IBM 2009 Annual Report Download - page 112

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Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
IBM Excess 401(k) Plus Plan
Effective January 1, 2008, the company replaced the IBM Exec-
utive Deferred Compensation Plan, an unfunded, nonqualified,
defined contribution plan, with the IBM Excess 401(k) Plus Plan
(Excess 401(k)), an unfunded, nonqualified defined contribution
plan. All employees whose eligible compensation is expected to
exceed the IRS compensation limit for qualified plans are eligible to
participate in the Excess 401(k). The purpose of the Excess 401(k)
is to provide benefits that would be provided under the qualified
IBM 401(k) Plus Plan if the compensation limits did not apply.
Amounts deferred into the Excess 401(k) are recordkeeping
(notional) accounts and are not held in trust for the participants.
Participants in the Excess 401(k) may invest their notional
accounts in the primary investment options available to all
employees through the 401(k) Plus Plan. Participants in the
Excess 401(k) are also eligible to receive company match and
automatic contributions on eligible compensation deferred into
the Excess 401(k) and on compensation earned in excess of the
Internal Revenue Code pay limit once they have completed one
year of service. Through June 30, 2009, eligible participants also
received transition credits. Amounts deferred into the Excess
401(k), including company contributions are recorded as liabilities.
NONPENSION POSTRETIREMENT BENEFIT PLAN
U.S. Nonpension Postretirement Plan
The company sponsors a defined benefit nonpension postretire-
ment benefit plan that provides medical and dental benefits to
eligible U.S. retirees and eligible dependents, as well as life insur-
ance for eligible U.S. retirees. Effective July 1, 1999, the company
established a Future Health Account (FHA) for employees who
were more than five years from retirement eligibility. Employees
who were within five years of retirement eligibility are covered
under the company’s prior retiree health benefits arrangements.
Under either the FHA or the prior retiree health benefit arrange-
ments, there is a maximum cost to the company for retiree
health benefits.
Since January 1, 2004, new hires, as of that date or later, are
not eligible for company subsidized postretirement benefits.
Non-U.S. Plans
Most subsidiaries and branches outside the United States spon-
sor defined benefit and/or defined contribution plans that cover
substantially all regular employees. The company deposits funds
under various fiduciary-type arrangements, purchases annuities
under group contracts or provides reserves for these plans.
Benefits under the defined benefit plans are typically based
either on years of service and the employee’s compensation
(generally during a fixed number of years immediately before
retirement) or on annual credits. The range of assumptions that
are used for the non-U.S. defined benefit plans reflect the differ-
ent economic environments within the various countries.
In addition, certain of the company’s non-U.S. subsidiar-
ies sponsor defined benefit nonpension postretirement benefit
plans that provide medical and dental benefits to eligible non-
U.S. retirees and eligible dependents, as well as life insurance for
certain eligible non-U.S. retirees. However, most of the non-U.S.
retirees are covered by local government sponsored and admin-
istered programs.
Plan Financial Information
Summary of Financial Information
The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated
Statement of Earnings.
($ in millions)
U.S. Plans Non-U.S. Plans Total
For the year ended December 31: 2009 2008 2007 2009 2008* 2007* 2009 2008* 2007*
Defined benefit pension plans $(919) $ (948) $ 473 $ 521 $402 $ 835 $ (398) $ (546) $1,308
Retention Plan 13 13 23 — — — 13 13 23
Total defined benefit pension plans
(income)/cost $(906) $ (936) $ 496 $ 521 $402 $ 835 $ (384) $ (534) $1,331
IBM 401(k) Plus Plan and Non-U.S. plans $ 946 $1,034 $ 390 $ 478 $540 $ 478 $1,424 $1,574 $ 868
Excess 401(k) 26 36 12 — — — 26 36 12
Total defined contribution plans cost $ 972 $1,069 $ 402 $ 478 $540 $ 478 $1,450 $1,609 $ 880
Nonpension postretirement benefit plans cost $ 292 $ 310 $ 342 $ 58 $ 53 $ 57 $ 350 $ 363 $ 399
Total retirement-related
benefits net periodic cost $ 358 $ 443 $1,240 $1,057 $996 $1,370 $1,415 $1,439 $2,610
* Reclassified to conform with 2009 presentation.
110