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We all know life can bring unexpected expenses and financial challenges. Whether you're looking to buy a home, cover emergency costs, or manage other financial needs, the Microsoft 401(k) Plan offers a loan program to help you access the funds you need.
A loan allows you to borrow money from your account and pay it back over time. The interest you pay on the loan goes back into your account. Loans are available to all participants who are employees of Microsoft or its subsidiaries and affiliates, except where prohibited by law. Once the loan is approved, it will take approximately 7 to 10 business days to receive the loan documents and your check.
Primary Residence Loan: Used to acquire your primary home within 90 days of receiving the loan. It can only be used for costs associated with the purchase of your home (not for remodeling, refinancing, or the purchase of land). The term of the loan can be between 1 and 15 years.
General Loan: Any loan other than a Primary Residence Loan. The term of the loan can be between 1 and 5 years.
The minimum loan amount is $1,000 and the maximum is the lesser of 50% of your account balance or $50,000, reduced by the outstanding balance of all other loans from the Plan. Loans must be in $100 increments.
Quick tip! Any money invested in your BrokerageLink account will be included in your balance for this calculation, but these assets can’t be liquidated to generate loan proceeds. If you want to take a loan using money in your BrokerageLink account, you’ll need to transfer those assets out of that account prior to requesting the loan.
The interest rate for both types of loans is 1% plus the prime rate on corporate loans, set at the time of loan initiation. There is a one-time $35 non-refundable fee to establish the loan. In addition, you’ll pay a $3.75 quarterly loan maintenance fee throughout the life of your loan.
When Microsoft stock is sold to fund a loan or when loan repayments are reinvested in Microsoft stock, your account will be assessed a $0.01 per share trading fee with a maximum commission of $19.95 per trade.
Loan repayments are made through after-tax payroll deductions. Loans may be pre-paid at any time without penalty. For an electronic payment or for payoffs by cashier’s or certified check, go to Fidelity NetBenefits and follow the steps to authorize a full or partial payoff. You may also call Fidelity at (888) 810-6738 to obtain the loan payoff amount and the mailing address. After you repay a loan, you must wait 30 days before being eligible to request a new loan of that same type.
If you leave Microsoft or transfer to a foreign subsidiary while you have an outstanding loan, you can set up electronic loan payments from a U.S. bank account within 60 days from your termination or transfer date to avoid defaulting on the loan. If you don’t make the payments when due, the loan will be in default and will become taxable income to you.
To apply for a loan, go to Fidelity NetBenefits, select Microsoft 401(k) Plan, then navigate to the Withdrawals/Loans tab. If you would like to receive your loan proceeds through an Electronic Funds Transfer (EFT), establish the EFT before requesting the loan. EFT is not available for loans initiated over the phone and cannot be set up with international banks.
Primary Residence Loan documentation If you’re applying for a Primary Residence Loan, fax or mail a copy of your Purchase & Sale or Contract Sale Agreement, signed by both the buyer and seller to one of the addresses below:
| Regular mail | Overnight mail | Fax |
Fidelity Investments
| Fidelity Investments
| (800) 347-2805 |
Before taking a loan from your Microsoft 401(k) Plan, it's important to consider the following:
Impact on Retirement Savings: Taking a loan reduces the amount of money invested in your retirement account, which can affect your long-term savings and investment returns.
Repayment terms: Ensure you understand the repayment terms and are comfortable with the semi-monthly payroll deductions. Special terms apply during a leave of absence, so refer to the Summary Plan Description for full details.
Fees and interest: Be aware of the fees and interest rates associated with the loan, as these will add to the overall cost.
Alternative options: Consider other sources of funds, such as personal savings or borrowing from a financial institution, which might offer more favorable terms.
Potential Default: Understand the conditions that could lead to a loan default and the consequences, including potential tax implications and penalties. Refer to the Summary Plan Description for full details.
If you start a paid leave of absence, loan payments will continue to be deducted from your paychecks. For unpaid leave (or if your pay is less than the required payments), regular loan payments are excused for the first 12 months of that leave (or if the loan is obtained during the unpaid leave, the first 12 months of regular loan payments), but interest will still accrue. After 12 months of unpaid leave or insufficient pay, you must make payments directly to Fidelity to avoid default. The entire loan balance and accrued interest must be paid within the original loan term. Missed payments and accrued interest during unpaid leave may be due as a lump sum at the end of the loan term. If you don't return to your paid status by the end of the loan term, the outstanding balance will be due on the final payment date. Upon returning to active paid status before the end of the loan term, your loan will be re-amortized, and future payments will be deducted from your paychecks, which may change due to missed payments and accrued interest during the leave.
Special rules apply if you take a leave of absence because of qualified military service and return to active employment after the period of military service. Contact your benefits team or HR representative for more information.