default of the loan, which is taxable income to the participant. In January 2018, the loan policy was amended pursuant to the PRTDs Administrative Determination
17-29
to allow participants, during the Eligible Period as defined therein, to request a temporary repayment forbearance up to one year from the original date on loans with outstanding balances as of
September 20, 2017 or on new loans completed on or before the Eligible Period, or to extend the period for loan repayment for one year without halting repayments.
NOTE 4 TAX STATUS
The PRTD has
determined and informed the Plan, by a letter dated June 2, 2014, that the Plan is qualified as a
tax-exempt
plan under the appropriate sections of the PRIRC. The determination letter covered Plan
amendments adopted through April 1, 2013. The Plan has been amended since receiving the determination letter; however, the Plan Administrator believes that the Plan is currently designed and operated in compliance with the applicable
requirements of the PRIRC. Therefore, the Plan is
tax-exempt
as of the financial statement date and no provision for income taxes has been recorded in the financial statements.
NOTE 5
PARTY-IN-INTEREST
TRANSACTIONS
Exempt
Party-In-Interest
Transactions
Microsoft Corporation is the parent company of the Sponsors. Accordingly, transactions in Microsoft Common Stock qualify as exempt
party-in-interest
transactions. As of December 31, 2018 and 2017, the Plan held 27,398 shares of Microsoft Common Stock valued at $2,782,815 and 35,700 shares valued at
$3,053,778, respectively. During the years ended December 31, 2018 and 2017, the Plan recorded Microsoft Common Stock dividend income of $56,804 and $57,296, respectively.
Nonexempt
Party-In-Interest
Transactions
The Plan remitted various participant contributions to the trustee later than required by the Department of Labor Regulation
2510.3-102.
This regulation requires remittances to be made within three business days; however, in certain instances the remittances took four days or longer. To remediate these late remittances, the impacted
participant accounts were credited by an amount representing investment income that would have been earned had the participant contributions been remitted on a timely basis. During 2018, late contributions of $7,301 from 2017 were remediated,
resulting in credits to participant accounts in 2018 of $1. During 2018, late contributions of $243,024 were made, of which $190,521 were remediated in 2018 and $52,503 were remediated in 2019, resulting in credits to participant accounts of $68 in
2018 and $18 in 2019. Late contributions of $273,998 related to various loan repayments, employer match and employee
catch-up
contributions from 2013 through 2018 have not yet been remediated.
NOTE 6 RELATED PARTY TRANSACTIONS
Certain general and administrative expenses are paid by the Sponsors on behalf of the Plan. During the years ended December 31, 2018 and 2017,
these expenses amounted to $77,313 and $80,847, respectively.
8