Sarah is in a defined contribution plan in which the school contributes 7% of her salary and she contributes 3%. The plan provides several investment options: bond funds, stock funds, and money market accounts. She has chosen to invest this contribution in fixed instruments (bond funds). The plan has a 2- to 6-year graduated vesting schedule, and she has been a participant for four years. The total balance of her account is $16,500. Although she has not participated, the school also offers a 403 (b) plan for salary deferrals. There are no employer contributions with the 403(b)

If Sarah left Woodridge Preparatory School today, what would be her vested retirement balance?

Hint: Vesting is based on years of service, NOT years of participation. She has been

Years of service	Vesting for Nonmatch Contributions	Vesting for Matching Contributions/ Top-heavy plans
1	0%	0%
2	20	20
3	40	40
4	60	60
5	80	80
6	100	100

Hint: 1) Determine what % is vested given how long she has been with the company. 2) Determine what % of the total contributions she contributed and what percent the company contributed. The case says she contributed 3% of her salary and the company contributed 7% of her salary. What percent of the total is her contribution? 3% of 10% contributed 3) Her contribution is 100% vested 4) The employer contribution is multiplied by the % in step 1. 5) Add the two together to get what she takes with her.

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