IBM 2013 Annual Report Download - page 129

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
128
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 com-
pensation 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 record-keeping
(notional) accounts and are not held in trust for the participants.
Participants in the Excess 401(k) may invest their notional accounts
in investments which mirror the primary investment options available
under 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 com-
pensation 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 in the Consolidated Statement of Financial
Position. Effective January 1, 2013, matching and automatic contri-
butions are recorded once annually at the end of the year. In order
to receive such contributions each year, a participant must be
employed on December 15 of the plan year. However, if a participant
separates from service prior to December 15, and has completed
certain service and/or age requirements, then the participant will
be eligible to receive such matching and automatic contributions
following separation from service.
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. Effective January 1,
2014, the company amended the plan to establish a Health Reim-
bursement Arrangement (HRA) for each Medicare-eligible plan
retiree, surviving spouse and long-term disability plan participant
who is eligible for company subsidized coverage and who enrolls in
an individual plan under the Medicare Exchange. The company also
amended its life insurance plan. Employees retiring on or after Janu-
ary 1, 2015, will no longer be eligible for life insurance. Existing
retirees and employees retiring during 2014 continue to be eligible
for retiree life insurance.
Since January 1, 2004, new hires, as of that date or later, are not
eligible for company subsidized nonpension postretirement benefits.
Non-U.S. Plans
Certain 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. Ben-
efits 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 spon-
sor nonpension postretirement benefit plans that provide medical
and dental benefits to eligible non-U.S. retirees and eligible depen-
dents, 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.