Ally Bank 2012 Annual Report Download - page 175

173
The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits.
($ in millions) 2012 2011 2010
Balance at January 1, $ 198 $ 214 $ 172
Additions based on tax positions related to the current year 14 11 69
Additions for tax positions of prior years 220 3
Reductions for tax positions of prior years (4) (3) (23)
Settlements (17) (35) (9)
Expiration of statute of limitations (4) — (2)
Foreign-currency translation adjustments (5) (9) 4
Deconsolidation of ResCap and discontinued operations (82) — —
Balance at December 31, $ 102 $ 198 $ 214
Included in the unrecognized tax benefits balances are some items, the recognition of which would not affect the effective tax rate, such
as the tax effect of certain temporary differences and the portion of gross state unrecognized tax benefits that would be offset by the tax
benefit of the associated federal deduction. At December 31, 2012, 2011, and 2010, the balance of unrecognized tax benefits that, if
recognized, would affect our effective tax rate is $84 million, $179 million, and $199 million, respectively.
We recognize accrued interest and penalties related to uncertain income tax positions in interest expense and other operating expenses,
respectively. For the years ended December 31, 2012, 2011, and 2010, $1 million, $1 million, and $1 million, respectively, were accrued for
interest and penalties with the cumulative accrued balance totaling $7 million at December 31, 2012, $178 million at December 31, 2011, and
$201 million at December 31, 2010.
We anticipate the examination of various U.S. income tax returns along with the examinations by various foreign, state, and local
jurisdictions will be completed within the next twelve months. As such, it is reasonably possible that certain tax positions may be settled and
the unrecognized tax benefits would decrease by $22 million, which includes interest and penalties.
We file tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Our most significant operations remaining
following our commitment to sell various international operations are the United States and Canada. The oldest tax years that remain subject
to examination for those jurisdictions are 2009 and 2004, respectively.
24. Employee Benefit and Compensation Plans
Defined Contribution Plan
A significant number of our employees are covered by defined contribution plans. Employer contributions vary based on criteria specific
to each individual plan and amounted to $56 million, $66 million, and $58 million in 2012, 2011, and 2010, respectively. These costs were
recorded as compensation and benefits expense in our Consolidated Statement of Income. We expect contributions for 2013 to be similar to
contributions made in 2012.
Defined Benefit Pension Plan
Certain of our employees are eligible to participate in separate retirement plans that provide for pension payments upon retirement based
on factors such as length of service and salary. In recent years, we have transferred, frozen, or terminated a significant number of our other
defined benefit plans. All income and expense noted for pension accounting was recorded as compensation and benefits expense in our
Consolidated Statement of Income.
The following summarizes information related to our pension plans.
Year ended December 31, ($ in millions) 2012 2011
Projected benefit obligation $ 355 $ 528
Fair value of plan assets 214 398
Underfunded status $ (141) $ (130)
The underfunded position is recognized on the Consolidated Balance Sheet and the change in the underfunded position was recorded in
other comprehensive income (loss).
Defined Benefit Pension Plan Actions
GMAC Mortgage Group LLC, our wholly owned subsidiary, sponsors a defined benefit pension plan (the GMACM Pension Plan) for
which the accrual of additional benefits were previously frozen. The GMACM Pension Plan primarily covers former employees of certain
discontinued or non-core businesses of our Mortgage and Insurance operations. In October 2012, we entered into an agreement under which
the GMACM Pension Plan purchased a group annuity contract from a third-party insurance company that requires the insurance company to
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K