2004 EA-2B Examination
Study Tips
The following represents my recommendation for self-studying for this examination. This is certainly not the only approach, and it is intended to serve as a guide for anyone attempting this examination for the first time. It can also be used in preparation for anyone planning to take a review course for this examination.
David Farber, ASA, EA, MSPA
Here’s how I’d start.
1. Course Outline – In my opinion, it’s nearly impossible to learn the syllabus for this exam by reading the regulations. Many of the regulations are outdated, and many of them (especially the non-discrimination regulations) contain so many cross references that it can take months to master them. A course outline can be helpful in guiding you through this. See the section below for my suggestions as far as study materials go.
2. Calculation of benefits – Read IRC sections 411, 415, and 416. These sections each have regulations. Note that the regulation for IRC section 415 is the original ERISA regulation, and much of it is now obsolete. You are better off ignoring the regulation for IRC section 415 and instead read Revenue Rulings 98-1 and 2001-51. Note that much of 98-1 is outdated. Read 2001-51, and use 98-1 as a cross reference, as some of the Q&A’s in 2001-51 reference 98-1. I would ignore Revenue Notices 83-10 and 87-21, as they describe the TEFRA and TRA’86 rules for IRC section 415, and are outdated. Read the regulation for IRC section 416, but keep in mind that many of the rules have changed effective in 2002, so some of the Q&A’s are outdated. Basically, if the Q&A violates the code section, then it is outdated.
3. Non-discrimination – This is the toughest topic to study since there is no real text for this topic. The regulations for IRC sections 401(a)(26), 401(b), 401(a)(4), and 401(l) tend to be long and tough to read due to their numerous cross references. One of the course outlines listed below will help. The ERISA Outline Book, described below, can be helpful with these topics.
4. Multiemployer plans – In addition to the material in any of the course outlines, the SOA study note is a good resource. The ERISA sections (4201 – 4225) and regulations are difficult to understand if you don’t have experience working with multiemployer plans.
5. PBGC rules – In addition to the material in any of the course outlines, the SOA study note is a good resource. Pay particular attention to ERISA sections 4022 and 4044. Review the instructions to the PBGC Form 1, Schedule A (this is more readable than the PBGC regulations).
6. Spin-offs and mergers – Revenue rulings 81-211 and 86-47 are the primary regulations for spin-offs. They are easy to read, and use examples to make their points. Regulation 1.414(l) primarily describes rules for mergers. The majority of past exam questions have involved spin-offs, rather than mergers.
The additional reading from the course syllabus is not as important as what has been outlined thus far, but is advisable to review.
It is important to check the Society of Actuaries web site for the updated version of the Joint Board Program Document. Based upon past history, the updated syllabus included in that document (effective as of January 1, 2004) should be available in early February. Any new syllabus items should be noted and studied.
There are many available outlines and problem sets available. These provide a good source of additional practice and material. Here is a summary of the materials and where they may be found.
1. Rick Groszkiewicz has his overheads used in his classes, original problems from those classes, and old exam solutions for sale on his web site (www.softwarepolish.com). Some of the older material is available as free downloads. I recommend Rick’s materials. The overheads can be used as a course outline.
2. ACTEX has various publications for sale (www.actexmadriver.com). There is an EA-2B ACTEX manual (this was new for 2003). Many students have commented that it was OK as a rough outline, but many of the old exam solutions were incorrect. Hopefully these will have been corrected through errata. ACTEX also offers a study manual listed as the Central Study Manual. This is basically the old ACTEX manual, and unless it has been drastically updated, it contains numerous errors. I would avoid this manual.
3. Also available through ACTEX are the various manuals published by ASM (Actuarial Study Materials), all of which were either written or edited by me. There is a manual of approximately 110 original problems, the majority of which were used years ago by ASM in courses that they offered. These problems have been updated by me to follow current law. (Note that anyone who has previously purchased an edition of this manual should not buy a new one. Errata for the old manuals can be found on the ASM web site (www.studymanuals.com), and any new problems added this year can be found as samples to this manual on the ASM web site.) A new manual is now offered by ASM that consists of a course outline (including a summary of each revenue ruling listed in the syllabus) as well as nearly 60 original questions and solutions that are used in my courses. This manual should not be purchased by anyone planning to attend one of my courses. Solutions to prior exams are also available. To view samples from any of these manuals, go to the ASM web site.
4. The SOA study notes can be used to provide an overview (and in some cases, detail) of many of the topics. They should not be used as a substitute for reading the internal revenue code, ERISA and regulations. The SOA web site is www.soa.org.
5. ASPA (American Society of Pension Actuaries) offers the ERISA Outline Book. This provides interpretation of much of ERISA. Although it is designed for pension administrators (not necessarily actuaries), it is an excellent resource for studying the nondiscrimination rules, IRC sections 411, 415, and 416, and the prohibited transaction rules. It’s huge (4 volumes) and isn’t cheap ($295). But it is definitely a helpful resource. The ASPA web site is www.aspa.org.
It’s important to do as many practice problems as possible in studying for the exam. Therefore, I’d suggest getting as many of the above recommended materials as possible.