Question

Required information The following information applies to the questions displayed below.) In 2019, Maggy (34 years old) is an employee of YBU Corp.YBU provides a 401(k) plan for all its employees. According to the terms of the plan, YBU contributes 50 cents for every dollar the employee contributes. The maximum employer contribution under the plan is 15 percent of the employee's salary (if allowed, YBU contributes until the employee has contributed 30 percent of her salary). (Use Exhibit 13-2) a. Maggy worked for YBU Corporation for 3 years before deciding to leave effective July 1, 2019. Maggy's annual salary during this time was $45,000 $52,000. $55,000, and $60,000 (she only received half of her $60,000 2019 salary). Assuming Maggy contributed 8 percent of her salary (including her 2019 salary) to her 401(k) account, what is Maggy's vested account balance when she leaves YBU (exclusive of account earnings)? Assume YBU uses three-year cliff vesting. Vested account balance c. Maggy wants to maximize YBU's contribution to her 401(k) account in 2019. How much should Maggy contribute to her 401(k) account assuming her annual salary is $100.000 (and assuming she works for YBU for the entire year)? Maggy's contribution b. Using the same facts in part (a), assume YBU uses six-year graded vesting. What is Maggy's vested account balance when she leaves YBU (exclusive of account earnings)? Vested account balance EXHIBIT 13-2 Defined Contribution Plans Minimum Vesting Schedules* Full Years of Service 3-Year Cliff 0% 6-Year Graded 0% O 20 40 60 100 N/A N/A N/A 5 80 100

Answer 1

Answer: Given that maggy is .: an employee of (34 year old) . a) YBU. contributed (u5006 +52006 +550001 60000 XSI ma999 = 15000 +52000 +55000 + 160.000X0.5) - 14560 I pu 560 contributy = 10560 X 50%. VBU 1560 X 6.50 TE 7280 in her = 1u566 + 7 280 The endir balance 21840 (6) maggy's leaves maggy vested account balance when she y Bu contributed, ll u 5000 + 52,000 + 55.000€ bo eod (Ser) contributed -T 14,560l maggy

* YB u contributes tom aggy's Plan (101560X504.) 1141560805) 7280 * YB u's contribution is uox. * They maggy's vested benefit y BC Con tribution is (7,280 X hoy.) - (028o xe-u) TË 21927 * IH is earning on rou contribution is I also not (C) + y By contri butes 50 centributes 5o cents per dollar contributed by an emplee to her uolial up to ist. A However. 201 employee are limited to contributing play.. In this intance Maggy should contriduction * - the entire 14566,

* the Receive and receive a contribution from employer of 8750 Total contribution her collk) of 26,256 * d) Just as in ¿ to maximize maggy should contribute Ć 17,500 +5,500) catch al the contribution a total of $23,000 adicestment * The for contribute an the year 34.600 addition at 11,500 (23,600X050) ( 23,000 til 506) to her account