In 2021, Maggy (34 years old) is an employee of YBU Corporated 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 3½ years before deciding to leave effective July 1, 2021. 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 2021 salary). Assuming Maggy contributed 8 percent of her salary (including her 2021 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. **Exhibit 13-2: Defined Contribution Plans Minimum Vesting Schedules**| Full Years of Service | 3-Year Cliff | 6-Year Graded ||-----------------------|--------------|---------------|| 1 | 0% | 0% || 2 | 0 | 20 || 3 | 100 | 40 || 4 | N/A | 60 || 5 | N/A | 80 || 6 | N/A | 100 |*Percent of employer contributions no longer subject to forfeiture.***Explanation:**This table outlines the minimum vesting schedules for defined contribution plans. It compares two common vesting schedules: the 3-Year Cliff and the 6-Year Graded. - **3-Year Cliff Vesting**: Employees become 100% vested in employer contributions after three years of service. Before that, there is no vesting. - **6-Year Graded Vesting**: Vesting gradually increases each year. Employees become 20% vested after two years, with an additional 20% vesting each subsequent year, reaching 100% at six years.This information is important for understanding how employer contributions to retirement plans become non-forfeitable based on years of service.

Taxable income is the amount of income an entity makes every year upon which the government levies taxes. It is the amount of income used to calculate the taxes owed by an individual or company. Answer -a Year Annual salary Maggy's contribution @ 8% Employer contribution @ 50% of maggy's contribution 2018 45000 3600 1800 2019 52000 4160 2080 2020 55000 4400 2200 2021 60000 2400 1200 Total 14560 7280 Maggy's vested account balance (14560+7280)=$21840.

Answered: In 2021, Maggy (34 years old) is an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 2021, Maggy (34 years old) is an employee of YBU Corporated 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 3½ years before deciding to leave effective July 1, 2021. 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 2021 salary). Assuming Maggy contributed 8 percent of her salary (including her 2021 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.