Dean has earned $70,250 annually for the past six 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 4.0 percent of the average of their three highest annual salaries for every full year of service with WCC. Dean has worked for six full years for WCC and his vesting percentage is 80 percent. What is Dean's vested benefit (or annual retirement benefit he has earned so far)?
A)$16,860.
B)$56,200.
C)$13,488.
D)$0.

Question

Quizplus · Accepted Answer

Dean's highest annual salary is $70,250, and since his salary has been consistent, the average of his three highest annual salaries is also $70,250. The benefit formula is 4.0 percent of this average salary for every full year of service. For six years of service, this is $70,250 \times 4\% \times 6 = \$16,860$ in total benefits. However, because Dean is only 80% vested, his vested benefit is $16,860 \times 80\% = \$13,488$.

Dean Has Earned $70,250 Annually for the Past Six Years