Question

Dean has earned $70,750 annually for the past five years working as an architect for WCC Incorporated Under WCC's defined benefit plan (which uses a seven-year graded vesting schedule) employees earn a benefit equal to 3.5 percent of the average of their three highest annual salaries for every full year of service with WCC. Dean has worked for five full years for WCC and his vesting percentage is 60 percent. What is Dean's vested benefit (or annual retirement benefit he has earned so far)

Answer 1

Answer:

$7,429

Explanation:

Calculation to determine Dean's vested benefit

Using this formula

Vested benefit=Average salary for the prior three years×( 3.5% × 5 years of service)×Vesting percentage)

Let plug in the formula

Vested benefit=$70,750 ×( 3.5% × 5)× 60%

Vested benefit=$70,750 × 17.5%× 60%

Vested benefit=$7,428.75

Vested benefit=$7,429 (Approximately)

Therefore Dean's vested benefit is $7,429