Distributions
Active participants may take a withdrawal from the Plan in the event of a financial hardship. A hardship withdrawal is limited to the amount necessary
to meet the participants immediate financial need. Hardship withdrawals are further limited to pre-tax contributions, pre-tax
catch-up contributions, after-tax contributions (including earnings thereon), Roth contributions, Roth catch-up contributions,
and rollover contributions (excluding acquisition rollovers). Prior to 2019, a hardship withdrawal generally resulted in a six-month suspension of contributions (other than rollover contributions) to the Plan
and the sources available for a hardship withdrawal excluded earnings on pre-tax (including catch-up) and after-tax
contributions.
Active participants may also generally take a withdrawal at any time from their rollover and
after-tax accounts within the Plan. After reaching age 591⁄2, active participants may withdraw all, or any portion, of the
balance in their accounts. Distributions, in full or any portion, may also occur if the participant terminates employment, retires, becomes permanently disabled, or dies. Distributions of investments in Microsoft Common Stock may be taken in the
form of Microsoft Common Stock or cash. Distributions may be made in installments.
Participants may also withdraw all, or any portion, of their pre-tax and Roth contributions during a leave of absence to perform qualified military service of at least 30 days, subject to a six-month suspension on future non-rollover contributions to the Plan, or if they elect a qualified reservist distribution. The distribution generally must be made in a single lump sum cash payment, except that distributions of investments in
Microsoft Common Stock may be taken in the form of Microsoft Common Stock or cash.
In-Plan Roth Conversions
Active and terminated participants may convert any Plan balances (other than outstanding loans) to a Roth account within the Plan.
Administrative Expenses
Plan administrative expenses are
paid by the Company to the extent not paid or offset by the Plan. Participants are responsible for fees associated with certain transactions or services they utilize, such as loan originations and maintenance, domestic relations order
qualifications, dividend check processing, overnight check fees, and professional management service fees. Participants also pay commission charges to Fidelity for buying and selling Microsoft Common Stock within the Plan.
Plan Amendment and Termination
The Company has the right to
amend or terminate the Plan. If the Plan is terminated, all account balances will be distributed in the form and manner determined by the Plan Administrator.
Risks and Uncertainties
The Plan utilizes various
investment instruments, including common stock, mutual funds, common collective trusts, and separately managed accounts. Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk, and overall market
volatility. Due to the level of risk associated with certain investment securities, including systemic market disruptions, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the financial statements.
In March 2020, the World Health Organization declared the
outbreak of COVID-19 to be a pandemic. The ongoing COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global
society, economies, financial markets, and business practices, and there is substantial uncertainty in the nature and degree of its continued effects over time. The extent to which COVID-19 impacts the
Plan going forward will depend on numerous evolving factors which cannot be reliably predicted, and management is not able to estimate the impact the pandemic may have on the Plans financial statements.
Estimates and Assumptions
The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein. Actual results and outcomes may differ from managements estimates and
assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. The Plan has no contingent assets or liabilities for any periods presented in these
financial statements.
6