Leave it to the Experts

I'm not allowed to practice law. I don't have a law degree, and I have not passed the bar exam in any state in the US. I'm not allowed to practice accountancy. I have not passed the CPA exam. For whatever reason, though, some people in both of those esteemed professions think that (apparently because of the nature of who they are and what their professions are) they are highly qualified to do things that I and my brethren do.

There are lots of really good attorneys out there, and similarly, there are plenty of fine accountants. You know what, they aren't the ones who are typically treading outside of their space.

It's the rogues that concern me. I'm not going to name them, but you know who I am talking about. I read a piece earlier today written by an attorney (not even one who lists his or her specialty as ERISA or tax) explaining how certain actuarial calculations should be done. It involved lump sum calculation in a qualified defined benefit plan. Here I paraphrase:

Take the annual benefit amount. Look on the internet for the life expectancy for a person of that gender (at birth). Subtract the annuitant's current age. Multiply the annual benefit amount by that difference. Add annual interest for that period at 5% per year. That gives you the lump sum amount.

WRONG!

Yesterday, I read from an accountant who was discussing whether FICA taxes should be paid on nonqualified defined benefit plans annually as they vest rather than at retirement. He discussed the tax benefits (I could easily take either side of this argument), and then went on to say IN WRITING that paying FICA taxes annually is easier to administer. And, he built a case for it (well, he thinks he built a case for it).

WRONG!

Each of us has our own area of expertise, although I do concede that there is often significant overlap. You wouldn't take your problem with your automatic transmission to your favorite bartender. You wouldn't ask your golf pro to fix your roof.

So, don't ask me to give you a legal, tax, or accounting opinion. And, don't ask your lawyer or accountant to dabble in actuarial, plan design, or plan administration work.