Question

Lillian has a defined benefit plan that promises an annual retirement benefit based on 2% of her final 3-year average annual salary for each year of service. at retirement, lillian has 15 years of service and had an average salary of $80,000 over the last 3 years. what is the amount of her annual benefit? group of answer choices

O $65,000
O $50,500
O $35,400
O $24,000
O $0

Answer 1

Lillian's annual retirement benefit is calculated by using her final 3-year average annual salary and her total years of service. By taking 2% of her average salary of $80,000, multiplied by her 15 years of service, we get an annual retirement benefit of $24,000.

Step-by-step explanation:

The question asks us to determine the amount of Lillian's annual retirement benefit from a defined benefit plan based on her years of service and average annual salary.

Lillian's benefit formula multiplies 2% of her three-year average salary by her total years of service. With a service period of 15 years and an average salary of $80,000, we calculate her retirement benefit as:

Annual Benefit = 2% x $80,000 x 15

Annual Benefit = 0.02 x $80,000 x 15

Annual Benefit = $1,600 x 15

Annual Benefit = $24,000

Therefore, the correct option for Lillian's annual retirement benefit from her defined benefit plan is $24,000.