in combination, and the actuarial cost VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 method and the actuarial method of valuation of assets are appropriate; (ii) The calculations are accurately carried out and properly documented; and (iii) The report, any recommendations, and any supplemental advice or explanation relative to the report reflect the results of the calculations. (2) An enrolled actuary shall include in any report or certificate stating actuarial costs or liabilities, a statement or reference describing or clearly identifying the data, any material inadequacies therein and the implications thereof, and the actuarial methods and assumptions employed. (f) Due diligence. (1) An enrolled actuary must exercise due diligence— (i) In preparing or assisting in the preparation of, approving, and filing tax returns, documents, affidavits, and other papers relating to the Department of the Treasury, the Department of Labor, the Pension Benefit Guaranty Corporation, or any other applicable Federal or State entity; (ii) In determining the correctness of oral or written representations made by the enrolled actuary to the Department of the Treasury, the Department of Labor, the Pension Benefit Guaranty Corporation, or any other applicable Federal or State entity; and (iii) In determining the correctness of oral or written representations made by the enrolled actuary to clients. (2) An enrolled actuary advising a client to take a position on any document to be filed with the Department of the Treasury, the Department of Labor, the Pension Benefit Guaranty Corporation, or any other applicable Federal or State entity (or preparing or signing such a return or document) generally may rely in good faith without verification upon information furnished by the client. The enrolled actuary may not, however, ignore the implications of information furnished to, or actually known by, the enrolled actuary, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete. (g) Solicitations regarding actuarial services. An enrolled actuary may not in any way use or participate in the use of any form of public communication or private solicitation related to the performance of actuarial services containing a false, fraudulent, or coercive statement or claim, or a misleading or deceptive statement or claim. An enrolled actuary may not make, directly or indirectly, an PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 uninvited written or oral solicitation of employment related to actuarial services if the solicitation violates Federal or State law, nor may such person employ, accept employment in partnership form, corporate form, or any other form, or share fees with, any individual or entity who so solicits. Any lawful solicitation related to the performance of actuarial services made by or on behalf of an enrolled actuary must clearly identify the solicitation as such and, if applicable, identify the source of the information used in choosing the recipient. (h) Prompt disposition of pending matters. An enrolled actuary may not unreasonably delay the prompt disposition of any matter before the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation, or any other applicable Federal or State entity. (i) [Reserved] (j) Return of client’s records. (1) In general, an enrolled actuary must, at the request of a client, promptly return any and all records of the client that are necessary for the client to comply with his or her legal obligations. The enrolled actuary may retain copies of the records returned to a client. The existence of a dispute over fees generally does not relieve the enrolled actuary of his or her responsibility under this section. Nevertheless, if applicable state law allows or permits the retention of a client’s records by an enrolled actuary in the case of a dispute over fees for services rendered, the enrolled actuary need only return those records that must be attached to the client’s legally required forms. The enrolled actuary, however, must provide the client with reasonable access to review and copy any additional records of the client retained by the enrolled actuary under state law that are necessary for the client to comply with his or her legal obligations. (2) For purposes of this section, records of the client include all documents or written or electronic materials provided to the enrolled actuary, or obtained by the enrolled actuary in the course of the enrolled actuary’s representation of the client, that preexisted the retention of the enrolled actuary by the client. The term ‘‘records of the client’’ also includes materials that were prepared by the client or a third party (not including an employee or agent of the enrolled actuary) at any time and provided to the enrolled actuary with respect to the subject matter of the representation. The term ‘‘records of the client’’ also includes any return, claim for refund, schedule, affidavit, appraisal or any E:\FR\FM\21SEP1.SGM 21SEP1 Federal Register / Vol. 74, No. 181 / Monday, September 21, 2009 / Proposed Rules other document prepared by the enrolled actuary, or his or her employee or agent, that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current legal obligations. The term ‘‘records of the client’’ does not include any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the enrolled actuary or the enrolled actuary’s firm, employees or agents if the enrolled actuary is withholding such document pending the client’s performance of its contractual obligation to pay fees with respect to such document. * * * * * (m) The rules of this section apply to all actuarial services and related acts performed on or after the date these regulations are published as final regulations in the Federal Register. Par. 10. Section 901.31 is amended by revising paragraphs (a) and (c) introductory text to read as follows: § 901.31 Grounds for suspension or termination of enrollment. (a) Failure to satisfy requirements for enrollment. The enrollment of an actuary may be terminated if it is found that the actuary did not satisfy the eligibility requirements set forth in § 901.11 or § 901.12. * * * * * (c) Disreputable conduct. The enrollment of an actuary may be suspended or terminated if it is found that the actuary has, at any time after he/she applied for enrollment, engaged in any conduct set forth in § 901.12(f) or other conduct evidencing fraud, dishonesty, or breach of trust. Such other conduct includes, but is not limited to, the following: * * * * * Par. 11. Section 901.32 is amended by revising the last sentence to read as follows: srobinson on DSKHWCL6B1PROD with PROPOSALS § 901.32 Receipt of information concerning enrolled actuaries. * * * If any other person has information of any such violation, he/ she may make a report thereof to the Executive Director. Par. 12. Section 901.47 is amended by revising the last sentence to read as follows: § 901.47 Transcript. * * * Copies of exhibits introduced at the hearing or at the taking of depositions will be supplied to parties upon the payment of a reasonable fee (31 U.S.C. 9701). Par. 13. Section 901.72 is added to read as follows: VerDate Nov<24>2008 18:23 Sep 18, 2009 Jkt 217001 § 901.72 Additional rules. The Joint Board may, in notice or other guidance of general applicability, provide additional rules regarding the enrollment of actuaries. Zenaida Samaniego, Chairman, Joint Board for the Enrollment of Actuaries. [FR Doc. E9–22454 Filed 9–18–09; 8:45 am] BILLING CODE 4810–25–P Washington, DC 20472, (202) 646–2820, or (e-mail) kevin.long@dhs.gov. FOR FURTHER INFORMATION CONTACT: Kevin C. Long, Acting Chief, Engineering Management Branch, Mitigation Directorate, Federal Emergency Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–2820, or (e-mail) kevin.long@dhs.gov. The Federal Emergency Management Agency (FEMA) proposes to make determinations of BFEs and modified BFEs for each community listed below, in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR 67.4(a). These proposed BFEs and modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own, or pursuant to policies established by other Federal, State, or regional entities. These proposed elevations are used to meet the floodplain management requirements of the NFIP and are also used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in these buildings. Comments on any aspect of the Flood Insurance Study and FIRM, other than the proposed BFEs, will be considered. A letter acknowledging receipt of any comments will not be sent. National Environmental Policy Act. This proposed rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared. Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601–612, a regulatory flexibility analysis is not required. Executive Order 12866, Regulatory Planning and Review. This proposed rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866, as amended. Executive Order 13132, Federalism. This proposed rule involves no policies that have federalism implications under Executive Order 13132. Executive Order 12988, Civil Justice Reform. This proposed rule meets the SUPPLEMENTARY INFORMATION: DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency 44 CFR Part 67 [Docket ID FEMA–2008–0020; Internal Agency Docket No. FEMA–B–1074] Proposed Flood Elevation Determinations AGENCY: Federal Emergency Management Agency, DHS. ACTION: Proposed rule. SUMMARY: Comments are requested on the proposed Base (1% annual-chance) Flood Elevations (BFEs) and proposed BFE modifications for the communities listed in the table below. The purpose of this notice is to seek general information and comment regarding the proposed regulatory flood elevations for the reach described by the downstream and upstream locations in the table below. The BFEs and modified BFEs are a part of the floodplain management measures that the community is required either to adopt or show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). In addition, these elevations, once finalized, will be used by insurance agents, and others to calculate appropriate flood insurance premium rates for new buildings and the contents in those buildings. DATES: Comments are to be submitted on or before December 21, 2009. ADDRESSES: The corresponding preliminary Flood Insurance Rate Map (FIRM) for the proposed BFEs for each community is available for inspection at the community’s map repository. The respective addresses are listed in the table below. You may submit comments, identified by Docket No. FEMA–B–1074, to Kevin C. Long, Acting Chief, Engineering Management Branch, Mitigation Directorate, Federal Emergency Management Agency, 500 C Street, SW., PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 48043 E:\FR\FM\21SEP1.SGM 21SEP1

Agencies

[Federal Register Volume 74, Number 181 (Monday, September 21, 2009)]
[Proposed Rules]
[Pages 48030-48043]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22454]


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JOINT BOARD FOR THE ENROLLMENT OF ACTUARIES

20 CFR Part 901

[REG-159704-03]
RIN 1545-BC82


Performance of Actuarial Services Under the Employee Retirement 
Income Security Act of 1974

AGENCY: Joint Board for the Enrollment of Actuaries.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed amendments to 20 CFR part 901 
relating to the enrollment of actuaries under section 3042 of the 
Employee Retirement Income Security Act of 1974 (ERISA). The proposed 
amendments would update the eligibility requirements for performing 
actuarial services for ERISA-covered employee pension benefit plans, 
including the continuing education requirements, and the standards for 
performing such actuarial services. The proposed amendments would 
affect employee pension benefit plans and the actuaries providing 
actuarial services to those plans.

DATES: Written or electronic comments must be received by November 20, 
2009.

ADDRESSES: Send written comments to: CC:PA:LPD:PR (REG-159704-03), Room 
5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
159704-03), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC or sent electronically via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS REG-159704-03).

FOR FURTHER INFORMATION CONTACT: Patrick McDonough, Executive Director, 
Joint Board for the Enrollment of Actuaries, (202) 622-8229 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information referenced in this notice of 
proposed rulemaking were previously reviewed and approved by the Office 
of Management and Budget in accordance with the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507(d)) under control number 1545-0951, relating to 
Enrolled Actuaries under Employee Retirement Income Security Act of 
1974, published on September 7, 1988, in the Federal Register (53 FR 
34484). There are no proposals for substantive changes to this 
collection of information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains proposed amendments to 20 CFR Part 901 under 
section 3042 of the Employee Retirement Income Security Act of 1974 (88 
Stat. 829), Public Law 93-406 (ERISA). Section 3042 of ERISA provides 
that the Joint Board for the Enrollment of Actuaries (Joint Board) 
shall, by regulations, establish reasonable standards and 
qualifications for persons performing actuarial services with respect 
to plans subject to ERISA and, upon application by any individual, 
shall enroll such individual if the Joint Board finds that such 
individual satisfies such standards and qualifications. Section 3042 
also provides that the Joint Board may, after notice and an opportunity 
for a hearing, suspend or terminate the enrollment of an individual who 
fails to discharge his duties under ERISA or who does not satisfy the 
requirements for enrollment.
    Consistent with section 3042, the Joint Board has promulgated 
regulations at 20 CFR part 901, addressing eligibility for enrollment, 
requirements for continuing education of enrolled actuaries, 
professional standards for performance of actuarial services under 
ERISA, bases for disciplinary actions and the procedures to be followed 
in taking those actions. Comprehensive regulations regarding section 
3042 were last issued in 1988 (53 FR 34484). The Joint Board has 
determined that the regulations need to be updated to reflect changes 
in the law and in industry practice. In addition to these proposed 
regulations, final regulations relating to user fees for the initial 
enrollment and reenrollment as an enrolled actuary were published in 
the Federal Register on December 21, 2007 (72 FR 72606).
    In anticipation of amending the Joint Board regulations, the Joint 
Board issued a Request for Information (RFI) which was published in the 
Federal Register on June 30, 2004 (69 FR 39376). The RFI specifically 
requested comments as to whether, and to what extent, changes should be 
made to the regulations in the following five areas:
    1. Procedures and conditions for enrollment and reenrollments;
    2. Continuing professional education (CPE) requirements;
    3. Waivers of the CPE requirements;
    4. Types of enrollment statuses (active, inactive, and retired); 
and
    5. Standards of conduct.
    Eight comments were received.
    The current regulations prescribe various rules regarding the 
enrollment and reenrollment of actuaries. Section 901.13 of the 
regulations provides that an individual applying for enrollment must 
satisfy requirements for: (1) Qualifying experience; (2) basic 
actuarial knowledge; and (3) pension actuarial knowledge. Basic 
actuarial knowledge may be demonstrated by passing a Joint Board 
examination (or an examination acceptable to the Joint Board) regarding 
basic actuarial mathematics and methodology, or by earning a degree 
pertaining to actuarial mathematics from an accredited college. Pension 
actuarial knowledge must be demonstrated by passing a Joint Board 
examination (or an examination acceptable to the Joint Board) in 
actuarial mathematics related to pension plans.
    Under section 901.11, an enrolled actuary must reenroll once every 
three years. To qualify for reenrollment an actuary must complete a 
minimum of 36

[[Page 48031]]

hours of continuing education credit within the preceding three year 
period.\1\ Of these 36 hours, at least one-half must consist of core 
subject matter, which is subject matter directly related to the 
performance of actuarial services under ERISA or the Internal Revenue 
Code (Code). The remaining hours may consist of non-core subject 
matter. The regulations provide examples of both core and non-core 
subject matter. The regulations provide that the Executive Director of 
the Joint Board may review the CPE records of an enrolled actuary to 
verify compliance with these rules.
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    \1\ The regulations also include transitional rules for 
reenrollment cycles prior to 1993. This summary refers to the rules 
currently applicable.
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    The regulations also provide that the continuing education must be 
provided as part of a ``qualifying program'' conducted by a 
``qualifying sponsor.'' A qualifying program is (1) a ``formal 
program'' (which requires the attendance of at least three individuals 
engaged in substantive pension service), (2) a correspondence or 
individual study program, or (3) a program utilizing teleconferencing. 
A qualifying sponsor is an accredited educational institution, an 
organization recognized by a State licensing body, or an organization 
recognized by the Joint Board under a sponsor agreement in effect for a 
given enrollment cycle. A qualifying sponsor must ensure that the CPE 
program satisfies various requirements regarding subject matter and 
administration, including recordkeeping. A separate provision applies 
to the recordkeeping requirements for the enrolled actuary.
    In addition to attending CPE programs, an enrolled actuary may earn 
CPE credits by serving as an instructor or speaker at a CPE program, 
publishing articles on topics directly related to the CPE requirements, 
serving on a Joint Board advisory committee, participating in the 
preparation of Joint Board examinations, passing examinations sponsored 
by recognized organizations, or by passing a Joint Board pension law 
actuarial examination. These alternative means for earning CPE credits 
are subject to various requirements and limitations.
    In the event an enrolled actuary applies for renewal but fails to 
comply with the applicable requirements, the regulations provide that 
the enrolled actuary shall be notified of his or her failure and given 
an opportunity to provide additional information. If the enrolled 
actuary fails to provide any additional information (or fails to apply 
for reenrollment) the actuary will be placed in inactive status for a 
period of three years (beginning on the date that renewal would have 
been effective) and will be ineligible to perform services as an 
enrolled actuary during this time. An individual placed in inactive 
status must file an application for renewal and satisfy the 
requirements for renewal within three years or his enrollment will 
terminate. If an individual's enrollment is terminated, it can only be 
reestablished by satisfying the requirements for initial enrollment.
    The regulations also provide that an individual may request 
placement in an inactive retirement status during which time the 
actuary will be ineligible to perform services as an enrolled actuary. 
An individual placed in this status may be reinstated by completing the 
required CPE credits for the applicable period.
    Section 901.20 of the regulations prohibits an enrolled actuary 
from performing actuarial services under various circumstances 
including when the actuary is not qualified to perform the service, 
where the actuary has reasonable grounds to believe his or her services 
will be used in a fraudulent manner, or where there is a conflict of 
interest. The section also requires that an enrolled actuary must 
exercise due care, skill, and diligence in providing his or her pension 
actuarial services and proper utilization of the enrolled actuary 
designation.

Explanation of Provisions

    The submitted comments and the related proposed changes to the 
regulations may be divided into the five categories of the RFI.

A. Procedures for Enrollment and Reenrollment

    Various comments were received regarding the materials covered by 
the enrolled actuary examinations. Several comments supported 
broadening the scope of the material to include matters unrelated to 
defined benefit plans, such as the funding of post-retirement medical 
and life insurance benefits within the meaning of Code sections 419 and 
419A. To the extent that an enrolled actuary may need to practice 
before the IRS in these areas, one comment suggested that an enrolled 
actuary should be permitted to work together with a qualified health 
actuary. In contrast, another comment suggested focusing the 
examinations exclusively on pension actuarial issues under ERISA and 
the Code. Some comments called for a stronger emphasis on the selection 
of actuarial assumptions. One such comment acknowledged that the 
subject is not easily tested, but made suggestions as to how this could 
be done.
    Another comment proposed eliminating requirements for the 
examinations to cover specific materials and instead have the 
regulations grant the Joint Board the authority and flexibility to 
prescribe relevant and current topics.
    There were also suggestions regarding the process and form of 
testing. One comment suggested that focusing each examination question 
on a single concept (instead of multiple concepts as is done currently) 
would enable a candidate to avoid losing credit for an entire question 
if he/she responds correctly to all but one of the concepts being 
tested. It was also suggested that the regulations allow more 
flexibility in the number of exams and that they clarify any time limit 
for their completion.
    One comment recommended the use of computer-based testing and other 
emerging alternative testing procedures, and coordination of changes in 
the Joint Board examinations with related examinations offered by 
recognized organizations.
    There was general agreement among the comments in keeping the 
current qualifying experience requirement unchanged although one 
comment suggested that the regulations require that an applicant's 
actuarial experience be certified by an enrolled actuary.
    No changes are made under the proposed regulations to the materials 
covered by either the basic actuarial examination or to the examination 
for pension actuarial knowledge. The Joint Board believes that the 
provisions of the current regulations regarding the general form and 
structure of the examinations, as updated from time to time, are 
adequate.
    The proposed regulations, however, would require that the pension 
actuarial examination must be completed within the ten-year period 
immediately preceding the date of application for initial enrollment. 
The Joint Board believes such a requirement is needed because of the 
frequent changes in pension law and a need for an enrolled actuary to 
have current knowledge of pension requirements.\2\ On the other hand, 
because the material in the basic actuarial examination is generally 
mathematical in nature and is not affected by changes in pension law, a 
similar rule for the basic actuarial examination would not apply.
---------------------------------------------------------------------------

    \2\ This rule would be applied prospectively. Accordingly, the 
successful completion of a pension actuarial examination prior to 
the effective date of this regulation will be recognized for ten 
years after such effective date.
---------------------------------------------------------------------------

    With respect to computer-based testing, the Joint Board 
acknowledges

[[Page 48032]]

that new technologies can serve many uses. The Joint Board believes, 
however, that the language in the current regulations would not 
preclude the use of computer-based testing and does not believe it is 
necessary to amend the regulations to specify the format for taking 
examinations.
    With respect to qualifying experience, the proposed regulations 
would require that all actuarial and pension actuarial experience be 
certified in writing by individuals with knowledge of the individual's 
experience. If the individual's supervisor is not an enrolled actuary, 
the pension actuarial experience must be certified by both the 
supervisor and an enrolled actuary with knowledge of the individual's 
pension experience. As in the current regulations, the qualifying 
experience must have been completed within the last 10 years before the 
application for enrollment.

B. CPE Requirements

    Several comments were received regarding the distinction between 
core and non-core subject matter. One comment suggested that the 
distinction between core and non-core subject matter be eliminated for 
purposes of meeting CPE requirements as the distinction does not serve 
a useful purpose in a rapidly evolving financial marketplace and 
regulatory environment. The comment added that, assuming these core/
non-core categories were kept, additional guidance should be provided 
as to what constitutes core and non-core credit subject matter.
    Other comments suggested that the list of core subject matter be 
expanded to include such topics as pension accounting, Code sections 
419, 419A and 420, risk theory, and finance. Another comment 
specifically supported adding pension accounting, but objected to 
counting investment topics as core topics. Another comment recommended 
including various additional topics in an expanded list of acceptable 
non-core topics such as defined contribution plans, Social Security and 
Medicare benefits, pension valuation software programming, other 
accounting, risk management and new emerging topics in actuarial 
practice. Another comment recommended replacing the core/non-core 
classification with three new categories: (1) Retirement plan rules 
under ERISA and the Code (including, but not limited to, sections 401 
through 420), (2) funding issues in relation to defined benefit plans, 
and (3) actuarial ethics. This comment also suggested requiring at 
least 45 hours of CPE credit (with a minimum of three hours in funding 
issues and in actuarial ethics) and granting the Joint Board the 
authority to designate additional mandatory areas of CPE. One comment 
recommended that the definition of ``core'' subject matter should 
continue to be focused on pension actuarial services under ERISA and 
the Code and opposed any expansion of the definition of core subject 
matter.
    Some comments suggested distinguishing between CPE credits required 
early in an actuary's career, where core courses may be necessary to 
help cement the actuary's understanding of actuarial principles, and 
credits needed later in an actuary's career. One comment suggested, for 
example, that 18 hours of core CPE credit be required for the first two 
enrollment cycles and that 12 hours of core credit be required in 
subsequent enrollment cycles. It was also suggested that a minimum of 
three hours of ethics be required.
    Many comments, particularly from sponsors of CPE programs, 
requested flexibility in the use of the web and other alternatives to 
formal meetings. For example, some suggested that computer-based self-
study or distance learning programs and webcasts should be included as 
qualifying CPE programs. A number of comments sought additional 
guidance from the Joint Board regarding the use of webcasts and self-
study programs to earn CPE credits. The issues raised in this regard 
included the need for appropriate safeguards and mechanisms to validate 
participation by the actuary. In recognition that future technological 
advances are almost certain to occur, another comment recommended that 
the regulations be revised to allow a qualifying sponsor to apply to 
the Joint Board for approval to use those technologies. The comment 
also suggested that the regulations specifically give the Joint Board 
the authority to permit the use of those emerging technologies, with 
acceptance of the technology being communicated via a public 
announcement without requiring the Joint Board to further update the 
regulations.
    One comment recommended permitting actuaries to attest in their 
professional capacities to their completion of continuing education 
credit, and the establishment of an appropriate audit process to 
oversee compliance with the rules. The comment further recommended that 
the Joint Board undertake random audits of CPE records to ensure 
compliance with the attestation requirement. Similarly, another comment 
recommended an enrolled actuary should be required to certify that he/
she has satisfied certain CPE requirements and to provide information 
regarding whether or not he/she has been disciplined or is under 
disciplinary review by any professional body.
    One comment suggested that the requirement that a formal program be 
attended by at least three individuals engaged in substantive pension 
service may be satisfied, in the case of programs viewed simultaneously 
at multiple locations via teleconference, web cast, conference call or 
other similar technology, if the total combined audience at all 
locations contains at least three such individuals.
    Several comments recommended various electronic means to retain 
records and to streamline the application process. One comment 
recommended that a qualifying sponsor be required to keep electronic 
copies of the session materials, but make them accessible to the Joint 
Board should they need to be reviewed or audited for content. Another 
comment recommended that the Joint Board provide for on-line renewal of 
enrollment and an on-line process for an actuary to respond to an audit 
of his/her CPE credits. A third comment recommended that all records be 
maintained electronically and that CPE credit hours be provided and 
stored electronically, enabling the Joint Board to have access to the 
credit hours earned by actuaries at all times and reducing the volume 
of hard copy recordkeeping.
    One comment recommended extending the enrollment cycle to 5 years 
with an increase in the required CPE credits to 60 hours, including a 
minimum of 8 hours in each year of the cycle. Another comment suggested 
that the current CPE requirement (36 credit hours over a three year 
cycle) is appropriate, with some possible refinements such as either 
reducing the credits that could be earned for each hour as a presenter 
and increasing the current limit on such credits as a portion of total 
CPE; allowing CPE credits as a co-author (if not the primary author); 
or withholding session credit to an attendee for inattentive or 
disruptive conduct.
    One comment suggested that the regulations should provide guidance 
on renewal of approval for qualifying sponsors. There were a few 
comments that suggested changing the enrollment cycle for qualifying 
sponsors so as not to be coterminous with the enrolled actuary 
enrollment cycle or to increase the number of years in the sponsor 
enrollment cycle. Another comment suggested the regulations be amended 
to allow the Joint Board to periodically publish a list of qualifying 
sponsors in

[[Page 48033]]

order to facilitate a search for programs that are eligible for CPE 
credits.
    The Joint Board continues to believe that an important thrust of 
CPE should be core subject matter that is directly related to pension 
actuarial services under ERISA and the Code, an area in which an 
enrolled actuary must maintain minimum competencies at all times. The 
Joint Board also believes that there are other relevant non-core topics 
that enhance the knowledge of enrolled actuaries and keep them current 
in matters related to the performance of pension actuarial services. 
The proposed regulations would provide a revised definition of ``core'' 
subject matter which the Joint Board believes will be helpful in 
distinguishing between core and non-core subject matter. The lists of 
core and non-core subject matter are generally unchanged, but the 
proposed regulations would provide that all materials included on the 
syllabi of any of the pension actuarial examinations offered by the 
Joint Board during the current and immediately preceding enrollment 
cycles would constitute core subject matter. The Joint Board also 
invites further comments in this area.
    With respect to CPE programs, the proposed regulations would 
clarify the permissible forms of qualifying programs. The regulations 
would also retain the use of alternative means for completion of CPE, 
but continue to limit the portion of total CPE that may be earned under 
these alternative approaches. The regulations would also add a 
provision that awards CPE credits to a co-author of a publication or a 
person listed as a major contributor to a publication.
    The proposed regulations would also clarify the responsibilities of 
program sponsors by requiring that those who submit requests to the 
Executive Director to be recognized as qualifying sponsors include 
sufficient information in their requests to establish that their 
programs would satisfy the applicable requirements for qualifying 
programs.
    The Joint Board agrees that new technologies allow enrolled 
actuaries and qualifying sponsors more flexibility in their choices of 
form and delivery of CPE programs and should be reflected when granting 
CPE credits. However, new technologies also raise new challenges 
regarding verification of attendance and completion of CPE under 
certain programs. Therefore, the proposed regulations would allow 
qualifying programs to include both formal programs as well as 
correspondence or individual study programs (including audio and/or 
video taped programs) and teleconferencing (including web casts) 
provided that the qualifying program meets certain requirements with 
regard to verification of attendance and measurement of completion.
    The Joint Board also agrees that recordkeeping provisions under the 
current regulations should be updated. The proposed regulations would 
amend the recordkeeping requirements to place more reliance on 
qualifying sponsors to maintain records of the course content since 
they generally maintain records of that content in any event. The 
enrolled actuaries will now be required only to retain certificates of 
completion and/or instruction as evidence of satisfaction of CPE 
requirements. In addition, the proposed regulations would expressly 
allow the Joint Board to request CPE records from the enrolled actuary 
and the qualifying sponsor. The regulations do not reflect any changes 
in the method used to provide information to the office of the 
Executive Director. However, the Board is willing to consider web-based 
applications or other technology for this information in the future.
    With respect to the renewal cycle and required CPE credits, the 
Joint Board continues to believe that the current three-year renewal 
period is appropriate. The Board, however, proposes to delay the start 
date for the renewal cycle for qualifying sponsors by one year after 
the renewal cycle for enrolled actuaries in order to ease the 
administrative demands on the Executive Director and his staff, and to 
facilitate renewals by qualifying sponsors.
    The proposed regulations would also retain the current requirement 
for a total of 36 hours of CPE (half of which must be core subject 
matter) for the initial three-year enrollment renewal cycle, for 
individuals who renew on a timely basis. Recognizing, however, that 
experienced actuaries generally do not need to focus on core topics as 
much as newly enrolled actuaries, the proposed regulations would reduce 
the number of core CPE credits required after the enrolled actuary's 
initial enrollment renewal from 18 required core hours to 12 required 
core hours. The Joint Board also believes that enrolled actuaries 
should maintain high professional standards and thus proposes a new 
requirement that a minimum of two hours of core CPE be allocated to 
ethical standards in each enrollment cycle. Topics that would meet this 
requirement include (but are not limited to) discussions of 
professional codes of conduct, professional responsibilities, and any 
of the topics addressed in section 901.20 of these proposed 
regulations.
    The Joint Board believes that formal programs should continue to 
play a prominent role in fulfilling CPE requirements because of the 
additional learning opportunities that occur in face-to-face 
interactions with other enrolled actuaries. Therefore, no change is 
proposed to the current requirement that a formal program must have at 
least three individuals in attendance who are engaged in substantive 
pension service. Furthermore, the proposed regulations would add a new 
requirement that a minimum of one-third of the required total CPE 
credits must be in the form of formal programs.
    The proposed regulations would also retain current limits on the 
maximum number of CPE credits that can be obtained under alternative 
CPE programs, such as authoring published articles (25 percent), as a 
percentage of total CPE per enrollment cycle. Under the proposed 
regulations, however, college courses will no longer be available as an 
alternative program for purposes of fulfilling CPE requirements (unless 
they meet the requirements of a qualifying program) due to the 
practical difficulties in evaluating course curricula and the 
qualifications of the instructors. Despite the elimination of the 
specific list of conditions that would support a waiver, circumstances 
such as extended active military duty will continue to constitute 
strong evidence of the type of extraordinary circumstances that would 
justify a waiver.

C. Waivers of the CPE Requirements

    One comment suggested expanding the list of conditions for which a 
waiver from CPE requirements may be granted to include parental leave. 
Another comment recommended that applications for a waiver of the CPE 
requirements be accepted during the normal enrollment renewal process, 
subject to the Joint Board's discretion to accept late filings. A third 
comment did not perceive problems with the current waiver process and 
standards. There were no other specific recommendations regarding this 
issue except in conjunction with proposals regarding changes in 
enrollment status.
    The Joint Board believes that it is essential for practicing 
actuaries to keep their knowledge current, particularly given the 
frequent changes in pension law, court decisions, and other factors 
that affect an enrolled actuary's practice. Accordingly, and in light 
of the expanded varieties of acceptable CPE programs, the proposed 
regulations would eliminate the list of reasons for

[[Page 48034]]

which a CPE waiver may be granted and provide instead that a waiver 
from the CPE requirements may be granted only under extraordinary 
circumstances and only upon submission of evidence that every effort 
was made during the entire renewal cycle to complete such requirements. 
Despite the elimination of the specific list of conditions that would 
support a waiver, circumstances such as extended active military duty 
will continue to constitute strong evidence of the type of 
extraordinary circumstances that would justify a waiver.

D. Enrollment Status

    Several comments were directed to the status for ``inactive 
retirement'' which may be elected by an actuary. One comment suggested 
that the Joint Board allow for some flexibility in the renewal process 
in order to reduce the need for individuals to request inactive 
retirement status and to ensure a minimal period of disruption of 
actuarial services to plans and employers. For example, it was 
recommended that any CPE credit hours completed between December 31 (or 
the end of the enrollment period by which CPE credits must be earned 
for that period) and the date the application for renewal is filed be 
permitted to be used to satisfy the CPE requirement for renewal of 
enrollment effective April 1. Thus, the comment stated that an enrolled 
actuary who files an application for renewal after March 1 due to 
delayed completion of the CPE requirement should be eligible to perform 
services as an enrolled actuary 30 days after the application filing 
date unless notified otherwise by the Joint Board. However, these 
delayed CPE credits would not be permitted to be applied to another 
enrollment cycle.
    Under the current regulations, an actuary in inactive retirement 
status is ineligible to perform services as an enrolled actuary, but 
the actuary may be reinstated by completing the ``required continuing 
professional education credits for the applicable enrollment cycle'' 
regardless of how long the actuary was inactive. Several comments 
stated that this status, and the requirements for reinstatement, were 
unclear. Some comments suggested that inactive retirement status be 
available for no more than three consecutive three-year enrollment 
cycles, but that if the individual has been retired for less than three 
three-year enrollment cycles, the actuary would be allowed to ``back 
fill'' any missing CPE requirements.
    One comment recommended that the regulations be revised to extend 
inactive status to six years (or a maximum of two three-year enrollment 
cycles). The comment stated that three years is too short since an 
enrolled actuary often leaves the workforce for child-rearing or other 
reasons, and should not be discouraged from resuming his/her career. 
Another comment recommended that the regulations be clarified to 
specify more clearly the CPE requirements for reinstatement as of 
various points of time during the following three-year cycle, and the 
relationship of those CPE requirements with the requirements for 
ongoing renewal after reinstatement. One comment suggested special 
catch-up requirements where an individual would have to ``back fill'' 
any missing CPE requirements (for example, 108 hours of CPE credits 
would be required for an actuary who had missed two enrollment renewal 
cycles, with 36 credits required for each inactive enrollment cycle 
plus 36 credits required for the enrollment cycle immediately preceding 
the date on which the individual returns to active status). The comment 
suggested that any individual who fails to complete the necessary back 
fill would need to follow current reenrollment procedures. The comment 
further stated that, depending on the circumstances, a waiver of some 
CPE requirements may be permitted for an enrolled actuary going from 
inactive to active status.
    The Joint Board agrees that the current rules relative to the 
different inactive statuses warrant simplification. The proposed 
regulations would limit enrollment statuses to only two categories, 
``active'' or ``inactive,'' with special provisions for reinstatement 
depending on the length of the period during which an enrolled actuary 
is in inactive status and for those situations where an actuary's 
status is terminated for cause. An enrolled actuary who timely renews 
his/her enrollment would be in active status. An enrolled actuary who 
fails to meet requirements for timely renewal of enrollment would be in 
inactive status. While in inactive status, an enrolled actuary would be 
prohibited from performing pension actuarial services under ERISA and 
the Code.
    The Joint Board also believes that the longer an actuary has been 
in inactive status, the less likely it is that he/she has kept up with 
current developments or had the current work experience necessary to 
competently function as an enrolled actuary. The proposed regulations 
would increase the CPE requirements and/or add experience requirements 
for reenrollment for actuaries in inactive status, with more stringent 
requirements applying to those who have been inactive for a longer 
period of time. Under the proposed regulations, an individual who 
applies for reenrollment during his or her first inactive enrollment 
cycle would need to complete 36 hours of CPE (including CPE credits 
from the immediately preceding enrollment cycle) in order to qualify 
for reenrollment. An individual who applies during the second inactive 
enrollment cycle would need to complete 48 hours of CPE (counting only 
those credits earned during the first and second inactive enrollment 
cycles) and must also have 18 months of certified responsible pension 
actuarial experience since the start of the first inactive cycle. An 
individual who applies during the third active enrollment cycle would 
need to complete 60 hours of CPE (counting only those credits earned 
during the second and third inactive enrollment cycles) and have 18 
months of certified responsible pension actuarial experience since the 
start of the second inactive cycle. The proposed regulations present 
some examples to illustrate these changes.
    Furthermore, the proposed regulations would limit the time that an 
enrolled actuary can be in inactive status and remain eligible to apply 
for reenrollment. If the enrolled actuary does not qualify and apply 
for reenrollment after being in inactive status for three enrollment 
cycles, he or she would be placed in terminated status and would have 
to meet the requirements for initial enrollment (including the 
applicable examination requirements) in order to be reinstated as an 
enrolled actuary.
    Notwithstanding these general rules for reenrollment from inactive 
status, any application for reenrollment from termination status due to 
disciplinary reasons would be subject to special consideration by the 
Executive Director. An individual placed in inactive status prior to 
the effective date of the final regulations would be deemed to have 
been placed in inactive status on that date and thus considered to be 
in his/her first inactive enrollment cycle on that date for purposes of 
determining the requirements for a return to active status.

E. Standards of Conduct

    One comment states that the Joint Board has not been very active in 
investigating and disciplining enrolled actuaries whose performance 
does not meet applicable standards. One comment suggested that the 
Joint Board consider utilizing the Actuarial Board for Counseling and 
Discipline as an independent contractor to investigate

[[Page 48035]]

complaints. Alternatively, it was recommended that the Joint Board 
either require an enrolled actuary to become a member of a professional 
actuarial organization as a condition of enrollment (thereby subjecting 
the member to the Actuarial Code of Professional Conduct (Code of 
Conduct) to which all the major actuarial organizations in the U.S. and 
Canada subscribe), or incorporate the Code of Conduct into the 
regulations.
    Another comment stated that, unlike other professionals, an 
enrolled actuary is not compelled to operate within certain standards 
by the underlying threat that failure to do so will result in the loss 
of his/her license to practice in the profession. Even if an enrolled 
actuary is a member of an actuarial organization and subject to that 
organization's disciplinary procedures, this comment suggested that the 
Joint Board not rely on these organizations in this area, but rather 
that the Joint Board more actively utilize its current authority under 
ERISA to supervise and evaluate the provision of actuarial services and 
to discipline enrolled actuaries. This comment also suggested that the 
Joint Board periodically publish information regarding the nature and 
types of complaints received, the number of actuaries disciplined and 
the nature of the discipline. This comment indicated that publicizing 
such information would reassure the public that complaints are being 
acted upon and encourage compliance with the applicable standards.
    Another comment recommended that the Board coordinate with other 
actuarial or governmental bodies, for example, the IRS or PBGC, so that 
if any other body finds that an enrolled actuary has violated the 
standards of conduct, performance or practice relating to the 
performance of actuarial services, including all applicable regulations 
and revenue rulings, the respective body will refer the offending 
individual to the Joint Board for possible suspension or termination of 
his/her enrollment.
    One comment reiterated a concern that actuaries who do not have 
significant credentials in the health tax area should not be encouraged 
to engage in unqualified practice under the Code, or in an area where 
they do not meet the qualification standards in accordance with the 
Code of Conduct. The commentator recommended that the Joint Board 
outline those areas where the enrolled actuary may rely on the 
expertise of another actuary and any qualifications needed for those 
other actuaries as appropriate.
    One comment stated that the standards of performance of actuarial 
services set forth in current regulations are adequate. The comment 
suggested, however, in the event the Board were to decide that these 
standards need to be expanded, that any differences from the Code of 
Conduct be kept to a minimum or, wherever possible, any expanded 
regulatory standards should incorporate the applicable parts of the 
Code of Conduct.
    In light of the responses to the RFI regarding actuarial standards 
of performance, the proposed regulations would clarify existing 
provisions in this area and add some new provisions. Specifically, the 
proposed regulations would add a new general standard that would 
require enrolled actuaries to perform actuarial services in accordance 
with all applicable laws and the relevant standards of professional 
responsibility and, as under the current regulations, require that 
enrolled actuaries not perform any actuarial services where those 
services may be used in a fraudulent manner. The proposed regulations 
would also provide that an enrolled actuary must report any material 
violation of this section by another enrolled actuary to the Executive 
Director of the Joint Board. For example, an enrolled actuary that 
replaces another enrolled actuary as a plan's actuary and discovers 
that the previous actuary had signed a Schedule B that listed plan 
contributions that the previous actuary knew had not been made would be 
required to report this violation to the Executive Director.
    The proposed regulations would also modify the rules regarding 
conflicts of interest. The regulations currently provide that in any 
situation in which an enrolled actuary has a conflict of interest with 
respect to the performance of actuarial services, the actuary shall not 
perform such services until full disclosure of the conflict has been 
made to the affected parties. The proposed regulations would add that 
such disclosure must be made in writing and that the affected parties 
must agree in writing to the enrolled actuary performing the services. 
The proposed regulations would also provide that the actuary must 
reasonably conclude that his or her ability to act impartially is not 
impaired by the conflict and the performance of such services is not 
prohibited by law.
    The current regulations also provide that an enrolled actuary must 
exercise due care, skill, prudence, and diligence to ensure that all 
actuarial assumptions are reasonable in the aggregate and that all 
calculations are accurately carried out. To reflect changes made in the 
law made by the Pension Protection Act of 2006, Public Law 109-280, the 
proposed regulations would provide that an enrolled actuary must 
exercise sufficient due care, diligence, skill, and prudence as is 
required to ensure that all actuarial assumptions are reasonable 
individually and in combination. The proposed regulations would also 
require that all calculations not only be accurately carried out but 
also properly documented.
    The proposed regulations would also expressly expand the due 
diligence requirement into other areas. For example, the proposed 
regulations would require that an enrolled actuary must exercise due 
diligence in preparing documents to be filed with Federal and State 
entities and in determining the correctness of oral and written 
representations to those entities and to clients. This section of the 
proposed regulations follows section 10.22(a) of the regulations 
governing practice before the IRS (Circular 230) except to include 
other agencies where enrolled actuaries typically file documents or 
make representations in connection with the performance of pension 
actuarial services.
    The proposed regulations would also include other provisions 
similar to those in Circular 230 regarding solicitations of employment. 
For example, the current regulations provide that an enrolled actuary 
shall not advertise his or her status as an enrolled actuary in any 
solicitation related to the performance of actuarial services and shall 
not employ or share fees with any individual who so solicits. The 
proposed regulations would modify this prohibition by adding a rule 
similar to that in section 10.30(a)(1) of Circular 230 by providing 
that an enrolled actuary may not use any form of public or private 
solicitation containing a false, fraudulent, or misleading claim. Also, 
as provided in section 10.30(a)(2) of Circular 230, the proposed 
regulations would provide that an enrolled actuary may not make 
uninvited solicitations of employment if the solicitation violates 
Federal or State law and any lawful solicitations must clearly identify 
the solicitation as such and, if applicable, identify the source of the 
information used in choosing the recipient of the solicitation.
    The proposed regulations would also include provisions similar to 
those in Circular 230 regarding the prompt disposition of pending 
matters and the return of client records, except the Circular 230 rules 
would be modified for purposes of these regulations to reflect the fact 
that enrolled actuaries deal with government entities in

[[Page 48036]]

addition to the IRS. Thus, as under section 10.23 of Circular 230, the 
proposed regulations would provide that an enrolled actuary may not 
unreasonably delay the prompt disposition of any matter before the IRS, 
but the proposed regulations would extend the rule for these purposes 
to matters before the Department of Labor, the PBGC and other 
applicable Federal and State entities. Similarly, the proposed 
regulations would adopt provisions similar to those in section 10.27 of 
Circular 230 regarding the return and retention of client's records, 
but they would define ``records of the client'' for these purposes to 
include documents related to legal obligations in addition to Federal 
tax obligations. The provisions of these proposed regulations would not 
modify the Circular 230 regulations but would apply rules to enrolled 
actuaries in addition to those already applicable under Circular 230.
    The Joint Board believes that the current structure and procedures 
for the disciplining of enrolled actuaries are adequate and consistent 
with Federal statutes and so is not proposing any changes to the 
existing regulations in this regard. The Joint Board emphasizes that 
anyone, including other members of the profession and plan officials 
and participants, can make referrals to the Executive Director 
regarding any suspicious activity or conduct that may warrant further 
investigation or discipline. The Joint Board is also considering in a 
separate action amending the application forms for enrollment and 
renewal to require additional information that may be relevant to 
standards of performance, including any record of violations of the law 
or prior misconduct, and requests comments in that regard.

Proposed Effective/Applicability Date

    These regulations are proposed to generally apply 30 days after the 
date these regulations are published as final regulations in the 
Federal Register. However, section 901.11 regarding the enrollment of 
actuaries would apply to the enrollment cycle beginning January 1, 
2011, and ending December 31, 2013, and to all subsequent enrollment 
cycles.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations, and therefore 
the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
This notice of proposed rulemaking will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The Joint Board specifically requests comments on the clarity of 
the proposed regulations and how they may be made easier to understand. 
All comments will be available for public inspection and copying. A 
public hearing will be scheduled if requested in writing by any person 
that timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these regulations is Carolyn Zimmerman, IRS 
Employee Plans, Tax Exempt and Government Entities Division. However, 
other personnel from the Joint Board and the IRS participated in their 
development.

List of Subjects in 20 CFR Part 901

    Regulations Governing the Performance of Actuarial Services under 
the Employee Retirement Income Security Act of 1974.

Proposed Amendments to the Regulations

    Accordingly, 20 CFR part 901 is proposed to be amended as follows:

PART 901--REGULATIONS GOVERNING THE PERFORMANCE OF ACTUARIAL 
SERVICES UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

    Paragraph 1. The authority citation for part 901 continues to read 
in part as follows:

    Authority: These rules are issued under authority of 88 Stat. 
1002; 29 U.S.C. 1241, 1242. See also 5 U.S.C. 301; 31 U.S.C. 330; 
and 31 U.S.C. 321.

    Par. 2. Section 901.0 is amended by revising the second sentence to 
read as follows:


Sec.  901.0  Scope.

    * * * Subpart A of this part sets forth definitions and eligibility 
to perform actuarial services; subpart B of this part sets forth rules 
governing the enrollment of actuaries; subpart C of this part sets 
forth standards of performance to which enrolled actuaries must adhere; 
subpart D of this part sets forth rules applicable to suspension and 
termination of enrollment; and subpart E of this part sets forth 
general provisions.
    Par. 3. Section 901.1 is amended by:
    A. Adding new paragraph (d)(5).
    B. Revising paragraph (g).
    C. Adding new paragraphs (i), (j) and (k).
    The revisions and additions read as follows:


Sec.  901.1  Definitions.

* * * * *
    (d) * * *
    (5) Selection of assumptions.
* * * * *
    (g) Enrolled actuary means an individual who has satisfied the 
standards and qualifications set forth in this part and who has been 
approved by the Joint Board for the Enrollment of Actuaries (the Joint 
Board), or its designee, to perform actuarial services required under 
ERISA or the regulations.
* * * * *
    (i) Certified responsible actuarial experience means responsible 
actuarial experience of an individual that has been certified in 
writing by the individual's supervisor.
    (j) Certified responsible pension actuarial experience means 
responsible pension actuarial experience of an individual that is 
certified in writing by the individual's supervisor if the supervisor 
is an enrolled actuary. If the individual's supervisor is not an 
enrolled actuary, the pension actuarial experience must be certified in 
writing by both the supervisor and an enrolled actuary with knowledge 
of the individual's pension actuarial experience.
    (k) Enrollment cycle means the three year period from January 1, 
2011, to December 31, 2013, and every three-year period thereafter.
    Par. 4. Section 901.10 is amended by revising paragraph (a) to read 
as follows:


Sec.  901.10  Application for enrollment.

    (a) Form. As a requirement for enrollment, an applicant shall file 
with the Executive Director of the Joint Board (the Executive Director) 
a properly executed application on a form or forms specified by the 
Joint Board, and shall agree to comply with these regulations and any 
other guidance as required by the Joint Board. A reasonable non-
refundable fee may be charged for each application for enrollment 
filed.
* * * * *

[[Page 48037]]

    Par. 5. Section 901.11 is amended by:
    A. Revising the first sentence of paragraph (a).
    B. Revising paragraphs (c) and (d).
    C. Revising paragraphs (e) introductory text, (e)(1) and (e)(2)(i).
    D. Revising the last sentence of paragraph (e)(2)(ii).
    E. Adding new paragraphs (e)(2)(iv), (v), and (vi).
    F. Removing paragraph (e)(3).
    G. Revising paragraphs (f)(1) introductory text, and (f)(1)(i).
    H. Revising the second sentence of paragraph (f)(1)(ii), and 
paragraph (f)(1)(iv).
    I. Revising paragraph (f)(2).
    J. Adding paragraph (f)(3).
    K. Revising paragraph (g).
    L. Removing the last two sentences of paragraph (h)(2).
    M. Removing paragraph (l).
    N. Redesignating paragraphs (i), (j), and (k) as paragraphs (j), 
(k), and (l), respectively.
    O. Adding and reserving new paragraph (i).
    P. Revising newly redesignated paragraphs (j) and (k).
    Q. Revising the first sentences of newly redesignated paragraphs 
(l)(1) and (l)(2), and the second sentence of newly redesignated 
paragraph (l)(3).
    R. Revising newly redesignated paragraphs (l)(4), (l)(5), (l)(6), 
and (l)(7), and the first sentence of newly redesignated paragraph 
(l)(9).
    S. Revising paragraph (n).
    T. Adding new paragraphs (o) and (p).
    The revisions and additions read as follows:


Sec.  901.11  Enrollment procedures.

    (a) Enrollment. The Joint Board shall enroll each applicant it 
determines has met the requirements of these regulations, and any other 
guidance as required by the Joint Board, and shall so notify the 
applicant. * * *
* * * * *
    (c) Rosters. The Executive Director shall maintain rosters of all 
actuaries who are duly enrolled under this part and of all individuals 
whose enrollment has been suspended or terminated, or who are in 
inactive status. The Executive Director may publish any or all of these 
rosters, including display on the Joint Board's Web site, to the extent 
permitted by law.
    (d) Renewal of enrollment. To maintain active enrollment to perform 
actuarial services under ERISA, each enrolled actuary is required to 
have his/her enrollment renewed as set forth herein.
    (1) All enrolled actuaries must file an application for renewal of 
enrollment on the prescribed form between October 1, 2010, and March 1, 
2011, and between October 1 and March 1 of every third year thereafter.
    (2) The effective date of renewal of enrollment for individuals who 
file complete renewal applications by March 1 is the April 1 
immediately following the date of application. The effective date of 
renewal of enrollment for individuals who file complete renewal 
applications after March 1 is the date the notice of renewal is mailed 
to that individual by the Joint Board.
    (3) Forms required for renewal may be obtained from the Executive 
Director.
    (4) A reasonable non-refundable fee may be charged for each 
application for renewal of enrollment filed.
    (e) Condition for renewal: Continuing professional education. To 
qualify for renewal of enrollment, an enrolled actuary must certify, on 
the form prescribed by the Executive Director, that he/she has 
completed the applicable minimum number of hours of continuing 
education credit required by this paragraph (e) and satisfied the 
recordkeeping requirements of paragraph (j) of this section.
    (1) Transition rule for renewal of enrollment effective April 1, 
2011. (i) A minimum of 36 hours of continuing education credit must be 
completed between January 1, 2008 and December 31, 2010. Of the 36 
hours, at least 18 must consist of core subject matter; the remainder 
may be non-core subject matter.
    (ii) An individual who receives initial enrollment in 2008 or 2009 
must satisfy the following requirements by December 31, 2010: Those 
enrolled during 2008 must complete 24 hours of continuing education; 
those enrolled during 2009 must complete 12 hours of continuing 
education. At least one-half of the applicable hours must consist of 
core subject matter; the remainder may consist of non-core subject 
matter. For purposes of this paragraph (e), credit will be awarded for 
continuing education completed after January 1 of the year in which 
initial enrollment was received.
    (iii) An individual who receives initial enrollment during 2010 is 
exempt from the continuing education requirements until the next 
enrollment cycle, but must file a timely application for renewal.
    (2) For renewal of enrollment effective April 1, 2014, and every 
third year thereafter. (i) A minimum of 36 hours of continuing 
education credit must be completed between January 1, 2011 and December 
31, 2013, and between January 1 and December 31 for each three year 
period subsequent thereto.
    (ii) * * * For purposes of this paragraph (e), credit will be 
awarded for continuing education completed after January 1 of the year 
in which initial enrollment was received.
* * * * *
    (iv) For an individual who was initially enrolled before January 1, 
2008 (and who has therefore completed at least one full enrollment 
cycle as of January 1, 2011), at least 12 hours of the 36 hours of 
continuing education required for each enrollment cycle must consist of 
core subject matter; the remainder may consist of non-core subject 
matter.
    (v) For an individual who was initially enrolled on or after 
January 1, 2008, at least 18 hours of his or her 36 hours of continuing 
education required for the first full enrollment cycle must consist of 
core subject matter. Thereafter, for such individuals, for each 
subsequent enrollment cycle at least 12 hours of the 36 hours must 
consist of core subject matter. In each instance, the remainder may 
consist of non-core subject matter.
    (vi) As part of the core subject matter required for each 
enrollment cycle, an individual must complete a minimum of two hours of 
continuing education credit relating to ethical standards.
    (f) Qualifying continuing education--(1) In general. To qualify for 
continuing education credit an enrolled actuary must complete his/her 
hours of continuing education credit under a qualifying program, within 
the meaning of paragraph (f)(2) of this section, consisting of core 
and/or non-core subject matter. In addition, a portion of the 
continuing education credit may be earned under the provisions of 
paragraph (g) of this section. In any event, no less than \1/3\ of the 
total hours of continuing education credit required for an enrollment 
cycle must be obtained by attending in person a formal program or 
programs, within the meaning of paragraph (f)(2)(ii)(A) of this 
section.
    (i) Core subject matter is 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. Such core subject matter includes the 
characteristics of actuarial cost methods under ERISA, actuarial 
assumptions, minimum funding standards, titles I, II, and IV of ERISA, 
requirements with respect to the valuation of plan assets, requirements 
for qualification of pension plans, maximum deductible contributions, 
tax treatment of distributions from qualified

[[Page 48038]]

pension plans, excise taxes related to the funding of qualified pension 
plans and standards of performance (including ethical standards) for 
actuarial services. Core subject matter includes all materials included 
on the syllabi of any of the pension actuarial examinations offered by 
the Joint Board during the applicable enrollment cycles. For this 
purpose, the applicable enrollment cycles are the current enrollment 
cycle and the enrollment cycle immediately preceding the current 
enrollment cycle.
    (ii) * * * Examples include economics, computer programming, 
pension accounting, investment and finance, risk theory, communication 
skills, and business and general tax law.
* * * * *
    (iv) The same course of study cannot be used more than once within 
a given 36-month period to satisfy the continuing education 
requirements of these regulations. A program or session bearing the 
same or a similar title to a previous one may be used to satisfy the 
requirements of these regulations if the major content of the program 
or session differs substantively from the previous one.
    (2) Qualifying Program--(i) In general. A qualifying program is a 
course of learning that--
    (A) Is conducted by a qualified sponsor, within the meaning of 
paragraph (f)(3) of this section;
    (B) Is developed by individual(s) qualified in the subject matter;
    (C) Covers current subject matter;
    (D) Includes written outlines or textbooks;
    (E) Is taught by instructors, discussion leaders, and speakers 
qualified with respect to the course content;
    (F) Includes means for evaluation by the Joint Board of technical 
content and presentation;
    (G) Provides a certificate of completion, within the meaning of 
paragraph (f)(3)(iv) of this section, to those who have successfully 
completed the program; and
    (H) Provides a certificate of instruction, within the meaning of 
paragraph (f)(3)(v) of this section, to those who have served as 
instructors, discussion leaders, or speakers.
    (ii) Types of qualifying programs. Qualifying programs may be 
formal programs, correspondence or individual study programs, and 
teleconferencing:
    (A) Formal programs. Formal programs are programs that meet all of 
the requirements of paragraph (f)(2)(i) of this section and also 
require physical attendance by at least three individuals engaged in 
substantive pension service in addition to the instructor, discussion 
leader, or speaker.
    (B) Correspondence or individual study programs (including audio 
and/or video taped programs). Correspondence or individual study 
programs are programs completed on an individual basis by the enrolled 
actuary. Such programs are qualifying programs if they meet all of the 
requirements of paragraph (f)(2)(i) of this section and also provide a 
means for measuring completion by the participants (for example, a 
written examination).
    (C) Teleconferencing. Teleconferencing or other communications 
technologies (including webcasting) are qualifying programs if they 
meet all of the requirements under paragraph (f)(2)(i) of this section 
and either--
    (1) Include a sign-on/sign-off capacity or similar technique to 
verify attendance; or
    (2) Provide a means for measuring completion by the participants 
(for example, a written examination).
    (3) Qualifying sponsors--(i) In general. Qualifying sponsors are 
organizations recognized by the Executive Director whose programs offer 
opportunities for continuing professional education in subject matter 
within the scope of this section. A sole proprietor shall not be 
treated as a qualifying sponsor for purposes of this section.
    (ii) Sponsor agreements. Organizations requesting qualifying 
sponsor status shall file sponsor agreement requests with the Executive 
Director and furnish information in support of such requests as deemed 
necessary for approval by the Executive Director. Such information 
shall include sufficient information to establish that all programs 
designated as qualifying programs offered by the qualifying sponsor 
will satisfy the requirements of paragraph (f)(2) of this section.
    (iii) Sponsor enrollment cycle. Qualifying sponsor agreements will 
remain in effect for no more than one sponsor enrollment cycle. The 
Executive Director shall publish the names of such sponsors on a 
periodic basis.
    (A) For sponsor agreements effective on or after January 1, 2008, 
and before January 1, 2012, the applicable sponsor enrollment cycle 
will end December 31, 2011.
    (B) For sponsor agreements effective on or after January 1, 2012, 
the applicable sponsor enrollment cycle will be three years and will 
begin on January 1 and end on December 31 at the end of the three year 
period. Each such three year period is a ``sponsor enrollment cycle.'' 
The sponsor enrollment cycle is not affected by when during the 
enrollment cycle the sponsor agreement became effective. For example, 
for sponsor agreements effective on or after January 1, 2012 and before 
January 1, 2015, the applicable sponsor enrollment cycle will end 
December 31, 2014. The subsequent sponsor enrollment cycle will begin 
January 1, 2015, and end December 31, 2017.
    (iv) Certificates of completion. Qualifying sponsors shall furnish 
to each attendee successfully completing a program presented by such 
qualifying sponsor a certificate listing the following information:
    (A) The name of the attendee.
    (B) The name of the sponsoring organization.
    (C) The title, location, and speaker(s) of each session attended.
    (D) The dates of the program completed.
    (E) The total credit hours claimed and the total core and non-core 
credit hours claimed.
    (v) Certificates of instruction. Qualifying sponsors shall furnish 
to each instructor, discussion leader, or speaker, a certificate 
listing the following information:
    (A) The name of the instructor, discussion leader, or speaker.
    (B) The name of the sponsoring organization.
    (C) The title and location of the program.
    (D) The dates of the program.
    (E) The total credit hours claimed and the total core and non-core 
credit hours claimed for the program.
    (g) Alternative means for completion of credit hours--(1) In 
general. In addition to credit hours completed under paragraph (f) of 
this section,