Thoughts from the Chair
By Dean Slyter
TAXING TIMES, June 2023
As the current chair of the Taxation Section, I’ve taken some time to think about the importance of expertise. Specifically, taxation expertise.
When new parents seek Life Insurance Death Benefits to replace lost income, they don’t know how to keep those death benefits undiminished by taxes. They might not understand the importance of tax-free death benefits. Whether they purchase Term Insurance, Whole Life Insurance, or Universal Life Insurance they expect the insurer has used tax and legal expertise to maintain the tax-free death benefit.
When an employee decides to contribute to an Employer Retirement Plan, they expect tax expertise to have been used to provide tax advantage through various taxation timing choices. And they expect the Retirement Plan Administrator will help them maintain tax compliance as they age.
When a future or current retiree chooses to purchase a deferred annuity with guaranteed withdrawal benefits or an income annuity, they expect tax expertise will help the retiree properly report the income for their tax return. If the premium to purchase those incomes is qualified money, expertise will be used to maintain compliance with distribution rules and required withdrawals.
You may have heard, as I have, that respect for expertise has diminished over the last 10 years or so. Regardless of this decline, tax expertise is needed and expected by our product customers. In fact, tax expertise is needed in financial reporting and other areas. While I have mainly used product tax expertise in the last decade of my actuarial career, I developed Stark Moore Tax Reserve factors to comply with the Tax Equity and Fiscal Responsibility Act (TEFRA) at the beginning of my career. There have been a few changes to Tax Financial Reporting since those years.
How can new actuaries and non-actuaries discover, understand, and expand insurance taxation expertise? Actuarial expertise on taxation was developed and shared for several years before the section was founded in 2005. Many excellent resources are found in old newsletters and other publications. With nearly 20 years as a section, the materials produced—whether books, monographs, newsletters, seminars, webcasts, or meeting sessions—could fill a two-foot bookshelf. While the book Life Insurance & Modified Endowments under Internal Revenue Code Sections 7702 and 7702A has been updated with one new edition and a special supplement in 2021, many of the older materials are still valuable and applicable without update.
In addition to the SOA website search, you can use the “Publication Browse” feature to locate past articles from TAXING TIMES. This method goes back to the first issue in 2005. You’ll also find complete issues of TAXING TIMES on the Taxation Section newsletter webpage.
I will close my thoughts with the purpose of the Taxation Section from our section bylaws:
“The purpose of the Taxation Section is to advance the actuarial profession by assisting members and affiliates with the education, research, networking and other specialized needs that arise in matters related to taxation, including those related to life insurance companies, insurance and annuity products and employee benefit plans.”
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the editors, or the respective authors’ employers.
Dean Slyter, FSA, MAAA, is a senior product actuary and actuarial specialist at Tata Consultancy Services. He can be reached at dslyter@q.com.