IBM 2010 Annual Report Download - page 115

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies 113
The company’s matching contributions vest immediately and
participants are always fully vested in their own contributions. All
contributions, including the company match, are made in cash
and invested in accordance with participants’ investment elections.
There are no minimum amounts that must be invested in company
stock, and there are no restrictions on transferring amounts out of
company stock to another investment choice, other than excessive
trading rules applicable to such investments.
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.
Employees who are eligible to participate in the 401(k) Plus Plan
and 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 ben-
efits 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 com-
pany contributions, are recorded as liabilities in the Consolidated
Statement of Financial Position.
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: 2010 2009 2008 2010 2009 2008 2010 2009 2008
Defined benefit pension plans $(949) $ (919) $ (948) $ 541 $ 521 $402 $ (408) $ (398) $ (546)
Retention Plan 14 13 13 — — — 14 13 13
Total defined benefit pension plans
(income)/cost $(935) $(906) $ (936) $ 541 $ 521 $402 $ (394) $ (384) $ (534)
IBM 401(k) Plus Plan
and Non-U.S. plans $ 882 $ 946 $1,034 $ 527 $ 478 $540 $1,409 $1,424 $1,574
Excess 401(k) 20 26 36 — — — 20 26 36
Total defined contribution plans cost $ 902 $ 972 $1,069 $ 527 $ 478 $540 $1,430 $1,450 $1,609
Nonpension postretirement
benefit plans cost $ 281 $ 292 $ 310 $ 66 $ 58 $ 53 $ 347 $ 350 $ 363
Total retirement-related
benefits net periodic cost $ 248 $ 358 $ 443 $1,134 $1,057 $996 $1,382 $1,415 $1,439
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 insurance
for eligible U.S. retirees. Effective July 1, 1999, the company estab-
lished 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 arrangements, 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 sponsor
defined benefit and/or defined contribution plans that cover sub-
stantially 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 different economic environments
within the various countries.
In addition, certain of the company’s non-U.S. subsidiaries
sponsor 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 non-U.S. retirees are covered by local
government-sponsored and -administered programs.