Zackie Has Five Years of Service Completed as of February

question 55

Multiple Choice

Zackie has five years of service completed as of February 5, 2018, which is his employment anniversary date.If his defined benefit plan [not a § 401(m) arrangement] uses the graded vesting rule, determine Zackie's nonforfeitable percentage.

• A)40%
• B)60%
• C)80%
• D)100%
• E)None of these

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Definitions:

EAR

Effective Annual Rate (EAR) is a measure of interest that takes into account the effects of compounding over a given period.

Compounded Monthly

Interest calculated on an investment or loan each month based on both the initial principal and the accumulated interest from previous months.

EAR

Effective Annual Rate, a measure of interest that takes into account the effect of compounding over a year.

Compounded Quarterly

The process whereby the interest earned on an investment is calculated and added to the principal sum every three months, then the new total is used for the next compounding period.