inported From Finel Dan Manager CheapComain.coms Studentloensgov OnCampus& Dey i

Question

inported From Finel Dan Manager CheapComain.coms Studentloensgov OnCampus& Dey iveruty Ch. 13834 . HW Problems Help Save & Exlt Submit Check my work Problem 13-51 (LO 13-1) 50 Alicia has been working for JMM Corp for 32 years. Alicia participates in JMMs defined benefit plan Under the plan, for every year of service for JMM she is to receive 2 percent of the average salary of her three highest years of compensation from JMM She retred on January 1. 2017 Bofore retirement, her annual salery was $586.000 $607000, and $664,000 for 2014, 2015, and 2016. What is the maximum benett Alicia can receive in 2017? Reterence lins Prec 10, 2 Ned> 5 6 8 9 FGHK L ENTER 4

Explanation / Answer

The limit for defined benefit plan in 2017 (year of retirement) is $215,000. Thus the maximum benifit shall not exceed $215,000.

Now, average highest salary for three years = (586,000 + 607,000 + 664,000) / 3 = $619,000

2% per year for 32 years of service = 2 x 32 = 64%

Thus $619,000 x 64% = $396,160

Since the limit of $215,000 is lower than $396,160

Maximum benefit in 2017 shall be $215,000/-

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