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.
