suspension of contributions (other than rollover contributions) to the Plan. Active participants may also take a withdrawal from their rollover and
after-tax
account types within the Plan without meeting one of the hardship criteria.
After reaching age 59
1
⁄
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.
Effective January 1, 2019, the Plan was amended to adopt certain provisions of the Bipartisan Budget Act of 2018. With this amendment, the
six-month
suspension of contributions following a hardship withdrawal was eliminated, and the sources available for a hardship withdrawal were expanded to include earnings on
pre-tax
(including
catch-up)
and
after-tax
contributions starting in January 2019.
In-Plan
Roth Conversions
Active participants may convert their Plan distribution-eligible balances to their 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, 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.
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. The Plan has no contingent assets or liabilities for any periods presented in these financial statements.
Valuation of Investments and Income (Loss) Recognition
Investments are recorded at fair value. Security transactions are accounted for as of the trade date. Dividend income is recorded on the
ex-dividend
date, and interest income is recorded as earned. Net increase (decrease) in fair value of investments includes the Plans gains and losses on investments bought and sold as well as held during the
year.
6