Navy Federal Credit Union 2015 Annual Report Download - page 64

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Financial Section 45
2015—SHARED SUCCESS
The following is a description of the valuation methodologies used for the Plan’s financial
instruments measured at fair value:
> U.S. Equity Securities (Level 2)—During the years ended December 31, 2015 and 2014, the
Plan invested in one common collective trust. The trust is valued at net asset value, which
is calculated based on the fair value of the underlying investments of the trust. Most of the
underlying investments in this trust are traded in markets that are considered to be active,
but the trust itself is not actively publicly traded, as it is marketed principally to institutional
investors. For those underlying investments that are not considered actively traded, the
values are based on quoted market prices, dealer quotations or valuations from pricing
sources supported by observable inputs. As such, the trust is classified within Level 2 of
the fair value hierarchy.
Interest in the trust can generally be purchased and redeemed daily with two days’ advance
notice. Trades are usually settled no later than three business days after the trade date.
> Intermediate-Term Fixed-Income Securities (Level 2)—The intermediate-term fixed-income
securities are generally valued using benchmark yields, reported trades and broker/dealer
quotes for similar assets in an active market. In addition, as of December 31, 2015 and 2014, the
Plan invested in one intermediate-term fixed-income security common collective trust. Most of
the underlying investments in this trust are traded in markets that are considered to be active,
but the trust itself is not actively publicly traded, as it is marketed principally to institutional
investors. As such, the trust is classified within Level 2 of the fair value hierarchy. Interest in
the trust can generally be purchased and redeemed daily with advance written notice of one
business day. Settlement of redemptions of more than $1 million will occur 10 business days
following the trade date.
There were no significant concentrations of risk within plan assets at December 31, 2015 and 2014,
as equity and fixed-income assets are broadly diversified.
Navy Federal 401(k) Savings Plan
The Navy Federal 401(k) savings plan is a defined contribution plan where employees can
contribute up to the statutory limits to a 401(k) retirement account and receive employer
matching contributions. The matching contribution percentage is based on the formula the
employee receives in the defined benefit retirement plan. Employees eligible for the Cash Balance
benefit receive a 100% employer match on the first 7% of pay (6% of the pay for the year ended
December 31, 2014) they contribute to their 401(k) account up to IRS limits and are vested after
completing two years of service. The employees eligible for the Traditional benefit receive an
employer match of 50% on the first 7% of pay (6% of the pay for the year ended December 31,
2014) they contribute to their 401(k) account up to IRS limits.
The cost recognized for the 401(k) Plan, including matching contributions and administrative costs,
was $39.4 million and $28.6 million for the years ended December 31, 2015 and 2014, respectively.