SunTrust 2015 Annual Report Download - page 148

Notes to Consolidated Financial Statements, continued
120
Expected Cash Flows
Expected cash flows for the pension and other postretirement benefit plans is as follows:
(Dollars in millions) Pension Benefits 1Other Postretirement Benefits
(excluding Medicare Subsidy) 2
Employer Contributions:
2016 (expected) to plan trusts $— $—
2016 (expected) to plan participants 38 —
Expected Benefit Payments:
2016 191 7
2017 172 7
2018 166 6
2019 165 5
2020 167 5
2021 - 2025 819 20
1 Based on the funding status and ERISA limitations, the Company anticipates contributions to the Retirement Plan will not be required during 2016.
2 Expected payments under other postretirement benefit plans are shown net of participant contributions.
3 The expected benefit payments for the SERP will be paid directly from the Company's corporate assets.
Defined Contribution Plans
SunTrust's employee benefit program includes a qualified
defined contribution plan. For years ended December 31, 2015,
2014, and 2013, the 401(k) plan provided a dollar-for-dollar
match on the first 6% of eligible pay that a participant, including
executive participants, elected to defer. The related 401(k)
Company expense was $102 million, $98 million, and $96
million for the years ended December 31, 2015, 2014, and 2013,
respectively.
SunTrust also maintains the SunTrust Banks, Inc. Deferred
Compensation Plan in which key executives of the Company are
eligible. Matching contributions for the deferred compensation
plan are the same percentage as provided in the 401(k) plan,
subject to limitations imposed by the plans' provisions and
applicable laws and regulations.
Matching contributions for both the Company's 401(k) plan
and the deferred compensation plan fully vest upon two years of
completed service. Furthermore, both plans permit an additional
discretionary Company contribution equal to a fixed percentage
of eligible pay. Discretionary contributions to the 401(k) plan
and the deferred compensation plan are shown in the following
table.
Performance Year 1
(Dollars in millions) 2015 2014 2013
Contribution $19 $19 $19
Percentage of eligible pay 1% 1% 1%
1 Contributions for each of these performance years are paid in the first quarter of the
following performance year.
NOTE 16 – GUARANTEES
The Company has undertaken certain guarantee obligations in
the ordinary course of business. The issuance of a guarantee
imposes an obligation for the Company to stand ready to perform
and make future payments should certain triggering events occur.
Payments may be in the form of cash, financial instruments, other
assets, shares of stock, or provision of the Company’s services.
The following is a discussion of the guarantees that the Company
has issued at December 31, 2015. The Company has also entered
into certain contracts that are similar to guarantees, but that are
accounted for as derivatives as discussed in Note 17, “Derivative
Financial Instruments.”
Letters of Credit
Letters of credit are conditional commitments issued by the
Company, generally to guarantee the performance of a client to
a third party in borrowing arrangements, such as CP, bond
financing, and similar transactions. The credit risk involved in
issuing letters of credit is essentially the same as that involved
in extending loan facilities to clients and may be reduced by
selling participations to third parties. The Company issues letters
of credit that are classified as financial standby, performance
standby, or commercial letters of credit.
At December 31, 2015 and 2014, the maximum potential
amount of the Company’s obligation for issued financial and
performance standby letters of credit was $2.9 billion and $3.0
billion, respectively. The Company’s outstanding letters of credit
generally have a term of less than one year but may extend longer.
Some standby letters of credit are designed to be drawn upon in
the normal course of business and others are drawn upon only
in circumstances of dispute or default in the underlying
transaction to which the Company is not a party. In all cases, the
Company is entitled to reimbursement from the client. If a letter
of credit is drawn upon and reimbursement is not provided by
the client, the Company may take possession of the collateral
securing the letter of credit, where applicable.