NOTES TO FINANCIAL STATEMENTS
December 31, 2020 and 2019
NOTE 1 -
DESCRIPTION OF PLAN
General: The McDonalds Corporation 401(k) Plan (the Plan - formerly McDonalds 401k Plan) is administered by a
committee of officers (the Administrative Committee) appointed by the Executive Vice President - Chief People Officer of McDonalds Corporation (the Company or McDonalds). Fiduciary Counselors oversees the McDonalds Common Stock
Fund and the McDonalds ESOP Stock Fund under the Plan. Participants should refer to the Summary Plan Description and Prospectus for a complete description and
up-to-date information. The Plan was amended and restated on January 1, 2020 to appoint Empower Retirement as the recordkeeper. The Plan was further amended on
December 21, 2020 to allow Roth contributions and hardship withdrawals, to implement a 20% cap on balance transfers into the Company Stock Fund, and to make revisions related to certain Coronavirus Aid, Relief, and Economic Security Act (CARES
Act) and Setting Every Community Up for Retirement Enhancement Act (SECURE Act) provisions.
Eligibility: In order to participate in the 401(k)
feature of the Plan, all eligible employees must be at least 21 years of age, have a valid Social Security number, and be on the U.S. payroll of the Company or a participating employer. For purposes of the eligibility and contribution description
below, the term Company includes McDonalds Corporation and all participating employers.
Restaurant management employees and staff
employees, (including part-time staff employees) are eligible to make 401(k) contributions, up to 50% of eligible compensation, beginning the first day of the month after completing one full calendar month of employment. Vice Presidents and above,
crew employees and interns are eligible to make 401(k) contributions after one year of eligibility service as defined by the Plan document. Restaurant management employees, who are not contributing to the Plan, are enrolled automatically at a 1%
contribution level as soon as they have completed one year of service and attained age 21. Matching contributions are provided to eligible employees after one year of eligibility service as defined by the Plan document.
Contributions: Each year, participants may contribute up to 50% of their eligible pre-tax annual compensation,
as defined by the Plan subject to Internal Revenue Service (the IRS) annual limits. Highly compensated employees under IRS rules are not able to make 401(k) contributions in their second calendar year of employment until the first of the month on or
after they complete one anniversary year with at least 1,000 hours of service under the Plan.
Participants who have attained age 50 before the end of the
Plan year are eligible to make catch-up contributions subject to IRS limits, and in addition, may contribute more than 50% if payroll tax and other withholding requirements are met. In accordance with Plan
procedures, participants may roll over money into the Plan if it is from a Qualified Plan, Section 403(b) tax-sheltered annuity plan, Section 457 deferred compensation plan of a state or local
government entity, SIMPLE 401(k) plan, Section 403(a) annuity plan, Traditional IRA, SIMPLE IRA with at least two years participation, IRA set up to receive a distribution from an eligible employer plan or Federal thrift plan under section
7701(j).
Participants direct the investment of their contributions and Company contributions into various investment options offered by the Plan. The
investment funds under the Plan are the Growth Fund, Income Fund, Inflation Strategy Fund, Capital Preservation Fund, Large Cap Equity Index Fund, Small & Mid Cap Equity Index Fund, International Equity Index Fund, Bond Index Fund, Index
Retirement Income Fund, Index 2010 Retirement Solutions Fund, Index 2015 Retirement Solutions Fund, Index 2020 Retirement Solutions Fund, Index 2025 Retirement Solutions Fund, Index 2030 Retirement Solutions Fund, Index 2035 Retirement Solutions
Fund, Index 2040 Retirement Solutions Fund, Index 2045 Retirement Solutions Fund, Index 2050 Retirement Solutions Fund, Index 2055 Retirement Solutions Fund, Index 2060 Retirement Solutions Fund, McDonalds Common Stock Fund, and the
McDonalds ESOP Stock Fund. No more than 20% of a participants future 401(k) contributions may be invested in the McDonalds Common Stock Fund. (Index 2010 Retirement Fund closed on September 26, 2020, and funds were moved to
Index Retirement Income Fund).
The Company matches (after one year of eligibility service and attainment of age 21) $1 for every $1 of contributions to
the Plan, up to a maximum of 6% of eligible compensation (as defined by the Plan).