Dean has earned $70,000 annually for the past five years working as an architect for MWC Inc. Under MWC's defined benefit plan (which uses a 7-year graded vesting schedule) employees earn a benefit equal to 3.5% of the average of their three highest annual salaries for every full year of service with MWC. Dean has worked for five full years for MWC and his vesting percentage is 60%. What is Dean's vested benefit (or annual retirement benefit he has earned so far)?
A) $12,250
B) $42,000
C) $7,350
D) $0

Question

Quizplus · Accepted Answer

Dean's average salary is $70,000. His benefit is 3.5% of this average for each of the 5 years worked, which equals $12,250. However, since he is 60% vested, his vested benefit is 60% of $12,250, which is $7,350.

Dean Has Earned $70,000 Annually for the Past Five Years