Question

Determine the maximum annual benefis payable to a participant from a defined benefit plan in the following independent situations:a. Frank, age 66, has been a partiipant for 17 years, and his highest average compensation for 3 years is $127,300.b. Ellen, age 65, has bee a partiipant for 9 years (11 years of service), and her highest average compensation for 3 years is $102,600.

Answer 1

Answer:

a.The maximum annual benefits for Frank is $7500.

b. The maximum annual benefits for Ellen is $11400.

Explanation:

a. The first question requires us to determine the maximum annual benefits payable to a participant from a defined benefit plan. Since we are given that Frank, age 66, has been a participant for 17 years, and his highest average compensation for 3 years is $127,300. We can simply calculate the annual benefit by dividing the highest average compensation for 3 years is $127,300 by the 17 years. Which is 27300/17= 7500 .Therefore the maximum annual benefits for Frank is $7500.

b. The second question requires us to determine the maximum annual benefits payable to a participant from a defined benefit plan .Since we are given the that Ellen, age 65, has been a participant for 9 years (11 years of service), and her highest average compensation for 3 years is $102,600 .We can simply calculate the annual benefit by dividing highest average compensation for 3 years which is $102,600 by 9 years. Which is annual benefit= 102600/9= $11400 .Therefore the maximum annual benefits for Ellen is $11400.