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juin [17]
3 years ago
14

Axe company sponsors a 401(k) profit sharing plan with no employer match, but the company did make noncontributory employer cont

ributions because the plan was top-heavy. Jack quit today after six years working for Axe and has come to you to determine how much of his retirement balance he can take with him. The plan uses the least generous graduated vesting schedule available. What is Jack's vested account balance if he has been a participant for 57 months? EMPLOYER EMPLOYEE CONTRIBUTIONS $9,000 $12,000 EARNINGS $4,000 $5,000 a. $17,000. b. $27,400. c. $24,800. d. $30,000.
Business
1 answer:
Vinil7 [7]3 years ago
6 0

Answer:

d. $30,000.

Explanation:

Jack is entitled to 100% of his own contributions = $9,000 + $4,000 = $13,000

The following is the least generous vesting schedule

Least-generous graded vesting schedule

Years of service            % vested

1                                             0%

2                                          20%

3                                          40%

4                                           60%

5                                          80%

6                                         100%

Since jack worked for 57 months, he is entitled to 100% of the employer's contributions = $12,000 + $5,000 = $17,000

Total account balance = $13,000 + $17,000 = $30,000

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