Request a Distribution When Leaving Microsoft

When your employment with Microsoft ends, you can request the distribution of your vested account balance from the Microsoft 401(k) Plan 30 days after your termination date. However, keep in mind that Microsoft doesn’t charge any accounting fees to keep your balance in the plan after you leave. If your balance exceeds $7,000, you can keep your balances in the Plan until age 73 at which point minimum withdrawals become required by law and will happen automatically.

Approximately two weeks after your termination date, you will receive a distribution packet from Fidelity with important tax and distribution information. If you don’t receive a distribution packet, you can request one by calling Fidelity at (888) 810-6738.

After you receive the distribution packet, you must:

Read the Special Tax Notice Regarding Plan Payments.
Review the distribution options and decide which one is best for you.
Wait 30 days after your employment ends.
Call Fidelity at (888) 810-6738 to request your distribution.

If you’re outside the U.S., you can call Fidelity's international number at IAC + (877) 833-9900. You must first obtain an International Access Code (IAC).

You can receive the distribution made payable to you (as a paper check or an Electronic Funds Transfer) or as a rollover to an IRA or qualified Plan. If you want to receive the distribution by EFT, you must establish the EFT before requesting a distribution.

Note: If you’ve moved outside of the U.S., but are still employed by Microsoft, you are not eligible for a distribution. For information about the 401(k) account options if you move to a location outside the United States, see Impact of Employment Changes.

Rollover your funds

You can rollover your distributed funds to an IRA, Roth IRA, or another qualified plan after you leave Microsoft. In this case, the issued distribution check will be payable to the new account custodian. Rolling over your vested account balance to another plan can allow you to continue deferral of taxes.

Note: If you decide to rollover your funds to an IRA or Roth IRA, consider opening a new account instead of using an existing account. If no other money is deposited into this new account, the funds can be rolled over to another qualified plan in the future.

Take a cash payout

Upon ending your employment with Microsoft, you can take a 401(k) distribution as a lump sum cash payout, payable to you. Keep in mind that if you choose to cash out your 401(k), you will be subject to taxation. In addition, if you are not yet age 59 ½, you may also be required to pay a 10% penalty. It’s always a good idea to consult your tax and/or financial advisor before choosing to cash out your 401(k) account.

Receiving Microsoft stock in-kind

If you hold shares of Microsoft Common Stock within the 401(k) Plan, you have the option to receive that stock in-kind upon distribution. If you receive your MSFT shares in-kind, you may have the option of not paying tax on the "net unrealized appreciation" of the stock until you sell the stock. Net unrealized appreciation generally is the increase in the value of the employer stock while it was held by the Plan. Treatment of net unrealized appreciation applies only when you receive a total distribution of your entire account or to Microsoft Stock purchased with after-tax contributions. For more information about net unrealized appreciation, call Fidelity at (888) 810-6738.

If you don’t take action, your plan assets will be automatically processed on the quarterly cadence based on the account balance:

Account balances under $1,000 will be liquidated and paid out to you via check minus the required taxes.
Note: Fidelity typically charges $50 for distributing assets from the IRA.
Account balances over $1,000 but not exceeding $7,000 will be rolled into a Fidelity IRA. Fidelity won’t charge an account or maintenance fee for this IRA if assets are held in the Fidelity Government Cash Reserves fund. Normal expenses and brokerage commissions apply to this IRA if you invest in a different fund.

Account balances over $7,000 will remain in the Microsoft 401(k) plan until you take action or reach age 73.