Wells Fargo 2005 Annual Report Download - page 89
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87
Note 15: Employee Benefits and Other Expenses
Employee Benefits
We sponsor noncontributory qualified defined benefit
retirement plans including the Cash Balance Plan. The
Cash Balance Plan is an active plan that covers eligible
employees (except employees of certain subsidiaries).
Under the Cash Balance Plan, eligible employees’ Cash
Balance Plan accounts are allocated a compensation credit
based on a percentage of their certified compensation. The
compensation credit percentage is based on age and years
of credited service. In addition, investment credits are
allocated to participants quarterly based on their accumulated
balances. Employees become vested in their Cash Balance
Plan accounts after completing five years of vesting service
or reaching age 65, if earlier.
Although we were not required to make a contribution
in 2005 for our Cash Balance Plan, we funded the maximum
amount deductible under the Internal Revenue Code, or
$288 million. The total amount contributed for our pension
plans was $340 million. We expect that we will not be
required to make a contribution in 2006 for the Cash
Balance Plan. The maximum we can contribute in 2006 for
the Cash Balance Plan depends on several factors, including
the finalization of participant data. Our decision on how
much to contribute, if any, depends on other factors,
including the actual investment performance of plan assets.
Given these uncertainties, we cannot at this time reliably
estimate the maximum deductible contribution or the
amount that we will contribute in 2006 to the Cash
Balance Plan. For the unfunded nonqualified pension plans
and postretirement benefit plans, we will contribute the
minimum required amount in 2006, which equals the benefits
paid under the plans. In 2005, we paid $78 million in benefits
for the postretirement plans, which included $29 million
in retiree contributions, and $13 million for the unfunded
pension plans.
We sponsor defined contribution retirement plans
including the 401(k) Plan. Under the 401(k) Plan, after
one month of service, eligible employees may contribute up
to 25% of their pretax certified compensation, although
there may be a lower limit for certain highly compensated
employees in order to maintain the qualified status of the
401(k) Plan. Eligible employees who complete one year
of service are eligible for matching company contributions,
which are generally a 100% match up to 6% of an employee’s
certified compensation. The matching contributions generally
vest over four years.
Expenses for defined contribution retirement plans were
$370 million, $356 million and $257 million in 2005, 2004
and 2003, respectively.
We provide health care and life insurance benefits for
certain retired employees and reserve the right to terminate
or amend any of the benefits at any time.
The information set forth in the following tables is
based on current actuarial reports using the measurement
date of November 30 for our pension and postretirement
benefit plans.