BB&T 2009 Annual Report Download - page 132

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
liabilities for tax-related interest recorded on its Consolidated Balance Sheets at December 31, 2009 and 2008,
respectively. Total interest, net of the federal benefit, related to unrecognized tax benefits recognized in the 2009,
2008 and 2007 Consolidated Statements of Income was $1 million, $4 million and $12 million, respectively. BB&T
classifies interest and penalties related to income taxes as a component of the provision for income taxes in the
Consolidated Statements of Income.
The IRS has completed its federal income tax examinations of BB&T through 2006. In connection with the
settlement agreement with the IRS regarding its leveraged lease transactions, BB&T is entitled to federal income
tax refunds for tax years 1998-2006. During the first quarter of 2010, BB&T received federal tax refunds, including
interest, of approximately $213 million for tax years 1998-2002, and expects to receive additional federal tax refunds
of approximately $80 million plus interest thereon later in 2010. In February 2010, BB&T received a statutory
notice of deficiency from the IRS for tax years 2002-2007 asserting a liability for taxes, penalties and interest of
approximately $890 million related to the disallowance of foreign tax credits and other deductions claimed by a
deconsolidated subsidiary in connection with a financing transaction. Management has consulted with outside
counsel and continues to believe that BB&T’s treatment of this transaction was in compliance with applicable tax
laws and regulations. Consequently, BB&T will pay the disputed tax, penalties and interest in the first quarter of
2010 and then file a lawsuit seeking a refund in federal court. Management believes the Company’s current reserves
for this matter are adequate, although the final outcome is uncertain. Final resolution of this matter is not expected
to occur within the next twelve months. Various years remain subject to examination by state taxing authorities.
NOTE 14. Benefit Plans
BB&T provides various benefit plans to substantially all employees, including employees of acquired entities.
Employees of acquired entities generally participate in existing BB&T plans after consummation of the business
combinations. The plans of acquired institutions are typically merged into the BB&T plans after consummation of
the mergers, and, under these circumstances, credit is usually given to these employees for years of service at the
acquired institution for vesting and eligibility purposes. The Colonial transaction, as an asset purchase, was
handled differently from typical mergers. The retirement plans of Colonial were not assumed by BB&T, and as
such, were not merged into the BB&T plans. Credit for years of service with Colonial, where given, was
determined on a plan-by-plan basis with regard to the participation of former Colonial employees in BB&T’s
plans.
The following table summarizes expenses (income) relating to employee retirement plans:
For the Years Ended
December 31,
2009 2008 2007
(Dollars in millions)
Defined benefit plans $76 $9 $32
Defined contribution and ESOP plans 83 76 72
Other 26 (38) 12
Total expense related to retirement benefit plans $185 $ 47 $116
Defined Benefit Retirement Plans
BB&T provides a defined benefit retirement plan qualified under the Internal Revenue Code that covers
substantially all employees. Benefits are based on years of service, age at retirement and the employee’s
compensation during the five highest consecutive years of earnings within the last ten years of employment.
In addition, supplemental retirement benefits are provided to certain key officers under supplemental
defined benefit executive retirement plans, which are not qualified under the Internal Revenue Code. Although
technically unfunded plans, a Rabbi Trust and insurance policies on the lives of the certain covered employees are
available to finance future benefits.
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