Wells Fargo 2008 Annual Report Download - page 151

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Note 20: Employee Benefits and Other Expenses
Employee Benefits
We sponsor noncontributory qualified defined benefit
retirement plans including the Wells Fargo & Company
Cash Balance Plan (Cash Balance Plan), which covers
eligible employees of the legacy Wells Fargo and the
Wachovia Corporation Pension Plan (Pension Plan), a cash
balance plan that covers eligible employees of the legacy
Wachovia Corporation.
Under the Cash Balance Plan, eligible employees’ Cash
Balance Plan accounts are allocated a compensation credit
based on a percentage of their qualifying 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.
Prior to January 1, 2008, employees became vested in their
Cash Balance Plan accounts after completing five years of
vesting service or reaching age 65, if earlier. Effective
January 1, 2008, employees become vested in their Cash
Balance Plan accounts after completing three years of
vesting service or reaching age 65, if earlier.
Under the Pension Plan, eligible employees who were
hired prior to January 1, 2008, are allocated an annual
compensation credit based on a percentage of their qualifying
compensation. The compensation credit is based on their
level of compensation. In addition, investment credits are
allocated to participants annually based on their accumulated
balances. Effective January 1, 2008, employees become
vested in their Pension Plan accounts after completing
three years of vesting service.
We made a $250 million contribution to our Cash Balance
Plan in 2008 although a contribution was not required. We
expect that we will not be required to make a contribution to
the Cash Balance Plan or the Pension Plan in 2009, however,
this is dependent on the finalization of participant data. Our
decision of whether to make a contribution in 2009 will be
based on various factors including the maximum deductible
contribution under the Internal Revenue Code and the actual
investment performance of plan assets during 2009. Given
these uncertainties, we cannot estimate at this time the
amount, if any, that we will contribute in 2009 to the Cash
Balance Plan or Pension Plan. The total amount contributed
for our other pension plans in 2008 was $33 million. For the
unfunded nonqualified pension plans and postretirement
benefit plans, we will contribute the minimum required amount
in 2009, which equals the benefits paid under the plans. In
2008, we paid $65 million in benefits for the postretirement
plans, which included $39 million in retiree contributions.
We sponsor defined contribution retirement plans
including the Wells Fargo & Company 401(k) Plan (401(k)
Plan) and the Wachovia Savings Plan (Savings Plan). We
also have a frozen defined contribution plan resulting from
a company acquired by Wachovia. No contributions are
permitted to that plan. Under the 401(k) Plan, after one month
of service, eligible employees may contribute up to 25% of
their pre-tax qualifying 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 qualifying
compensation. The matching contributions generally vest
over four years.
Under the Savings Plan, after one month of service, eligible
employees may contribute up to 30% of their qualifying
compensation on a pre-tax or after-tax basis, although there
may be a lower limit for certain highly compensated employees
in order to maintain the qualified status of this Savings 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 qualifying
compensation. The matching contributions vest immediately.
Expenses for defined contribution retirement plans were
$411 million, $426 million and $373 million in 2008, 2007
and 2006, 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 December 31 for our pension and postretirement
benefit plans.
Under FAS 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans – an amendment
of FASB Statements No. 87, 88, 106, and 132(R), we were
required to change the measurement date for our pension
and postretirement plan assets and benefit obligations from
November 30 to December 31 beginning in 2008. To reflect
this change, we recorded an $8 million (after tax) adjustment
to the 2008 beginning balance of retained earnings.