27. Defined Contribution Plans

Team members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing up to 80 percent of their compensation, as limited by statute or regulation. Generally, we match 100 percent of each team member's contribution up to 5 percent of total compensation. Company match contributions are made to funds designated by the participant.

In addition, we maintain a nonqualified, unfunded deferred compensation plan for approximately 3,000 current and retired team members whose participation in our 401(k) plan is limited by statute or regulation. These team members choose from a menu of crediting rate alternatives that are the same as the investment choices in our 401(k) plan, including Target common stock. We credit an additional 2 percent per year to the accounts of all active participants, excluding members of our management executive committee, in part to recognize the risks inherent to their participation in a plan of this nature. We also maintain a nonqualified, unfunded deferred compensation plan that was frozen during 1996, covering substantially fewer than 100 participants, most of whom are retired. In this plan, deferred compensation earns returns tied to market levels of interest rates plus an additional 6 percent return, with a minimum of 12 percent and a maximum of 20 percent, as determined by the plan's terms. Our total liability under these plans is $505 million at February 2, 2013.

We mitigate some of our risk of offering the nonqualified plans through investing in vehicles, including company-owned life insurance and prepaid forward contracts in our own common stock, that offset a substantial portion of our economic exposure to the returns of these plans. These investment vehicles are general corporate assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur.

The total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax income/(loss) of $14 million, $(4) million and $4 million in 2012, 2011 and 2010, respectively. During 2012 and 2011, we invested $19 million and $61 million, respectively, in such investment instruments, and this activity is included in the Consolidated Statements of Cash Flows within other investing activities. Adjusting our position in these investment vehicles may involve repurchasing shares of Target common stock when settling the forward contracts as described in Note 25. The settlement dates of these instruments are regularly renegotiated with the counterparty.

Prepaid Forward Contracts on Target Common Stock


Prepaid Forward Contracts on Target Common Stock			Contractual Price Paid per Share
(millions, except per share data)	Number of Shares		Contractual Price Paid per Share		Contractual Fair Value		Total Cash Investment

January 28, 2012		1.4	$	44.21	$	69	$	61
February 2, 2013		1.2	$	45.46	$	73	$	54

Plan Expenses


(millions)	2012			2011			2010

401(k) plan
Matching contributions expense	$	218		$	197		$	190
Nonqualified deferred compensation plans
Benefits expense (a)		78			38			63
Related investment loss/(income) (b)		(43	)		(10	)		(31	)

Nonqualified plan net expense	$	35		$	28		$	32

(a): Includes market-performance credits on accumulated participant account balances and annual crediting for additional benefits earned during the year.
(b): Includes investment returns and life-insurance proceeds received from company-owned life insurance policies and other investments used to economically hedge the cost of these plans.