Henry Has Been Working for Cars Corporation for 40 Years

Essay

Henry has been working for Cars Corporation for 40 years and four months. Cars Corporation provides a defined benefit plan for its employees. Under the plan, employees receive 2 percent of the average of their three highest consecutive calendar years compensation for each full year of service. Cars Corporation uses a five-year cliff vesting schedule. Henry retired on January 1, 2020. Henry received annual salaries of $520,000, $540,000, and $560,000 for 2017, 2018, and 2019, respectively. What is the maximum benefit Henry can receive under the plan in 2020?