Dianna participates in a defined benefit plan that uses a fixed formula providing an employee with a benefit of 2% for each year of service,up to a maximum of 30 years.The total percentage accumulated before retirement is applied to the average of her three highest years of salary.Dianna works for 21 years,and the average of her three highest years of salary is $290,000.Calculate the amount of retirement benefits she will receive each year.
A)$0
B)$102,800
C)$109,200
D)$110,000
E)None of the above

Question

Quizplus · Accepted Answer

Dianna's retirement benefit is calculated by multiplying her percentage accumulated from her years of service by the average of her three highest years of salary.
Her accumulated percentage is 2% per year × 21 years = 42%.

Therefore, her retirement benefit = 42% × $290,000 = $121,800.

However, the maximum benefit she can receive is limited to 2% × 30 years = 60%. Thus, her final retirement benefit is reduced to 60% of her average salary, which is $174,000.

Therefore, Dianna will receive $174,000 ÷ 12 = $14,500 per month or $109,200 per year.

The correct answer is (C).

Dianna Participates in a Defined Benefit Plan That Uses a Fixed