BB&T 2011 Annual Report Download - page 128

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 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. However, as a procedural matter and in order to limit its exposure to incremental
penalties and interest associated with this matter, BB&T paid the disputed tax, penalties and interest in March 2010, and
filed a lawsuit seeking a refund in the U.S. Court of Federal Claims. The Court has scheduled the trial to take place in
March 2013. BB&T recorded a receivable in other assets for the amount of this payment, less the reserve considered
necessary in accordance with applicable income tax accounting guidance. Based on an assessment of the applicable tax
law and the relevant facts and circumstances related to this matter, management has concluded that the amount of this
reserve is adequate, although litigation is still ongoing. 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.
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.
The following are the significant actuarial assumptions that were used to determine net periodic pension costs:
December 31,
2011 2010
Actuarial Assumptions:
Weighted average assumed discount rate 5.52 % 6.16 %
Weighted average expected long-term rate of return on plan assets 8.00 8.00
Assumed long-term rate of annual compensation increases (1) 4.50 4.50
(1) Represents the rate to be achieved by 2015.
The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be
earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the
expected rate of return, BB&T considers long-term compound annualized returns of historical market data for each asset
category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops
forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for
the plan based on target asset allocations contained in BB&T’s Investment Policy Statement.
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