Detailed Answer
(b) This problem requires that we determine Jen’s
vested interest in the 401(k) plan to be reported in her December
31, year 3 personal statement of financial condition. The
problem states that employer contributions vest after an employee
completes three years of service. As Jen has not completed
three years of service as of December 31, year 3, none of
the employer’s contributions have vested. Thus, the problem is
to determine Jen’s contributions and the earnings on her contributions
as follows:
Year 1 contributions $ 2,100
Year 2 contributions 2,300
Year 3 contributions 2,600
$ 7,000
Earnings on above contributions 1,200
Jen’s vested interest $ 8,200