Employee Benefit Plans

TCF maintains four employee benefit plans: (i) the TCF 401K Plan (the "401K"), (ii) the TCF 401K Supplemental Plan (the "Supplemental Plan"), (iii) the TCF Cash Balance Pension Plan (the "Pension Plan") and (iv) the Postretirement Plan.

TCF 401K Plan The 401K, a qualified 401(k) and employee stock ownership plan, allows participants to make contributions of up to 50% of their covered compensation on a tax-deferred and/or after-tax basis, subject to the annual covered compensation limitation imposed by the Internal Revenue Service ("IRS"). TCF matches the contributions of all participants with TCF common stock at the rate of $1 per dollar for employees with one or more years of service up to a maximum company contribution of 5.0% of the employee's covered compensation per pay period subject to the annual covered compensation limitation imposed by the IRS. Employee contributions vest immediately and matching contributions made subsequent to January 1, 2016 vest immediately. Company matching contributions made prior to January 1, 2016 are subject to a graduated vesting schedule based on an employee's years of service with full vesting after five years.

Employees have the opportunity to diversify and invest their account balance, including matching contributions, in various mutual funds or TCF common stock. At December 31, 2018, the fair value of the assets in the 401K totaled $319.4 million and included $152.0 million invested in TCF common stock. Dividends on TCF common shares held in the 401K reduce retained earnings and the shares are considered outstanding for computing earnings per share. The Company's matching contributions are expensed when earned. TCF's contributions to the 401K were $12.3 million, $12.3 million and $12.6 million for 2018, 2017 and 2016, respectively.

TCF 401K Supplemental Plan The Supplemental Plan, a non-qualified plan, allows certain employees to contribute up to 50% of their salary and bonus. TCF matching contributions to this plan totaled $1.3 million, $1.2 million and $1.7 million for 2018, 2017 and 2016, respectively. The Company made no other contributions to this plan, other than payment of administrative expenses. The amounts deferred under this plan are invested in TCF common stock or mutual funds. At December 31, 2018 and 2017, the fair value of the assets in the plan totaled $51.7 million and $52.7 million, respectively, and included $23.0 million and $26.0 million, respectively, invested in TCF common stock. The plan's assets invested in TCF common stock are held in trust and included in treasury stock and other. See Note 15. Equity for further information on treasury stock and other.

TCF Cash Balance Pension Plan The Pension Plan is a qualified defined benefit plan covering employees who were hired prior to June 30, 2004, were at least 21 years old and had worked 1,000 hours. Effective March 31, 2006, TCF amended the Pension Plan to discontinue compensation credits for all participants. Interest credits will continue to be paid until participants' accounts are distributed from the Pension Plan. TCF makes a monthly interest credit to each participant's account. The interest rate used to determine the monthly interest credit is based on the one-year average of the 5-year Treasury Constant Maturity Rate plus 25 basis points, rounded to the nearest quarter point, capped at 12% and determined at the beginning of each year. The weighted-average interest crediting rate was 2.25% and 1.50% for 2018 and 2017, respectively. All participant accounts are 100% vested. The information set forth in the following tables is based on current actuarial reports using the measurement date of December 31.

The measurement of the projected benefit obligation, prepaid pension asset, pension liability and annual pension expense involves actuarial valuation methods and the use of actuarial and economic assumptions. Due to the long-term nature of the Pension Plan obligation, actual results may differ significantly from the actuarial-based estimates. Differences between estimates and actual experience are recorded in the year they arise. TCF closely monitors all assumptions and updates them annually. The Company does not consolidate the assets and liabilities associated with the Pension Plan.

The funded status of the Pension Plan was as follows:



	At or For the Year Ended December 31,
(In thousands)	2018			2017
Change in projected benefit obligation:
Projected benefit obligation, beginning of period	$	31,389		$	33,174
Interest cost on projected benefit obligation	983			1,138
Actuarial (gain) loss	(630		)	765
Benefits paid	(3,412		)	(3,688		)
Projected benefit obligation, end of period	28,330			31,389
Change in fair value of plan assets:
Fair value of plan assets, beginning of period	36,863			39,377
Actual gain (loss) on plan assets	(607		)	1,174
Benefits paid	(3,412		)	(3,688		)
Fair value of plan assets, end of period	32,844			36,863
Funded status of plan, end of period	$	4,514		$	5,474
Amounts recognized in the Consolidated Statements of Financial Condition:
Prepaid (accrued) benefit cost, end of period	$	4,514		$	5,474

The accumulated benefit obligation for the Pension Plan was $28.3 million and $31.4 million at December 31, 2018 and 2017, respectively.

The discount rate used to determine the projected benefit obligation for the Pension Plan was 3.95% and 3.30% in 2018 and 2017, respectively. The discount rate used to determine the projected benefit obligation was determined by matching estimated benefit cash flows to a yield curve derived from corporate bonds rated AA by either Moody's or Standard and Poor's. Bonds containing call or put provisions were excluded. The average estimated duration of benefit cash flows for the Pension Plan was 6.6 years.

TCF's Pension Plan investment policy permits investments in cash, money market mutual funds, direct fixed income securities to include U.S. Treasury securities and U.S. Government-sponsored enterprises, and indirect fixed income investment securities made in fund form (mutual fund or institutional fund) where the fund invests in fixed income securities in investment grade corporate credits, non-investment grade floating-rate bank loans and non-investment grade bonds.

The Pension Plan assets include mutual funds, U.S. Treasury Bills, interest-bearing cash, mortgage-backed securities and a collective investment fund. The Pension Plan assets are measured at fair value on a recurring basis and grouped in three levels, based on the markets in which the assets are traded and the degree and reliability of estimates and assumptions used to determine fair value. Mutual funds, U.S. Treasury Bills and interest-bearing cash are categorized as Level 1. The fair value of Level 1 assets is based on quotes from independent asset pricing services based on active markets. Mortgage-backed securities are categorized as Level 2. The fair value of level 2 assets is based on prices obtained from independent pricing sources that are based on observable transactions of similar instruments, but not quoted markets. At December 31, 2018 and 2017, there were no assets categorized as Level 3. The fair value of the collective investment fund is based on the net asset value ("NAV") of units as a practical expedient, and therefore the asset is not classified in the fair value hierarchy.

The Pension Plan's investments measured at fair value on a recurring basis were as follows:



	At December 31, 2018
(In thousands)	Level 1		Level 2		Level 3		Total
Mutual funds	$	21,566	$	—	$	—	$	21,566
U.S. Treasury Bills	2,993		—		—		2,993
Interest-bearing cash	83		—		—		83
Mortgage-backed securities	—		3,399		—		3,399
Collective investment fund (measured at NAV of units as a practical expedient)	—		—		—		4,812
Total investments at fair value	$	24,642	$	3,399	$	—	$	32,853

	At December 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Total
Mutual funds	$	27,178	$	—	$	—	$	27,178
Interest-bearing cash	63		—		—		63
Mortgage-backed securities	—		4,613		—		4,613
Collective investment fund (measured at NAV of units as a practical expedient)	—		—		—		4,995
Total investments at fair value	$	27,241	$	4,613	$	—	$	36,849

The net periodic benefit plan (income) cost included in other non-interest expense for the Pension Plan was as follows:



	Year Ended December 31,
(In thousands)	2018			2017			2016
Interest cost	$	983		$	1,138		$	1,281
Return on plan assets	607			(1,174		)	(1,898		)
Recognized actuarial (gain) loss	(630		)	765			(625		)
Net periodic benefit plan (income) cost	$	960		$	729		$	(1,242	)

Pension Plan actual return (loss) on plan assets, net of administrative expenses was (1.6)%, 3.2% and 4.9% for 2018, 2017 and 2016, respectively.

The actuarial assumptions used in the Pension Plan valuation are reviewed annually. The assumptions used to determine the estimated net benefit plan cost for the Pension Plan were as follows:



	Year Ended December 31,
	2018		2017		2016
Discount rate	3.30	%	3.60	%	3.75	%
Expected long-term rate of return on plan assets	1.50		1.50		1.50

The expected long-term rate of return on plan assets is determined by reference to historical market returns and future expectations. The 10-year expected average return of the index consistent with the Pension Plan's current investment strategy was 2.5%, net of administrative expenses.

TCF is eligible to contribute up to $11.4 million to the Pension Plan until the 2018 federal income tax return extended due date under various IRS funding methods. TCF made no cash contributions to the Pension Plan in 2018, 2017 and 2016, respectively. TCF does not expect to be required to contribute to the Pension Plan in 2019.

The expected future benefit payments used to determine the projected benefit obligation of the Pension Plan were as follows:



(In thousands)
2019	$	3,241
2020	2,793
2021	2,410
2022	2,298
2023	2,478
2024 - 2028	9,399

Postretirement Plan The Postretirement Plan provides health care benefits to eligible retired employees who retired prior to December 31, 2009. Effective January 1, 2000, TCF modified the Postretirement Plan for employees not yet eligible for benefits under the Postretirement Plan by eliminating the Company subsidy. The provisions for full-time and retired employees then eligible for these benefits were not changed. The Postretirement Plan is not funded. The information set forth in the following tables is based on current actuarial reports using the measurement date of December 31.

The funded status of the Postretirement Plan was as follows:



	At or For the Year Ended December 31,
(In thousands)	2018			2017
Change in benefit obligation:
Benefit obligation, beginning of period	$	3,717		$	4,164
Interest cost on benefit obligation	110			133
Actuarial (gain) loss	(115		)	(248		)
Benefits paid	(392		)	(332		)
Benefit obligation, end of period	3,320			3,717
Change in fair value of plan assets:
Fair value of plan assets, beginning of period	—			—
Benefits paid	(392		)	(332		)
TCF contributions	392			332
Fair value of plan assets, end of period	—			—
Funded status of plan, end of period	$	(3,320	)	$	(3,717	)
Amounts recognized in the Consolidated Statements of Financial Condition:
Prepaid (accrued) benefit cost, end of period	$	(3,320	)	$	(3,717	)
Prior service cost included in accumulated other comprehensive income (loss)	(147		)	(193		)

The changes recognized in accumulated other comprehensive income (loss) attributable to the Postretirement Plan were as follows:



	At or For the Year Ended December 31,
(In thousands)	2018			2017			2016
Accumulated other comprehensive income (loss) before tax, beginning of period	$	(193	)	$	(239	)	$	(285	)
Amortization of prior service credit (recognized in net periodic benefit cost)	46			46			46
Accumulated other comprehensive income (loss) before tax, end of period	$	(147	)	$	(193	)	$	(239	)

Prior service credits of the Postretirement Plan of $46 thousand were included within accumulated other comprehensive income (loss) at December 31, 2018 and are expected to be recognized as components of net periodic benefit cost during 2019.

The net periodic benefit plan (income) cost included in other non-interest expense for the Postretirement Plan was as follows:



	Year Ended December 31,
(In thousands)	2018			2017			2016
Interest cost	$	110		$	133		$	151
Recognized actuarial (gain) loss	(115		)	(248		)	(211		)
Amortization of prior service cost	(46		)	(46		)	(46		)
Net periodic benefit plan (income) cost	$	(51	)	$	(161	)	$	(106	)

The discount rate used to determine the estimated net periodic benefit plan (income) cost for the Postretirement Plan was 3.15%, 3.40% and 3.50% for 2018, 2017 and 2016, respectively.

The assumptions used to determine the benefit obligation for the Postretirement Plan were as follows:



	Year Ended December 31,
	2018		2017
Discount rate	3.85	%	3.15	%
Health care cost trend rate assumed for next year	5.6		5.7
Final health care cost trend rate	4.5		4.5
Year that final health care trend rate is reached	2038		2038

The discount rate used to determine the benefit obligation was determined by matching estimated benefit cash flows to a yield curve derived from corporate bonds rated AA by either Moody's or Standard and Poor's. Bonds containing call or put provisions were excluded. The average estimated duration of benefit cash flows for the Postretirement Plan was 6.1 years.

TCF contributed $0.4 million, $0.3 million and $0.3 million to the Postretirement Plan in 2018, 2017 and 2016, respectively. TCF expects to contribute $0.4 million to the Postretirement Plan in 2019. TCF currently has no plans to pre-fund the Postretirement Plan in 2019.

The expected future benefit payments used to determine the benefit obligation of the Postretirement Plan were as follows:



(In thousands)
2019	$	431
2020	402
2021	374
2022	347
2023	320
2024 - 2028	1,233