# Does My Retirement Plan Need an Actuary? 401(k) to Cash Balance

Canonical: https://finbryn.com/us/guides/does-my-retirement-plan-need-an-actuary

A standard 401(k), including a safe harbor 401(k), needs no actuary. A defined benefit or cash balance plan does, because the plan's enrolled actuary must prepare and sign Schedule SB each year (DOL 2025 Form 5500 instructions). Finbryn provides valuation workpapers for plan sponsors, prepared for that actuary's review and signature.

## Key takeaways

- No actuary is needed for a 401(k). The IRS describes a 401(k) as a qualified plan with an employee deferral feature, and its overview (reviewed 2026-08-04) mentions no actuarial step. Safe harbor formulas under IRC 401(k)(12) are a match of 100% of the first 3% of pay plus 50% of the next 2%, or a 3% employer contribution for every eligible non-highly compensated employee.

- A defined benefit plan, including a cash balance plan, does need one. The DOL's 2025 Form 5500 instructions say a single-employer plan subject to the minimum funding standards must obtain a Schedule SB prepared and signed by the plan's enrolled actuary, and the IRS says an actuary must determine how well the plan is funded each year.

- Most defined benefit plans are small. In DOL data for plan years beginning in 2024, 36,202 of 40,747 Schedule SB filings (89%) reported fewer than 100 participants, and 22,132 (54%) fewer than ten.

- A cash balance plan has to cover staff. Under IRC 401(a)(26) a defined benefit plan must benefit the lesser of 50 employees or the greater of 40% of employees or two, so a firm with 10 employees must cover at least four.

- The risk sits with the employer. A funding shortfall is amortized over 15 plan years for plan years beginning after 2021 (IRC 430(c)(8)), and an adjusted funding target attainment percentage below 80% bars benefit increases and below 60% stops accruals (IRC 436).

## Do I need an actuary for my 401(k)?

No. A 401(k) is a defined contribution plan: each employee has an account, and the benefit is whatever the account holds. The IRS defines a 401(k) plan as a qualified plan with a feature that lets an employee elect to have part of pay contributed to an account, and its overview, reviewed August 4, 2026, describes the rules without any actuarial step (IRS, 401(k) plan overview).

That includes the safe harbor version. A safe harbor 401(k) skips the annual nondiscrimination tests on deferrals and matches in return for a required employer contribution. The statute gives two formulas: a match of 100% of the first 3% of pay that an employee defers plus 50% of the next 2%, or a contribution of at least 3% of pay for every eligible non-highly compensated employee whether or not they defer (IRC 401(k)(12)). The IRS adds that safe harbor contributions must be fully vested when made. A plan using the matching formula must give employees written notice, timely if given 30 to 90 days before the plan year begins; the 3% nonelective formula has needed no notice since the SECURE Act of 2019 (IRC 401(k)(12)(A)).

What a 401(k) does need is a recordkeeper or administrator to run the testing that applies, a Form 5500 each year, and an independent audit once the plan has 100 or more participants with account balances at the start of the year. The DOL instructions let a plan with between 80 and 120 participants keep the filing category it used the year before. The audit is a CPA engagement and has nothing to do with an actuary.

If your 401(k) is the only plan, you can stop reading here. If a financial adviser has pitched you a cash balance plan on top of it, read on.

## Which retirement plans do need an actuary?

Any plan that promises a benefit instead of an account balance. Defined benefit plans, including cash balance plans, are subject to minimum funding standards, and the plan's enrolled actuary prepares and signs Schedule SB (DOL, 2025 Instructions for Form 5500). The table sets the common plan types side by side.

| Plan | Actuary needed | Annual actuarial filing | Who signs | Where the funding risk sits |
| --- | --- | --- | --- | --- |
| 401(k), including safe harbor | No | None | Plan administrator files the Form 5500 | Contributions follow the formula |
| Profit sharing plan or 401(k) with a cross-tested allocation | No, but testing is needed | None | Plan administrator | Gateway: each non-highly compensated employee needs a rate of at least one third of the highest rate, or 5% of pay |
| Traditional defined benefit plan | Yes | Schedule SB | Plan's enrolled actuary | Employer funds the formula benefit |
| Cash balance plan | Yes, it is a defined benefit plan | Schedule SB | Plan's enrolled actuary | Employer funds pay credits and interest credits whatever the market does |
| 401(k) next to a cash balance plan | Yes, for the cash balance plan | Schedule SB | Plan's enrolled actuary | Combined deduction limit may apply |

The gateway in the second row is in 26 CFR 1.401(a)(4)-8(b)(1)(vi): each non-highly compensated employee needs an allocation rate of at least one third of the highest rate, or at least 5% of pay. A cross-tested design is a defined contribution plan, so it needs no actuary, but it is the usual alternative an adviser compares against a cash balance plan.

The 2026 limits show why owners look at the defined benefit route. For 2026 a defined benefit plan can fund an annual benefit of up to $290,000, while a defined contribution plan caps annual additions at $72,000 and elective deferrals at $24,500 (IRS Notice 2025-67). Our [limits reference](/guides/retirement-plan-limits-actuarial-rates-2026) has the full 2026 table.

## Who signs Schedule SB, and how do you check?

An enrolled actuary must sign Schedule SB, and the DOL instructions say the plan administrator must obtain a Schedule SB prepared and signed by the plan's enrolled actuary. An enrolled actuary is an individual who holds an enrollment from the Joint Board for the Enrollment of Actuaries. The IRS publishes a roster of active enrolled actuaries, current as of September 15, 2026.

That has three practical consequences. First, your CPA, TPA or plan consultant can prepare the Form 5500 and many schedules, but the Schedule SB signature comes from an enrolled actuary, so a TPA without an enrolled actuary on staff has to bring one in. Second, the engagement is yours: the plan sponsor engages the actuary. Third, you can check the signer's name on the IRS roster before you sign an engagement letter.

For a calendar-year plan the Form 5500 is due July 31 of the following year, and the minimum required contribution is due 8.5 months after the plan year ends, which is September 15. The enrolled actuary needs the census and plan data well before either date.

Finbryn does not sign Schedule SB and does not act as a plan's actuary. It prepares valuation workpapers, design illustrations and the support schedules that the plan's enrolled actuary reviews and signs. For the cost side, see [what a pension actuary costs](/guides/what-a-pension-actuary-costs), and for the wider decision, [how to choose an actuarial support provider](/guides/how-to-choose-actuarial-support-provider).

## Cash balance plan: what are the pros, the cons and the cost to staff?

A cash balance plan is a defined benefit plan that shows each participant a hypothetical account. The business owner's appeal is room: the 2026 annual benefit limit is $290,000, so for some owners, especially older and higher paid ones, a plan can support contributions above what 401(k) limits allow, and the employer funds the plan on an actuarial basis between a minimum and a maximum.

The costs show up in four places.

**Funding is mandatory.** The employer must make the minimum required contribution in good years and bad. A new shortfall is amortized over 15 plan years for plan years beginning after 2021 (IRC 430(c)(8)). Illustrative, made-up numbers: assets of $2,000,000 fall 10% against a funding target of $2,000,000, leaving a $200,000 shortfall, which is about $13,300 a year over 15 years before interest and on top of the normal cost. Asset averaging within 90% to 110% of market value (IRC 430(g)) can soften the first year, and the plan's actuary models it with the plan's actual assumptions.

**Funding level has consequences.** If the adjusted funding target attainment percentage is below 80%, an amendment that raises liabilities generally cannot take effect, and below 60% benefit accruals stop (IRC 436).

**Staff must be covered.** A defined benefit plan must benefit the lesser of 50 employees or the greater of 40% of all employees or two (IRC 401(a)(26)). A business with 10 employees must cover at least four, and one with 100 must cover 40, counting employees after the statutory exclusions. Benefits must also satisfy the nondiscrimination rules in 26 CFR 1.401(a)(4), which test accrual rates by group. The actuary can tell you before adoption what the staff pay credit is likely to be.

**Fees continue.** Actuarial, administration and PBGC costs recur every year. We collected published prices in the [cost guide](/guides/what-a-pension-actuary-costs).

## When do the audit and PBGC rules apply?

Two rules apply by size and type, and both surprise owners.

The audit: a plan with 100 or more participants at the start of the plan year files Schedule H and is generally required to engage an independent qualified public accountant to audit it (DOL instructions, 80 to 120 participant rule).

PBGC coverage: single-employer defined benefit plans are generally covered and pay premiums. The single-employer flat rate is $111 per participant for plan years beginning in 2026 and $116 for 2027, and the variable rate is $52 per $1,000 of unfunded vested benefits (PBGC, updated October 14, 2026). ERISA section 4021(b)(13) exempts a plan established and maintained by a professional service employer that has never had more than 25 active participants since September 2, 1974. ERISA defines a professional service employer as an organization owned or controlled by professional individuals whose principal business is performing professional services, so owner credentials alone do not settle it.

Coverage matters in a second place. The IRS combined-limit rule under IRC 404(a)(7) applies only when the defined benefit plan is exempt from PBGC coverage, an employee benefits under both plans and receives employer allocations other than deferrals in the defined contribution plan, and both plans are single-employer plans. If the employer's defined contribution allocations stay at or under 6% of those participants' pay, the combined limit does not apply, and above 6% only the excess counts (IRS, reviewed June 28, 2026). Ask the actuary to run that test before the 401(k) match is set.

## What if the plan stops working for you?

Plans end, and the exit has its own rules. An owner can freeze a defined benefit plan, convert it, or terminate it in a standard termination, which needs notices, PBGC filings and a certification that assets cover the benefits. PBGC's standard termination page (updated July 8, 2026) starts the clock with a notice of intent to terminate at least 60 and not more than 90 days before the proposed termination date.

We cover those steps on two service pages: [plan freeze and DB to DC conversion](/services/actuarial-services/db-to-dc-conversion-plan-freeze), and [plan termination](/services/actuarial-services/pension-risk-transfer-plan-termination). Selling the business changes the picture again, and our guide on [selling a company with a pension or self-funded plan](/guides/selling-a-company-with-a-pension-or-self-funded-plan) explains what a buyer asks for.

A freeze or termination is worth modeling before it is needed. An actuary can estimate what termination would cost on today's assets and rates. Do that on a quiet date and not in the month a lender or buyer asks.

## Seven questions to ask before you adopt a plan

1. How many employees do I have today, and how many will the plan have to benefit under the minimum participation rule?
2. What pay credit or contribution rate will staff receive, and does the design pass nondiscrimination testing with those rates?
3. What is the funding in a year when assets fall 10%? Ask the actuary to model it with the plan's actual assumptions.
4. Is the plan covered by PBGC, or exempt as a professional service employer, and what does that do to the combined limit with my 401(k)?
5. Who is the enrolled actuary, and can I check the name on the IRS roster?
6. What is the first-year cost and the ongoing annual cost, itemized by actuary, administration, Form 5500, testing and PBGC?
7. What does it take to freeze or terminate the plan?

If the answers fit your business, a cash balance plan can be sound. If they do not, a safe harbor or cross-tested 401(k) gets part of the way with no actuary. Finbryn provides [actuarial valuation support for cash balance and defined benefit plans](/services/actuarial-services/cash-balance-defined-benefit-plans), and quotes in writing after seeing a sample of your data.

## Frequently asked questions

**Q: Do I need an actuary for my 401(k)?**

A: No. A 401(k) is a defined contribution plan with no actuarial valuation, and the IRS overview (reviewed 2026-08-04) describes it without one. A 401(k) with 100 or more participants with account balances at the start of the year generally needs an independent CPA audit, which is a separate engagement from any actuarial work.

**Q: Does a safe harbor 401(k) need an actuary?**

A: No. Safe harbor status under IRC 401(k)(12) requires a 100% match on the first 3% of pay plus 50% on the next 2%, with written notice, or a 3% employer contribution for eligible non-highly compensated employees, which has needed no notice since 2020. None of that needs an actuarial signature.

**Q: Does a cash balance plan need an actuary every year?**

A: Yes. A cash balance plan is a defined benefit plan, and the DOL's 2025 Form 5500 instructions require a Schedule SB prepared and signed by the plan's enrolled actuary. The IRS says an actuary must determine how well the plan is funded each year (page reviewed 2026-10-16).

**Q: Who signs Schedule SB?**

A: An enrolled actuary, an individual enrolled with the Joint Board for the Enrollment of Actuaries. The IRS roster of active enrolled actuaries was current as of September 15, 2026. Finbryn does not sign Schedule SB; it prepares workpapers for the plan's enrolled actuary.

**Q: Can my CPA or TPA sign Schedule SB?**

A: Only if that individual is also an enrolled actuary. The DOL instructions call for a Schedule SB prepared and signed by the plan's enrolled actuary. A TPA without one on staff subcontracts the signature, and the engagement runs through you as plan sponsor.

**Q: Do I need an actuary if I have a 401(k) and a cash balance plan?**

A: Yes, for the cash balance plan. The IRS combined limit under IRC 404(a)(7) may apply when the cash balance plan is PBGC-exempt and employer allocations to the 401(k) exceed 6% of pay (IRS, reviewed 2026-06-28). Ask the actuary to test that before setting the match.

**Q: Do small cash balance plans pay PBGC premiums?**

A: Covered plans do: $111 per participant for plan years beginning in 2026 and $116 for 2027, plus $52 per $1,000 of unfunded vested benefits (PBGC, updated 2026-10-14). A professional service employer plan that never had more than 25 active participants is exempt under ERISA 4021(b)(13).

**Q: When is the minimum contribution due for a cash balance plan?**

A: Eight and a half months after the plan year ends, which is September 15 for a calendar-year plan (IRC 430(j)). The Form 5500 with Schedule SB is due July 31 for a calendar-year plan (DOL instructions). A plan that was underfunded the year before owes quarterly installments.

## Sources

1. [DOL EBSA, 2025 Instructions for Form 5500 (Schedule SB, enrolled actuary, Schedule H, 80-120 rule)](https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2025-instructions.pdf) (2026-10-18)
2. [DOL EBSA, F_SCH_SB_2024_Latest data set (Schedule SB filings, form year 2024)](https://askebsa.dol.gov/FOIA%20Files/2024/Latest/F_SCH_SB_2024_Latest.zip) (2026-10-18)
3. [IRS, Choosing a defined benefit plan (reviewed 2026-10-16)](https://www.irs.gov/newsroom/choosing-a-defined-benefit-plan) (2026-10-18)
4. [IRS, 401(k) plan overview (reviewed 2026-08-04)](https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-overview) (2026-10-18)
5. [26 U.S.C. 401, qualified plans, including (a)(26) and (k)(12)](https://www.law.cornell.edu/uscode/text/26/401) (2026-10-18)
6. [26 CFR 1.401(a)(4)-8, cross-testing and the minimum allocation gateway](https://www.law.cornell.edu/cfr/text/26/1.401(a)(4)-8) (2026-10-18)
7. [26 CFR 1.401(a)(4)-3, nondiscrimination in the amount of defined benefit plan benefits](https://www.law.cornell.edu/cfr/text/26/1.401(a)(4)-3) (2026-10-18)
8. [26 U.S.C. 430, minimum funding standards for single-employer defined benefit plans](https://www.law.cornell.edu/uscode/text/26/430) (2026-10-18)
9. [26 U.S.C. 436, funding-based limits on benefits and benefit accruals](https://www.law.cornell.edu/uscode/text/26/436) (2026-10-18)
10. [29 U.S.C. 1321 (ERISA section 4021), plans covered, including professional service employers](https://www.law.cornell.edu/uscode/text/29/1321) (2026-10-18)
11. [IRS, Combined limits under IRC section 404(a)(7) (reviewed 2026-06-28)](https://www.irs.gov/retirement-plans/combined-limits-under-irc-section-404a7) (2026-10-18)
12. [IRS Notice 2025-67, 2026 cost-of-living adjustments for retirement plan limits](https://www.irs.gov/pub/irs-drop/n-25-67.pdf) (2026-10-18)
13. [PBGC, Premium rates (last updated October 14, 2026)](https://www.pbgc.gov/employers-practitioners/premium-filings/rates) (2026-10-18)
14. [PBGC, Standard terminations (last updated July 8, 2026)](https://www.pbgc.gov/employers-practitioners/plan-terminations/standard) (2026-10-18)
15. [IRS, Enrolled actuaries, news from the Joint Board (roster current as of 2026-09-15)](https://www.irs.gov/tax-professionals/enrolled-actuaries/news-from-the-joint-board) (2026-10-18)

Reviewed October 2026

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