Benefit Plans

Defined Benefit Retirement Plans

BB&T provides defined benefit retirement plans qualified under the IRC that cover most employees. Benefits are based on years of service, age at retirement and the employee's compensation during the five highest consecutive years of earnings within the last ten years of employment.

In addition, supplemental retirement benefits are provided to certain key officers under supplemental defined benefit executive retirement plans, which are not qualified under the IRC. Although technically unfunded plans, Rabbi Trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefits.

The following actuarial assumptions were used to determine net periodic pension costs for the qualified pension plans:



	December 31,
	2017		2016		2015
Weighted average assumed discount rate	4.43	%	4.68	%	4.27	%
Weighted average expected long-term rate of return on plan assets	7.00		7.00		7.50
Assumed long-term rate of annual compensation increases	4.50		4.50		4.50

The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, BB&T considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in BB&T's Investment Policy Statement. For 2018, the expected rate of return on plan assets is 7.0%.

Financial data relative to qualified and nonqualified defined benefit pension plans is summarized in the following tables for the years indicated. On the Consolidated Balance Sheets, the qualified pension plan prepaid asset is recorded as a component of other assets and the nonqualified pension plans accrued liability is recorded as a component of other liabilities. The data is calculated using an actuarial measurement date of December 31.



	Year Ended December 31,
(Dollars in millions)	2017			2016			2015
Net Periodic Pension Cost:
Service cost	$	200		$	186		$	176
Interest cost	192			181			157
Estimated return on plan assets	(372		)	(326		)	(327		)
Net amortization and other	75			80			67
Net periodic benefit cost	95			121			73
Pre-Tax Amounts Recognized in OCI:
Prior service credit (cost)	30			—			—
Net actuarial loss (gain)	137			138			230
Net amortization	(75		)	(80		)	(67		)
Net amount recognized in OCI	92			58			163
Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax	$	187		$	179		$	236

The following actuarial assumptions were used to determine benefit obligations:

Activity in the projected benefit obligation is presented in the following table:



	Qualified Plan						Nonqualified Plans
	Year Ended December 31,						Year Ended December 31,
(Dollars in millions)	2017			2016			2017			2016
Projected benefit obligation, beginning of year	$	3,939		$	3,473		$	426		$	392
Service cost	188			174			12			12
Interest cost	173			163			19			18
Actuarial (gain) loss	576			152			77			15
Benefits paid	(102		)	(94		)	(12		)	(11		)
Plan amendments	165			—			(135		)	—
Acquisitions	—			71			—			—
Projected benefit obligation, end of year	$	4,939		$	3,939		$	387		$	426
Accumulated benefit obligation, end of year	$	4,198		$	3,403		$	288		$	363

Effective December 31, 2017, the qualified defined benefit plan was amended and a portion of the accrued benefits of participants in the nonqualified plan were shifted to the qualified plan. Affected associates continue to participate in the nonqualified plan for benefits earned in 2017 and later. In conjunction with this shift, a minimum benefit was established under the qualified plan.

Activity in plan assets is presented in the following table:



	Qualified Plan						Nonqualified Plans
	Year Ended December 31,						Year Ended December 31,
(Dollars in millions)	2017			2016			2017			2016
Fair value of plan assets, beginning of year	$	5,044		$	4,369		$	—		$	—
Actual return on plan assets	888			356			—			—
Employer contributions	479			360			13			11
Benefits paid	(102		)	(94		)	(13		)	(11		)
Acquisitions	—			53			—			—
Fair value of plan assets, end of year	$	6,309		$	5,044		$	—		$	—
Funded status at end of year	$	1,370		$	1,105		$	(387	)	$	(426	)

The following are the pre-tax amounts recognized in AOCI:



	Qualified Plan						Nonqualified Plans
	Year Ended December 31,						Year Ended December 31,
(Dollars in millions)	2017			2016			2017			2016
Prior service credit (cost)	$	(165	)	$	—		$	134		$	(1	)
Net actuarial loss	(1,092		)	(1,095		)	(198		)	(135		)
Net amount recognized	$	(1,257	)	$	(1,095	)	$	(64	)	$	(136	)

The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2018:



(Dollars in millions)	Qualified Plan			Nonqualified Plans
Net actuarial loss	$	(49	)	$	(22	)
Prior service credit (cost)	(25		)	$	19
Net amount expected to be amortized in 2018	$	(74	)	$	(3	)

BB&T makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. BB&T made discretionary contributions of $144 million during the first quarter of 2018. Management may make additional contributions in 2018. For the nonqualified plans, the employer contributions are based on benefit payments.

The following table reflects the estimated benefit payments for the periods presented:



(Dollars in millions)	Qualified Plan		Nonqualified Plans
2018	$	114	$	15
2019	125		15
2020	137		16
2021	150		16
2022	164		17
2023-2027	1,042		101

BB&T's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act of 1974. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.

BB&T periodically reviews its asset allocation and investment policy and makes changes to its target asset allocation. BB&T has established guidelines within each asset category to ensure the appropriate balance of risk and reward. For the year ended December 31, 2017, the target asset allocations for the plan assets included a range of 30% to 50% for U.S. equity securities, 11% to 18% for international equity securities, 35% to 53% for fixed income securities, and 0% to 14% for alternative investments, which include real estate, hedge funds and private equities. The plan may hold up to 10% of its assets in BB&T common stock.

The fair values of certain pension plan assets by asset category are reflected in the following table:



	December 31, 2017						December 31, 2016
(Dollars in millions)	Total		Level 1		Level 2		Total		Level 1		Level 2
Cash and cash-equivalents	$	67	$	67	$	—	$	179	$	179	$	—
U.S. equity securities	2,503		1,333		1,170		1,892		1,018		874
International equity securities	1,130		195		935		839		165		674
Fixed income securities	2,452		10		2,442		1,914		10		1,904
Total	$	6,152	$	1,605	$	4,547	$	4,824	$	1,372	$	3,452

International equity securities include a common/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Investments measured at fair value using the net asset value per share or equivalent as a practical expedient are not required to be classified in the fair value hierarchy. The pension plan held alternative investments valued using net asset values totaling $105 million and $199 million at December 31, 2017 and 2016, respectively.

Defined Contribution Plans

BB&T offers a 401(k) Savings Plan and other defined contribution plans that permit employees to contribute from 1% to 50% of their cash compensation. For full-time employees who are 21 years of age or older with one year or more of service, BB&T makes matching contributions of up to 6% of the employee's compensation. BB&T's contribution expense for the 401(k) Savings Plan and nonqualified defined contribution plans totaled $133 million, $129 million and $114 million for the years ended December 31, 2017, 2016 and 2015, respectively. Certain employees of subsidiaries participate in the 401(k) Savings Plan with different matching formulas.

Other Benefits

There are various other employment contracts, deferred compensation arrangements and covenants not to compete with selected members of management and certain retirees. These plans and their obligations are not material to the financial statements.

December 31,

Weighted average assumed discount rate

Assumed rate of annual compensation increases