Confused on Commonly Tested topics Question: Retirement Planning.

KIERAN9904623
KIERAN9904623 Posts: 1

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edited November 3 in Financial Planners Professional Community

On page 195 of the Summary of Commonly Tested Topics the question asks for the 2025 maximum pension benefit. The details include that the plan provides a retirement pension equal to the participants highest 3 consecutive years of compensation. The three highest years of comp are 130k, 350k and 150k. It's my understanding that the 2025 limit for max comp is 350k. making the answer 210k however the answer key says that 330k is the max limit and therefore the answer is actually $203,333. Can someone please help me understand? Is 330k a typo from an older comp limit that wasn't updated? any advice would be helpful.

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Answers

  • MikeHarris_CFFP
    MikeHarris_CFFP CFFP Faculty & Instructors Posts: 16 image

    Kieran,

    Thanks for your post. As you said, the key to the question is the maximum includible compenation for 2025 is $350k. So, reduce the $360K for Year 6 to $350,000. Then select the highest 3 consecutive years. As you said, in this case they are years 6-7 so $130k + $350k + $150k. Add them together and divide by 3. That should give you the $210,000 which is Answer B.

    The answer key on Page 240 uses $350,000 for 2025. $330,00 was the maximum includible compensation for 2023.

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