SOCIAL SECURITY INTEGRATION: DB PLANS (1 OF 2)
01.Core Concepts
• Marcee is a participant in a defined benefit pension plan and earns $125,000 per year and has been employed for 30 years. The base funding formula is 1% per year of service times final salary. Marcee’s benefit would equal $37,500 (1% x $125,000 x 30) • Excess Method • Assume Marcee also receives an additional benefit of 0.75% per year of service for income that exceeds covered compensation. Assuming Social Security covered compensation is $100,000, Marcee would receive an additional $5,625 (0.75% x ($125,000 - $100,000) x 30) or $43,125 ($5,625 + $37,500) in total.