Q&A: Carol Zimmerman

By Norman Levinrad • April 14, 2016 • 0 Comments
Welcome to the first of a regular Q&A series for the ACOPA e-news. In this feature I will be interviewing well-known people in the pension industry. My first victim, er… interviewee, is Carol Zimmerman. Carol, as many of you know, is an actuary with the IRS.

Q: Carol, thanks for doing this interview. What is your official title at the IRS and how long have you worked there? 

A: My title is short and sweet and to the point: “Actuary.” I have been at the IRS for almost 11 years now — after 25 years of private consulting. I’m not sure where the years went!

Q: You worked in private practice before you went to work for the IRS. What were your motivations for deciding to work for the government? 

A: The first step in my motivation was that I had been downsized from my job with a private consulting firm, so I needed to change employers no matter what. Otherwise, frankly, I don’t know that I would have had the courage to make the leap from private consulting to working with the government. 

I had been involved with the Joint Board examinations and was sitting on the Joint Board Advisory Committee at the time, so I had worked side-by-side with several of the IRS actuaries — including Paulette Tino and Marty Pippins — and I knew I would enjoy working with them. I had a couple of other job offers but I liked the idea of being able to research and answer questions without having to worry about billing rates or revenue goals. And I liked the idea of being able to bring a practical, hands-on perspective to the regulations and other work done at the IRS. The tie-breaker among the job offers came when the IRS was willing to let me work from Pittsburgh so I didn’t have to uproot my family — including my daughter, who was a senior in high school at the time. 

Q: From your perspective, what is better about working for the government than the private sector and what is worse? 

A: What is better is that I can get involved in policy issues that affect a large number of plans, and I don’t have to worry about billing rates or revenue goals (did I say that already?). I have always enjoyed the technical side of pension work and working with clients to resolve problems, so being able to work with actuaries across the U.S. and help them resolve issues, answer questions, etc. is very interesting to me. An unexpected benefit is the ability to delve into a number of different areas I hadn’t seen before — my practice revolved mostly around large, corporate plans and a small amount of multiemployer work, so it has been interesting to dig into the small plan issues and look at multiemployer plans in more depth. I also have enjoyed the challenge of having to look more closely at the “edges of the envelope.” My private-practice clients tended to be more conservative and use the “safe” interpretation — but being asked to look at a ruling and decide whether a particular approach is acceptable (even if it isn’t preferred) has been an interesting challenge.

I also appreciate the work-life balance at the IRS. When people here say, “family comes first,” they truly mean it. I have been able to spend much more time with my kids and grandkids than I would have if I were still in private practice. I joke that to my managers, I am a hero because I put in a lot of extra time — but I still feel that I am getting away with something because I’m still home for dinner most nights. It comes at a price, though. After 10 years, my pay is still only about half of what I was making in the private sector — despite all the headlines about how much federal workers are paid. And although I know it is the same for many of your members, I pay my professional dues out of my own pocket and have paid my own expenses (and used vacation time) to attend professional meetings. 

As far as what is worse — I’m sure you have all heard of the budget pressures being faced by the IRS today. That makes it more difficult to provide services to the actuaries and plan sponsors looking to us for answers. I think the hardest thing for me is to tell someone I can’t help them because we don’t have the resources to do so. I know that actuarial firms have budget pressures, too, and sometimes have to give difficult news to their clients and their employees, so I don’t know that we at the IRS are unique in these struggles.

Q: What does your normal work day look like? Do you know ahead of time what you will be working on, or do you get blindsided by unexpected task all the time (like I do)? 

A: It is a mix of things. I have a number of standing meetings to discuss regulation projects and so to some extent, I have an idea what is coming up in that regard. There are always surprises, though — particularly during the past few months, when I was in a temporary management position and would receive requests from my supervisor with a short turnaround time. I have to admit, though, that the surprises come much less frequently than when I was in private practice — when one phone call from a client would mean the difference between getting home for dinner or pulling an all-nighter.

Q: Many of us who work mainly in small plans often feel that the IRS don’t really understand what it is we do. For example the lack of guidance on the PPA funding rules for end-of-year valuations is a frustration. What is your response to that? 

A: I’m not sure I have a good answer. I know that I myself learned about small-plan funding and other issues on the job here at the IRS — and when working on the second round of funding regulations, every topic was looked at with an eye to how the rules would affect end-of-year valuations. And sometimes there are issues with the authority to do what we recognize would make sense, because the statute doesn’t support it (such as the application of segment rates to end-of-year valuations, until a technical correction was passed). 

Hearing practitioners’ concerns has very helpful to me in learning about the specific issues that affect small plan sponsors and actuaries. The only thing I can suggest is that organizations like yours continue to approach the IRS and Treasury to let us know what you need, and where the problem areas are. We can’t always address everything right away — but we do listen, and it is important to let us know what is most important to you, to help us prioritize. 

Q: Many of us in ACOPA take a lot of effort to do our work correctly and diligently, and then we see these crazy aggressive schemes being sold that clearly don’t follow the rules, but the promoters of them just go along year after year doing the same thing. How would you respond to a practitioner who says, “Why bother taking so much time to do it right when these cowboys never get touched by the IRS?” 

A: I don’t know that I would assume that these “cowboys,” as you call them, never get touched by the IRS. Results of audits and audit information are not a matter of public record and I can’t publicly address the actions of any particular practitioners. And don’t forget that policing the profession doesn’t always have to come from the IRS — if your members see things that you feel are egregious and damage the profession’s image, you can report that to your organization or file Form 14242 with the IRS to report suspected abusive tax promotions or preparers.

Q: We have to do a lot of our work in areas where we have no formal guidance — one example is the issue of Multiple Annuity Starting Dates when there have been prior distributions that will offset the 415 maximum. What reassurance can a practitioner ever get that the approach they think is a reasonable approach would also be seen by the IRS as reasonable? 

A: That is a difficult question, and having worked in private practice, I can appreciate how stressful it can be to not be able to tell your client definitively that what you are recommending is correct. My experience with most actuaries — both when I was in private practice and while at the IRS — is that people want to do the right thing; they just need to know what that is. On the other hand, as we all know, this area is complex and so it is entirely possible that a competent, well-meaning actuary misses a key point that prevents his/her approach from being reasonable.

My best advice would be to confer with other actuaries, attorneys and other benefits professionals to get the benefit of their thinking, and get as much of a consensus as possible — I know a lot of your members use the ACOPA bulletin board for this purpose. Keeping up with current developments, court cases, etc., also gives you a feel for what other people have experienced — and what is successful and what is not. Your approach still may not be the approach we’re looking for, but you would have more of a basis for defending your position if you can show you have researched it and have a rationale for what you did. If an issue is large enough and important enough to get formal reassurance from the IRS, you can come in for a private letter ruling — but I recognize that the user fee is a bit much for many of your members’ clients.

Q: Okay, let’s end with a softball question: What’s your favorite conference that you have ever attended, and why? 

A: Hmm… That isn’t as much of a softball question as you might think! I have some favorite anecdotes, though — like the time I was in the audience at a conference just after I joined the IRS and just after PPA 06 was passed. Jim Holland had just finished telling people that we would get guidance out as soon as we could, but that because the changes were so significant, it would take a while to release guidance on all the new rules. A fellow sitting near me wasn’t happy with that answer, and was grousing to me about the IRS — and I could see on his face the exact moment that he realized my name tag said I worked for the IRS. The tone of the conversation changed dramatically at that point!
Q: Thanks for doing this! 

A: You’re quite welcome, Norm. Thank you for inviting me to do this — I’m honored!