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consequence, Norwest elected to recognize as an immediate expense
its unrecognized transition obligation.12 The amount of this
obligation was $71.7 million (after tax).
On December 20, 1991, Norwest established the Norwest Corp.
Employee Benefit Trust for Retiree Medical Benefits (the
postretirement medical trust), effective December 16, 1991.13 The
postretirement medical trust funded postretirement medical benefits
to be provided to all employees, both active and retired (other
than “key employees”), under Norwest’s medical plan. Simultaneously
with the creation of the postretirement medical trust, Norwest
amended the master trust, effective December 16, 1991, to eliminate
the master trust’s responsibility to pay postretirement medical
benefits for all but key employees.
12 SFAS 106, par. 518, defines an “unrecognized transition
obligation” as the unrecognized amount, as of the date SFAS 106 is
initially applied, of “(a) the accumulated post-retirement benefit
obligation in excess of (b) the fair value of plan assets plus
accrued post-retirement benefit cost or less any recognized prepaid
post-retirement benefit cost.” “Accumulated post-retirement
benefit obligation” is defined by SFAS 106, par. 518, as the
actuarial present value of benefits attributed to employee service
rendered to a particular date. Since Norwest historically had
neither paid nor deducted the benefits until incurred, the
unrecognized transition obligation was equal to the accumulated
postretirement benefit obligation.
13 Effective Jan. 1, 1991, Norwest also established a
separate VEBA trust to fund the liabilities for the severance plan.
By an amendment to the master trust, effective Jan. 1, 1993,
Norwest merged the severance plan into the master trust.
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Last modified: May 25, 2011