BB&T 2013 Annual Report Download - page 123

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The IRS has completed its Federal income tax examinations of BB&T through 2007. Various years remain subject to
examination by state taxing authorities. 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. 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.
On September 20, 2013, the court denied the refund claim. BB&T has filed a Notice of Appeal to the U.S. Court of Appeals
for the Federal Circuit. As of December 31, 2013, the exposure for this financing transaction is fully reserved. Depending on
the outcome of the appeals process, as well as the current IRS examination, it is reasonably possible that changes in the
amount of unrecognized tax benefits, penalties and interest could result in a benefit of up to $750 million during the next
twelve months. The ultimate resolution of these matters may take longer.
NOTE 13. Benefit Plans
Defined Benefit Retirement Plans
BB&T provides a defined benefit retirement plan qualified under the Internal Revenue Code that covers most 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 actuarial assumptions were used to determine net periodic pension costs for the qualified pension plan:
December 31,
2013 2012 2011
Weighted average assumed discount rate 4.25 % 4.82 % 5.52 %
Weighted average expected long-term rate of return on plan assets 8.00 8.00 8.00
Assumed long-term rate of annual compensation increases 4.50 4.50 4.50
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. The expected rate of return has been decreased to
7.75% for fiscal 2014.
Financial data relative to the defined benefit pension plans is summarized in the following tables for the years indicated. The
qualified pension plan prepaid asset is recorded on the Consolidated Balance Sheets as a component of other assets and the
nonqualified pension plans accrued liability is recorded on the Consolidated Balance Sheets as a component of other
liabilities. The data is calculated using an actuarial measurement date of December 31.