BB&T 2010 Annual Report Download - page 141

respectively. Total interest, net of the Federal benefit, related to unrecognized tax benefits recognized in the
2010, 2009 and 2008 Consolidated Statements of Income was $1 million, $1 million and $4 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 2007. 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 2010, BB&T received Federal tax refunds including interest
of approximately $379 million for tax years 1998-2006. In February 2010, BB&T received an IRS statutory notice
of deficiency for tax years 2002-2007 asserting a liability for taxes, penalties and interest of approximately $892
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. BB&T paid the disputed tax, penalties and interest, and filed a lawsuit seeking a refund in the U.S.
Court of Federal Claims in March 2010. 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.
During the year ended December 31, 2010, BB&T finalized the tax basis valuation for the assets acquired
from Colonial Bank. Based on this analysis, BB&T identified approximately $114 million in unrecognized tax
benefits related to temporary differences that have been excluded from the deferred tax asset recognized at the
acquisition date.
NOTE 15. 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:
Years Ended
December 31,
2010 2009 2008
(Dollars in millions)
Defined benefit plans $22 $76 $ 9
Defined contribution and ESOP plans 86 83 76
Other 18 26 (38)
Total expense related to retirement benefit plans $126 $185 $ 47
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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