SunTrust 2006 Annual Report Download - page 79
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Other Actuarial Assumptions
To estimate the projected benefit obligation, actuarial assumptions are required about factors such as
mortality rate, turnover rate, retirement rate, disability rate and the rate of compensation increases.
These factors don’t tend to change significantly over time, so the range of assumptions, and their impact
on pension cost, is generally limited. SunTrust periodically reviews the assumptions used based on
historical and expected future experience.
Due to the adoption of SFAS No. 158, to estimate the projected benefit obligation as of December 31,
2006, the Company projected forward the benefit obligations from January 1, 2006 to December 31,
2006, adjusting for benefit payments, expected growth in the benefit obligations, changes in key
assumptions and plan provisions, and any significant changes in the plan demographics that occurred
during the year, including (where appropriate) subsidized early retirements, salary changes different
from expectations, entrance of new participants, changes in per capita claims cost, Medicare Part D
subsidy, and retiree contributions.
Income Taxes
The Company is subject to the income tax laws of the various jurisdictions where it conducts business
and estimates income tax expense based on amounts expected to be owed to these various tax
jurisdictions. On a quarterly basis, management evaluates the reasonableness of the Company’s effective
tax rate based upon its current estimate of net income, tax credits, and the applicable statutory tax rates
expected for the full year. The estimated income tax expense is reported in the Consolidated Statements
of Income.
Accrued taxes represent the net estimated amount due or to be received from taxing jurisdictions either
currently or in the future and is reported in other liabilities on the Consolidated Balance Sheet. SunTrust
assesses the appropriate tax treatment of transactions and filing positions after considering statutes,
regulations, judicial precedent and other pertinent information and maintains tax accruals consistent
with its evaluation. Changes in the estimate of accrued taxes occur periodically due to changes in tax
rates, interpretations of tax laws, the status of examinations by the taxing authorities, and newly enacted
statutory, judicial, and regulatory guidance that could impact the relative merits of tax positions. These
changes, when they occur, impact accrued taxes and can materially affect the Company’s operating
results. For additional information, see Note 15, “Income Taxes” to the Consolidated Financial
Statements.
Accounting Policies Recently Adopted and Pending Accounting Pronouncements
Recently issued and pending accounting pronouncements are discussed in Note 1, “Accounting
Policies,” to the Consolidated Financial Statements.
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