Medtronic Savings and Investment Plan

Transcription

1 DB1/ Medtronic Savings and Investment Plan (Also known as the Medtronic 401(k) Plan ) January 1, 2016

2 MEDTRONIC SAVINGS AND INVESTMENT PLAN This document is a summary of the Medtronic Savings and Investment Plan (also known as the Medtronic 401(k) Plan or Plan ), effective as of January 1, 2016 and is intended to serve as the summary plan description ( SPD ) for the Plan. It is intended to give you general information about your rights and responsibilities under the Plan. However, it does not include all of the detailed Plan provisions, which are contained in the legal Plan documents. If there is any discrepancy between this SPD and the legal Plan documents, the legal Plan documents govern. This SPD is updated periodically. You are encouraged to obtain a current SPD when making decisions about your Plan Account. The information in this document, where indicated, also serves as the Prospectus relating to the offer by Medtronic plc ( Medtronic or the Company ) of Medtronic s stock and interests in the Plan to eligible employees of Medtronic and other participating employers. This offer is being made pursuant to a Prospectus, which consists of this document and other documents that are incorporated by reference and are outlined in Addendum C. This document may be supplemented from time to time, and any such supplements also will constitute part of the Prospectus. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION, OR ANY OTHER REGULATORY AGENCY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This document, unless otherwise identified herein, constitutes part of a Prospectus covering securities that have been registered under the Securities Act of The date of the Prospectus is January 1, 2016 DB1/

3 Medtronic Savings and Investment Plan (Also known as the Medtronic 401(k) Plan ) TABLE OF CONTENTS MEDTRONIC 401(K) PLAN HIGHLIGHTS... 1 INTRODUCTION... 2 WHO IS ELIGIBLE?... 2 WHEN AM I ELIGIBLE?... 2 WHAT IS INCLUDED IN MY PLAN ACCOUNT?... 2 HOW DOES THE PLAN WORK?... 3 HOW DO I ENROLL IN THE PLAN?... 4 HOW DOES MEDTRONIC MATCH MY CONTRIBUTIONS TO THE PLAN?... 5 HOW DOES THE MEDTRONIC CORE CONTRIBUTION WORK?... 6 HOW DOES THE PERSONAL INVESTMENT ACCOUNT WORK?... 6 HOW DO I BECOME VESTED?... 6 CAN I DIVERSIFY MY ESOP ACCOUNTS?... 7 HOW CAN I INVEST MY CONTRIBUTIONS?... 8 HOW DO I CHANGE MY CONTRIBUTIONS OR INVESTMENTS?... 8 WHAT FEES DO I PAY?... 9 WHAT IS ELIGIBLE PAY?... 9 CAN I ROLL OVER CONTRIBUTIONS FROM OTHER EMPLOYER PLANS? CAN I CONVERT MY PLAN ACCOUNT TO ROTH ACCOUNTS? HOW DO I KEEP TRACK OF MY ACCOUNTS? HOW DO LOANS WORK? CAN I WITHDRAW MONEY FROM THE PLAN WHILE I AM WORKING? WHEN IS MY ACCOUNT PAID TO ME? HOW ARE DISTRIBUTIONS TAXED? WHAT HAPPENS TO MY ACCOUNT IF? HOW DO I CHOOSE A BENEFICIARY? PROTECTION OF PLAN BENEFITS/QDROS VOTING RIGHTS DISPUTES REGARDING YOUR BENEFITS STATUTE OF LIMITATIONS/LAWSUITS RECORDS DB1/ i-

4 ASSIGNMENT OF BENEFITS INVESTMENT LOSS LOSS OF BENEFITS NO EMPLOYMENT RIGHTS PENSION BENEFIT GUARANTY CORPORATION ( PBGC ) ADMINISTRATIVE INFORMATION YOUR ERISA RIGHTS ASSISTANCE WITH YOUR QUESTIONS TERMINATION OR AMENDMENT OF THE PLAN INTERPRETATION OF THE PLAN DB1/ ii-

5 MEDTRONIC 401(K) PLAN HIGHLIGHTS When can I start participating? You can start participating (become a Participant ) immediately upon hire if you are an eligible employee who is classified as a regular full-time or part-time employee. If you do not enroll in the Plan or affirmatively opt out, you will be automatically enrolled at a contribution percentage of 6%. Additional eligibility rules may apply if your employment is subject to a collective bargaining agreement. In addition, your contribution will be automatically increased each year until it reaches 10%. You may opt out of this automatic increase by calling the Retirement Service Center at or at retirement.medtronic.com. Who makes contributions to the Plan? You contribute to the Plan with pre-tax or Roth 401(k) dollars. Medtronic matches 50% of the contributions you make up to the first 6% of your eligible pay. If you became a Participant in the Plan on or after January 1, 2016, Medtronic will make a contribution equal to 3% of your eligible pay to the Plan. If you became a Participant in the Plan prior to January 1, 2016 and previously elected to participate in the Personal Investment Account, Medtronic will make a contribution equal to 5% of your eligible pay to the Plan. When are the funds in my Accounts mine? You are always 100% vested in the dollars you contribute. You earn a non-forfeitable right to your Employer Accounts after you complete three Years of Service (as defined below) through a process called cliff vesting. You are fully vested in all accounts if you become disabled, die or reach age 62 while employed at Medtronic. If you were hired prior to January 1, 2016, different vesting rules may apply. How can I invest my Account? The Plan offers several funds in which you can invest your Plan Account. The funds provide a variety of investment opportunities with varying amounts of risk. Can I change my contribution percentage and You can change your contribution percentage and investment choices? When can I withdraw money from the Plan? your investment choices at any time. Generally, your money in the Plan is intended for your retirement. However, you may be allowed to withdraw your contributions while you are working if you are 59½ or for an approved financial hardship. These types of distributions are generally referred to as in-service withdrawals. You can also take out a Plan loan. Plan loans and in-service withdrawals are only available from certain accounts under the Plan and are not available from certain accounts from a prior employer. Depending upon the reason for an inservice withdrawal, there may be tax consequences of any funds withdrawn. DB1/

6 INTRODUCTION Medtronic provides the Plan for you as an additional form of retirement savings. The Plan allows you to contribute, with pre-tax or Roth 401(k) dollars, and it provides for company contributions in the form of a matching contribution. Medtronic will also make a contribution equal to 3% of your eligible pay (the Medtronic Core Contribution ) to eligible employees. If you became a Participant in the Plan prior to January 1, 2016 and previously elected to participate in the Personal Investment Account, Medtronic will instead make a contribution equal to 5% of your eligible pay. WHO IS ELIGIBLE? You are an eligible employee if you are a United States citizen or resident and are employed by Medtronic or a participating division or subsidiary (hereinafter referred to as Medtronic ), but excluding: An individual who is classified as a leased employee under the Plan. An employee who is employed as a replacement employee to replace another employee who is absent due to vacation, sickness, disability, leave of absence, maternity or paternity leave, or who is employed as an intern or for a specific project of limited duration. An employee who is a resident of Puerto Rico and is performing services for and receiving payment from Medtronic Puerto Rico Operations Company and its divisions and subsidiaries in Puerto Rico. Any person performing services for Medtronic who is classified as an independent contractor, regardless of whether or not such person is ever determined to be an employee for purposes of the Federal Insurance Contribution Act or any other federal or state law. Temporary employees whose compensation is paid by a temporary agency other than Medtronic or any of its affiliated companies. Cooperative students and interns who are hired for temporary assignments for a limited duration. Any person who the participating employer determines, in the exercise of its sole discretion, not to be its common law employee. The eligibility of employees in a collective bargaining unit is subject to negotiations with the representative of that unit. If you have questions about whether you are eligible to participate in the Plan, or whether your employer is participating in the Plan, you should contact the Retirement Service Center at WHEN AM I ELIGIBLE? If you meet the above eligibility requirements and you are a regular full-time or part-time employee, you are eligible to participate immediately upon your hire date, or at such later date you meet the above eligibility requirements. If you meet the above eligibility requirements and you are classified as other than a regular full-time or part-time employee, you will be eligible to participate once you have completed one Year of Service. You earn Years of Service based on the time between the date you are hired and the date you terminate employment. Employees covered under a collective bargaining agreement are eligible for coverage under the Plan only if coverage specifically is required pursuant to the terms of the applicable collective bargaining agreement. Plan benefits for employees eligible to participate in the Plan due to the terms of a collective bargaining agreement are governed by the terms of that agreement and, in the event of any conflict between the terms of this SPD and the terms of the applicable collective bargaining agreement, the terms of the applicable collective bargaining agreement will govern. WHAT IS INCLUDED IN MY PLAN ACCOUNT? Your Plan Account is composed of various different contributions that were made to this Plan or another Plan, but that have been rolled over or transferred to the Plan. Below is a description of some of the contribution types that may make up your Plan Account. More information about the current and historical Plan contributions are set forth in more detail in the SPD. Pre-Tax Contributions. Pre-tax contributions are contributions that you make to the Plan. Your pretax contributions are made on a pre-tax basis and these contributions, plus any earnings or losses, grow on a pre-tax basis until you take a distribution from the Plan. Roth 401(k) Contributions. Roth 401(k) Contributions are after-tax Roth contributions that you make to the Plan. While your Roth contributions are made on an after-tax basis, the earnings will grow DB1/

7 on a pre-tax basis, provided certain requirements are satisfied (as explained later). Employer Matching Contributions. These contributions are made by Medtronic to the Plan as a percentage of eligible pay that you contribute. Medtronic Core Contributions. These contributions equal 3% of your eligible pay if you are employed on the last day of the Plan year and otherwise satisfy the Plan eligibility requirements. ESOP Contributions. These are amounts that were previously part of the Medtronic, Inc. Employee Stock Ownership and Supplemental Retirement Plan and were transferred to this Plan. Personal Investment Account Contributions. These contributions equal 5% of your eligible pay if you previously made an election for this Account prior to January 1, This Account is made up of a Personal Investment Income Account and a Personal Investment Retiree Account. Rollover Contributions. These amounts represent contributions that you have rolled into the Plan from another plan or Individual Retirement Account ( IRA ). Prior Plan Accounts. These amounts represent transfers from prior employer plans or plans where amounts have been merged into this Plan. This includes amounts from the Medtronic Savings Plan, Medtronic Profit Sharing Plan and the Covidien Retirement Savings and Investment Plan. Not all Participants will participate in all of these accounts. HOW DOES THE PLAN WORK? You can contribute from 2% up to 75% of your eligible pay to the Plan on a pre-tax or Roth 401(k) basis, subject to certain Internal Revenue Service ( IRS ) limits described later. You can also elect to have your contribution automatically increased annually each August. Unless you elect not to participate or affirmatively elect a different contribution amount, you will be automatically enrolled to contribute 6% of your eligible pay to the Plan on a pre-tax basis and this percentage will automatically increase 1% each year in August, up to a maximum of 10% or the IRS limit (if less); provided, however, that if you are either initially automatically enrolled or elect automatic escalation on or after May 1 of a Plan year, your increase will not take place until the second August following the date of your automatic enrollment or automatic escalation election. Participants may choose to increase, decrease or change their level of Plan contributions at any time. Each pay period, Medtronic allocates an Employer Matching Contribution to your Plan Account of 50 cents on each dollar you contribute up to the first 6% of your eligible pay. At the end of the Plan year, an adjustment contribution to equalize the minimum matching amount may be allocated to your Account. In addition, at the end of the Plan year, Medtronic may make an additional matching contribution for each dollar you contribute up to the first 6% of eligible pay. This additional Employer Matching Contribution is based on Medtronic s financial performance and is made at the end of the Plan year in the discretion of Medtronic. You must be actively employed on the last day of the Plan year in order to receive this additional contribution, if any. Employer Matching Contributions are subject to vesting. If you became a Participant in the Plan on or after January 1, 2016, Medtronic will make a Medtronic Core Contribution equal to 3% of your eligible pay to the Plan at the end of each Plan year. Medtronic Core Contributions are subject to vesting. In order to receive this contribution, you must be actively employed on the last day of the Plan year. If you became a Participant in the Plan prior to January 1, 2016 and previously elected to participate in the Personal Investment Account, Medtronic will make a contribution equal to 5% of your eligible pay to the Plan. You will receive this contribution instead of the Medtronic Core Contribution. A portion of this contribution is intended to help you pay for retiree medical costs. Personal Investment Account contributions are subject to vesting. In order to receive this contribution, you must be actively employed on the last day of the Plan year. You can invest the contributions to your Account in a variety of funds. The funds offered provide investment alternatives in every major investment risk category. Earnings on both your pre-tax contributions and Medtronic s contributions accumulate on a taxdeferred basis. This helps your savings grow faster. DB1/

8 Earnings on your Roth 401(k) contributions accumulate and are distributed tax-free provided you meet the requirements for a qualified distribution. Convenient payroll deductions make it easy for you to save. Although the money is intended for your retirement, in certain circumstances you can withdraw or borrow a portion of your Account while working, subject to certain restrictions. Your pre-tax contributions will be deducted from each of your paychecks before federal and, in most cases, state income taxes are calculated, but after Social Security and Medicare taxes. Income taxes on pre-tax contributions and earnings (or losses) are deferred until you withdraw the money. This lowers your current taxable income thereby reducing the amount of income taxes that you pay each paycheck. In effect, your tax savings help pay for a portion of your retirement savings, as shown in the following example. Example of tax benefits you can receive by making pre-tax contributions to the Plan If you contribute this $2,000 amount to the Plan each year: And you typically pay this 25% income tax percentage: Your annual tax savings due $500 to your $2,000 contribution will be: As a result of your $500 tax $1,500 savings, your annual take-home pay will only be reduced by this amount: Your Roth 401(k) contributions will be deducted from each of your paychecks after federal and state income taxes are withheld. Since you are using aftertax money to make the contributions, your Roth 401(k) contributions will be distributed tax-free. Further, if you take a qualified distribution, the earnings on your Roth 401(k) contributions will also be distributed tax-free. In order to be a qualified distribution, the distribution must occur after you complete a five-year participation period and one of the following events occurs: 1) you reach age 59½; 2) you become disabled; or 3) you die. The five-year participation period begins on the date that you first make Roth 401(k) contributions to this Plan or another employer plan with a Roth program. If you do not take a qualified distribution, the earnings on your Roth 401(k) contributions may be subject to income taxes. See Taxation of Roth 401(k) Account Distributions. Contribution Limits The maximum contribution allowed by law for all Participants in calendar year 2016 is $18,000. In addition, if you will be age 50 by the end of the calendar year, you may make an additional catch-up contribution to the Plan. This catch-up contribution maximum is $6,000 for The IRS may increase the contribution limit and catch-up contribution limit in future years. If you have contributed to another employer s 401(k) plan during the calendar year, the limits are reduced by the amount you have already contributed to the other employer s plan. You must monitor this in your first year of participation. In subsequent years, payroll will automatically stop your contributions when the maximum limit is reached. In addition to the general IRS limits, the Plan may need to further limit the annual contributions of some highly compensated employees in order to comply with other IRS requirements. HOW DO I ENROLL IN THE PLAN? Pre-Tax and Roth 401(k) Contributions Step 1 You will receive enrollment materials from Aon Hewitt when you are hired as an eligible employee. Contact the Retirement Service Center at if you do not receive materials. You can enroll via the web at retirement.medtronic.com or by calling the Retirement Service Center at If you do not enroll in the Plan within 60 days of becoming a Participant in the Plan, you will be automatically enrolled in the Plan at 6% of eligible pay. See Automatic Enrollment. If you do not wish to participate in the Plan, you must contact the Retirement Service Center at or log on to retirement.medtronic.com to opt out. Step 2 You choose a percentage of your eligible pay to contribute. You can contribute any whole percentage of your eligible pay from 2% up to 75% to the Plan, subject to certain limits. You can elect to contribute on both a pre-tax and Roth 401(k) basis. Remember, Medtronic matches the contributions you make to the Plan up to the first 6% of your eligible pay. If you are automatically enrolled and don t elect otherwise, your deferral percentage will be automatically increased by a set percentage each year (1%), each DB1/

9 August, up to a maximum of 10% or the IRS limit (if less); provided, however, that if you begin participating and are automatically enrolled after May 1 of a Plan year or if you elect automatic escalation on or after May 1 of a Plan year, your increase will not take place until the second August following your initial automatic enrollment or automatic escalation election date. If you do not elect otherwise, you will be automatically enrolled in the Plan. See Automatic Enrollment. Step 3 You choose how your contributions will be invested. The Plan offers investment fund alternatives in every major investment category. You can invest your money in one fund or in a combination of funds, but you must choose investments in increments of 1%. If you do not choose how your contributions will be invested, Medtronic will invest your Account in a Vanguard Target Retirement Trust Select that is closest to your expected year of retirement (assuming a retirement age of 65). Step 4 Your contributions will begin on the next pay period after your enrollment is received and processed by the Retirement Service Center. If you are automatically enrolled in the Plan, your contributions will begin as soon as administratively feasible following the end of the 60-day period described in Step 1. You may make contributions to the Plan as long as you are an eligible employee of Medtronic or until you elect to discontinue your contributions. If you discontinue your contributions, your contributions will cease until you elect otherwise. Your funds will continue to be held in your name under the Plan. Automatic Enrollment If you do not enroll in the Plan or do not indicate that you do not wish to make contributions within 60 days of becoming an eligible employee, you will be automatically enrolled to contribute 6% of your eligible pay on a pre-tax basis. Until you elect otherwise, your contributions will be invested in the Vanguard Target Retirement Trust Select that is closest to your expected year of retirement (assuming a retirement age of 65). If you are automatically enrolled and do not elect otherwise, your pre-tax contribution percentage will be automatically increased by 1% each following August, up to a maximum of 10% or any applicable IRS limit (if less); provided, however, that if you are automatically enrolled on or after May 1 of a Plan year, your first 1% increase will not take place until the second August following your automatic enrollment. You may stop or change your contribution at any time by contacting the Retirement Service Center at or by logging on to retirement.medtronic.com. Matching Contributions You automatically receive Employer Matching Contributions if you make pre-tax or Roth 401(k) contributions to the Plan. Medtronic Core Contributions If you are an eligible employee, Medtronic will make a contribution equal to 3% of your eligible pay at the end of each Plan year, provided that you are actively employed on the last day of the Plan year. This contribution will be made to your Plan Account even if you are not otherwise making pre-tax or Roth 401(k) contributions to the Plan. HOW DOES MEDTRONIC MATCH MY CONTRIBUTIONS TO THE PLAN? Medtronic will match 50 cents on each dollar you contribute (either pre-tax or Roth 401(k)) up to the first 6% of your eligible pay. Medtronic may also make an additional match from year to year based on the financial performance of Medtronic, in its discretion. In general, Employer Matching Contributions will not be made on catch-up contributions. You will receive your Employer Matching Contribution after each pay period. If an adjustment is required or if Medtronic makes an additional discretionary matching contribution, you will receive the additional amount after the end of the Plan year (April 30), provided you are employed by Medtronic on April 30 (the True-Up Contribution ). Any adjustment or True-Up Contribution will be provided if you are not employed on April 30 due to (i) death; (ii) retirement on or after age 55 with 10 Years of Service; or (iii) retirement on or after age 62 regardless of Years of Service. Employer Matching Contributions are subject to vesting. Example The following example assumes an Employer Matching Contribution of 50 cents per dollar of the first 6% of eligible pay. If Medtronic decides to DB1/

10 make an additional Employer Matching Contribution, your total savings could be more. If you earn $30,000 and contribute this percentage of your income to the Plan: After one year, your contribution equals: 50 cents minimum per dollar Medtronic match equals: The total amount contributed to your Account equals: 3% 6% 9% $900 $1,800 $2,700 $450 $900 $900 (Match applies to first 6% of pay only) $1,350 $2,700 $3,600 HOW DOES THE MEDTRONIC CORE CONTRIBUTION WORK? If you are an eligible employee in the Plan, Medtronic will make a contribution to your Plan Account equal to 3% of your eligible pay. In order to receive the contribution, you must be employed on the last day of the Plan year. Medtronic will make this contribution to your Account after the end of each Plan year. If you are actively participating in the Plan, the contribution will be allocated to your current Plan investment elections. If you have not otherwise made an investment election in the Plan, the Medtronic Core Contribution will be invested in the Vanguard Target Retirement Trust Select that is closest to your expected year of retirement (assuming a retirement age of 65). The contribution is based on your eligible pay for the Plan year ending April 30 and is made following the end of the Plan year. You will only be entitled to a Medtronic Core Contribution if you are employed by Medtronic on April 30. However, this contribution will be provided if you are not employed on April 30 due to (i) death; (ii) retirement on or after age 55 with 10 Years of Service; or (iii) retirement on or after age 62 regardless of Years of Service. HOW DOES THE PERSONAL INVESTMENT ACCOUNT WORK? If you participated in the Plan prior to January 1, 2016 and previously elected to receive a Personal Investment Account contribution, Medtronic will make a contribution equal to 4% of your eligible pay to your Personal Investment Income Account plus an additional contribution equal to 1% of your eligible pay to your Personal Investment Retiree Account. Although the Personal Investment Retiree Account is intended to be saved for retiree medical costs, it can be used for any purpose upon distribution. The contribution is based on your eligible pay for the Plan year ending April 30 and is made following the end of the Plan year. You will only be entitled to a Personal Investment Account contribution if you are employed by Medtronic on April 30. However, this contribution will be provided if you are not employed on April 30 due to (i) death; (ii) retirement on or after age 55 with 10 Years of Service; or (iii) retirement on or after age 62 regardless of Years of Service. As explained in more detail below, the Personal Investment Account option is only available to actively employed Participants who made this election prior to January 1, If you previously participated in the Personal Investment Account and terminate employment and are rehired more than 12 months after your termination date, you will not be permitted to participate and receive contributions to your Personal Investment Account and instead will be eligible for the Medtronic Core Contribution. HOW DO I BECOME VESTED? You are always 100% vested in the contributions you make to the Plan from your pay, any rollover contributions and employer contributions that were transferred to the Plan from the Medtronic Savings Plan and Medtronic Profit Sharing Plan. Employer contributions made to your Plan Account, including Employer Matching Contributions, Medtronic Core Contributions, ESOP Contributions and Personal Investment Account Contributions, are subject to vesting requirements. You generally become 100% vested after you complete three years of vesting service. The following chart shows how this works: If your years of Medtronic service equal: You are vested in this portion of your Accounts: Less than 3 years 0% 3 years or more 100% Special Rules You will be considered 100% vested regardless of your Years of Service if: You remain employed until age 62, or You die while actively employed, or You are absent from work for one year due to a disability. (You will be considered disabled if you are entitled to receive disability benefits from the Medtronic Long-Term Disability Plan.) DB1/

11 If you became employed by Medtronic in connection with an acquisition, you may be given credit for your Years of Service with the acquired entity. If you leave Medtronic before you are 100% vested, the nonvested portion of your Account will be forfeited. However, if you are rehired, the forfeited amount may be restored as described below. Additional Vesting Rules If you are working for Medtronic and were hired prior to January 1, 2016, you will become 100% vested after you complete three years of vesting service as follows: If your years of Medtronic service equal: You are vested in this portion of your Accounts: Less than 1 year 0% Between 1-2 years 20% Between 2-3 years 40% 3 years or more 100% If you were a legacy Covidien employee who participated in the Covidien Retirement Savings and Investment Plan and you became eligible to participate in the Plan on January 1, 2016, a different vesting schedule may apply to your Plan Account, including amounts transferred from the Covidien Retirement Savings and Investment Plan as follows: If you were a legacy Covidien employee (described above): On or before January 26, 2015 After January 26, 2015 Break in Service You are vested in this portion of your Accounts: 100% 100% after you complete 2 years of vesting service A break in service can affect your vesting status. A break in service occurs if your employment is terminated with Medtronic for any reason and you have no hours of service for a period of 12 consecutive months. If you have a break in service: Your vesting service is discontinued. If Medtronic reemploys you, your previous vesting service will be added to your future service when determining the vested portion of contributions made to the Plan after you are rehired. If your absence is for an approved leave of absence, not to exceed 12 months (including family and medical leave), the time you spend on leave will not count toward a break in service. If you are 0% vested at the time of your termination of employment or if you request a lump-sum distribution of the vested portion of your Employer Accounts at the time of termination and are later rehired before 60 consecutive months of severance, the unvested portion of your Account that was previously forfeited will automatically be restored to your Account, without earnings or losses. If you are rehired after 60 consecutive months of severance, any forfeited amounts in these accounts will not be restored. However, if you previously made pre-tax or Roth 401(k) contributions (even if you were otherwise 0% vested), your prior vesting service will be restored. If you defer distribution of your Employer Accounts upon termination and are rehired before 60 consecutive months of severance, any unvested portion of your Account previously forfeited will automatically be restored to your Account, with earnings or losses. If you defer distribution of your Account upon termination and are rehired after 60 consecutive months of separation, any forfeited amounts in these accounts will not be restored to your Account. If you were not vested in your Personal Investment Account or Medtronic Core Contribution Account at the time of termination and you are later rehired, before 60 consecutive months of severance, the unvested portion of your Account that was previously forfeited will automatically be restored to your Account, without earnings or losses. If you are rehired after 60 consecutive months of severance, any forfeited amounts in these accounts will not be restored. CAN I DIVERSIFY MY ESOP ACCOUNTS? You may diversify any portion of your Account that includes ESOP Contributions at any time. If you choose to diversify, you may invest ESOP Contributions in any of the other investment choices in the Plan. However, you cannot invest directly from an ESOP account to the Medtronic Common Stock Fund. No brokerage commissions are charged to convert your stock to the other investments. Once you diversify out of the ESOP Contribution account, you cannot reinvest in the ESOP account. Diversifying your ESOP Contribution accounts may have tax consequences. For example, if you diversify your Account into other investments, distributions DB1/

12 with respect to those investments will not qualify for the special tax treatment explained later in this SPD in Special Rules for Distributions of Medtronic Stock under the Section titled How Are Distributions Taxed? In addition, if you sell and repurchase Medtronic Stock, you will lose your tax basis in the Medtronic Stock. If you sell Medtronic Stock to take a distribution from the Plan, different rules apply. See Special Rules for Distributions of Medtronic Stock. Contact the Retirement Service Center at for more information regarding diversification. HOW CAN I INVEST MY CONTRIBUTIONS? The Plan offers professionally managed investment funds in which you can invest your contributions. Information about each fund and recent performance information is available in the Addendum to this document, or from the Retirement Service Center at or at retirement.medtronic.com. You can invest in one or any combination of the funds, as long as you do so in increments of 1% to a total of 100%. For example, you could invest 40% of your contributions in one fund, 32% in a second fund and 28% in a third fund. All investments carry a degree of risk. Each fund offers a different investment strategy with a different level of risk. In general, the higher the risk, the greater the potential return. There are several services available to you to help you manage your Account and achieve your financial goals. You can select a service based on your preferred level of interest and desired level of involvement in managing your Account. If you prefer to manage your Account yourself, you may want to take advantage of the Online Advice. If you would prefer to have Aon Financial Advisors manage your Account, you may want to take advantage of the Aon Financial Advisors Professional Management Program. If you do not choose how your contributions will be invested, Medtronic will invest your Account in a Vanguard Target Retirement Trust Select that is closest to your expected year of retirement (assuming a retirement age of 65). For more information on any of these services, refer to your Medtronic enrollment guide or contact the Retirement Service Center at or at retirement.medtronic.com. HOW DO I CHANGE MY CONTRIBUTIONS OR INVESTMENTS? One of the advantages of the Plan is that you can manage both the amount you contribute as well as how you invest your contributions to meet your needs. If your needs change, you can change how you use the Plan. You can enroll, discontinue, increase, decrease or recommence your contribution percentage any time. You can make investment changes daily, with some restrictions: If you exchange amounts out of a particular investment alternative, you may not exchange back into that same investment for 30 days (however, new contributions made to the Plan or loan repayments may be invested without restriction). Certain investments also prohibit direct transfers within 90 days following a transfer to a fund. Call the Retirement Service Center with questions about an investment transfer restrictions. Participants must comply with rules prohibiting insider trading, as described as part of the Prospectus in Addendum C. Neither Medtronic nor any other person can guarantee the performance of any of the investment funds available under the Plan, nor is there any obligation to make up any losses suffered by Participants. The Medtronic Qualified Plan Committee has the discretion to select and to change the form and number of investment funds available under the Plan and can eliminate any particular investment fund offered under the Plan at any time. The Plan is intended to constitute an ERISA Section 404(c) Plan that satisfies Department of Labor regulations Section c-1. This means that you are given the opportunity to direct the investment of your Accounts under the Plan. Because you are given this opportunity, the Plan fiduciaries are relieved of any liability for any losses to your Account that are the direct and necessary result of your investment direction or the result of your being automatically invested into the Plan s default investment option (which is currently the investment option in the Vanguard Retirement Trust Select that is based on your age and assumes a retirement age of 65). The Plan s investment options are selected by the Plan fiduciaries, and your investment elections are maintained by the Plan Trustee and a limited number of Medtronic employees as necessary to assist in administration of the Plan. Information DB1/

13 regarding your investment elections will not be available to Medtronic management and will be maintained in accordance with procedures designed to safeguard the confidentiality of the purchase, holding, or sale of Medtronic stock (unless release of information is required by any regulatory agency or legal process). If you have any questions about the Plan s confidentiality procedures, contact the Retirement Service Center at or at retirement.medtronic.com. In order to comply with ERISA Section 404(c), in addition to the information in this SPD, the following information will be made available to you upon your request: Copies of any prospectuses, financial statements, reports and other material related to the investment alternatives available under the Plan that have been provided to the Plan; A list of the assets composing the portfolio of each of the investment alternatives available under the Plan and the value of each asset or the proportion of the investment alternative which it constitutes; and Information regarding the value of shares or units in each investment alternative available under the Plan. The following chart summarizes how to make changes and when your changes take effect. To access your Account information or to make changes, contact the Retirement Service Center at or at retirement.medtronic.com. Changes you can make Enroll in Plan or change your contribution percentage Change how your existing Account balance is invested Change how future contributions are invested When changes take effect You can request a change at any time and it will be processed as soon as administratively feasible following the date of the request. The change will take effect on that business day if the change is made by 4:00 p.m. (Eastern Time). If the change is made after 4:00 p.m. (Eastern Time), it will take effect on the following business day. The change will take effect on the next business day and will apply to future contributions. Diversify your ESOP Account WHAT FEES DO I PAY? The change will take effect on that business day if the change is made by 4:00 p.m. (Eastern Time). If the change is made after 4:00 p.m. (Eastern Time), it will take effect on the following business day. As a Participant in the Plan, you pay fees associated with the Plan investments and recordkeeping and administrative fees. Medtronic generally pays Plan expenses by reducing any discretionary True-Up Contribution by the amount of any recordkeeping and other Plan administrative expenses. The funds in the Plan, like all mutual funds, carry an expense ratio. This percentage of a fund s average net assets is used to pay fund expenses staff, office space, utility bills, and the other normal administrative expenses of running a mutual fund. The current expense ratio for each of the funds in the Plan is provided in Addendum A. A fund s expense ratio will not appear as a line item on your quarterly Account statement. When you review your Account balance or the performance of your funds, the expense ratios have already been accounted for. In addition to the expense ratios, certain funds charge a redemption fee when you exchange shares that you have held for less than one year. The funds to which these fees apply are noted in Addendum A. You may also be charged a fee for the following: Loan origination fee $50 (or such other fee as will be disclosed annually in the Plan s fee disclosure). Qualified Domestic Relations Order ( QDRO ) fee $750 covers expenses related to divorce and allocation of assets between the affected parties. If you have questions about Plan fees or if you would like the most recent copy of the annual fee disclosure, contact the Retirement Service Center at or at retirement.medtronic.com. WHAT IS ELIGIBLE PAY? For purposes of the Plan, your eligible pay includes your: Base salary Overtime pay Formula bonus and incentive plan payments under a formalized plan Retention bonus DB1/

14 Sales commissions Any salary reduction contributions you make to this Plan or other tax-qualified plans (i.e., cafeteria plan, medical plan) Sick pay Salary continuation payments for short-term disability Lump-sum market adjustments, developmental or promotion increases. Eligible pay does not include: Pay earned prior to participating in the Plan Discretionary bonuses and long-term incentive plan payments Compensation paid more than 30 days after termination Pay from nonparticipating employers Service awards Tuition reimbursements Relocation allowances Restricted stock payments or stock option gains Performance share awards Long-term disability benefit payments Short-term disability benefit payments from a third party Severance payments Any one-time or other payments not directly related to base salary (such as referral bonuses, value of exercised stock options, etc.) Deferrals to any nonqualified plan The IRS limits the amount of income that can be considered when calculating contributions during a Plan year. For the Plan year beginning May 1, 2016, the income limit is $265,000. This limit may be adjusted by the IRS in future years. CAN I ROLL OVER CONTRIBUTIONS FROM OTHER EMPLOYER PLANS? You can make a rollover contribution to the Plan from another employer s plan or, in certain instances, from your IRA. Rollover contributions can preserve the tax-deferred status of a distribution from a previous employer s retirement plan. For details, contact the Retirement Service Center at or at retirement.medtronic.com. Medtronic does not match rollover contributions. Rollover Contributions from Other Medtronic Qualified Plans If you received a lump-sum payment from the Medtronic Retirement Plan, you may roll over the amount to the Plan in a direct rollover. CAN I CONVERT MY PLAN ACCOUNT TO ROTH ACCOUNTS? Yes, while you are actively working you can convert some or all of your Plan Account to a Roth Account by performing an In-Plan Roth Transfer and moving some or all of your Plan Account to a Roth Account within the Plan. You may elect to make a conversion to Roth once per calendar year. The converted funds will be subject to the same withdrawal restrictions as the money had before conversion. Money in your Roth Account, including any earnings, can be withdrawn tax-free if you are age 59½ or older if the money has been held in the Roth Account for at least five years. Tax-free withdrawals could be a significant benefit, especially if you expect your income tax bracket to be higher when you take your money than when you converted it to Roth. Before you decide to perform an In-Plan Roth Transfer, it s important to weigh the potential future tax benefit against the cost of conversion. Please note that if you convert Medtronic Stock, you will lose the tax-deferral advantage on the stock s net unrealized appreciation. See Special Rules for Distributions of Medtronic Stock for more information. Medtronic suggests that you consult with your tax advisor before deciding to convert money from pre-tax to Roth. Taxable amounts must be included in your gross income and reported by you on your personal tax returns in the year you convert pre-tax amounts to Roth amounts. Medtronic is not responsible for withholding any taxes on the amounts converted under the In-Plan Roth Transfer. Once you convert pre-tax money through an In-Plan Roth Transfer, you cannot reverse the transaction. Money in your Roth Transfer Account is also subject to the Plan s minimum required distribution rules. Amounts withdrawn from your Roth Transfer Account within five years of the conversion may be subject to a 10% early withdrawal penalty. HOW DO I KEEP TRACK OF MY ACCOUNTS? You will receive a personal statement of the current value of your Accounts each calendar quarter. Your statement will show you: Your beginning and ending balance for the period. Any new contributions made to your Accounts. Any stock dividends that are allocated to your Accounts. (Stock dividends will be used at the end of each fiscal quarter to purchase additional shares of Medtronic Stock, unless you elect to DB1/

15 receive them in cash. The stock will be purchased at the current market price.) Your investment fund choices, performance in each fund, and total investment earnings. Fund transfers. Loan activity, if applicable. This information is also available at retirement.medtronic.com. HOW DO LOANS WORK? While you are actively working, you may take a loan from pre-tax or Roth 401(k) contributions you have made to the Plan, Rollover Contributions and from Prior Employer Contributions associated with the Medtronic Savings Plan and the Profit Sharing Plan. For this purpose, you are considered to be actively working if you are working for a Medtronic Affiliate, including if you transfer employment to Medtronic Puerto Rico Operations Company. When you request a loan, you are borrowing from your own funds. An advantage of a loan is that when you repay the loan through payroll deduction, both the principal and interest go back into your own Account. In effect, you serve as your own banker and pay the interest to yourself. There are costs associated with obtaining a loan. In the first year of the loan, you pay an origination fee. Further, loan repayments will be deducted from your pay on an after-tax basis. However, to the extent the loan consisted of pre-tax contributions, once back inside the Plan the payments will remain classified as pre-tax contributions, and distribution of such amounts will be taxed upon distribution in the same manner as pre-tax contributions. See How Are Distributions Taxed?. You can borrow the money for any reason. All you have to do is agree to repay the loan through payroll deduction within either five years for a general purpose loan or 15 years for a primary residence loan at the agreed-upon amounts outlined in the amortization schedule. Taking a loan does not stop you from continuing to make contributions to the Plan. Once you repay a loan, you must wait at least 30 days following the date of repayment to request a new loan of the same type (i.e., general purpose or primary residence). There are no restrictions on the use of the loan proceeds for a general purpose loan. If you take a loan for purchase of your primary residence, you will need to provide proof of the purchase of your residence. You will be informed of the documentation that is needed for a primary residence loan at the time you apply. Loan requests and information are available through the Retirement Service Center at or at retirement.medtronic.com. The following chart summarizes some of the most commonly asked questions about loans: When can I take out loans? How many loans can I have outstanding at one time? How much money can I borrow? How do I apply for a loan? Are there any loan fees? How is the interest rate determined? How do I repay my loan? Generally, you can take out a loan if you are actively working and your vested balance in the Plan is at least $2,000. You can have up to two loans outstanding at a time. One loan may be a general purpose loan and one may be for purchase of your primary residence. Once you repay any loan, you must wait at least 30 days following the date of repayment to request a new loan of the same type (i.e., general purpose or primary residence). You can borrow up to the lesser of: 50% of your vested Account balance in the Plan that are eligible for loans; The total amount you contributed as pre-tax or Roth 401(k) contributions, your rollover contributions or Prior Employer Contributions associated with the Medtronic Savings Plan and the Profit Sharing Plan; or $50,000, reduced by the highest outstanding loan balance you had in the preceding year. The minimum amount you can borrow is $1,000. Contact the Retirement Service Center at or at retirement.medtronic.com to apply for a loan. There is a loan origination fee of $50 taken directly from the loan proceeds. The interest rate will be calculated as one percentage point above the prime rate as received by Aon Hewitt from The Wall Street Journal in effect on the 15th day of the month prior to the first day of the month to which it is to apply. The interest rate remains fixed for the duration of the loan. Loans are repaid through after-tax payroll deductions in equal amounts over a one-two-three-four-or-fiveyear period. You may also pay your DB1/

16 What happens if I terminate employment with an outstanding loan? Nonpayment Issues loan off early without penalty. Prior to the time that you take a distribution from the Plan, you may either repay the loan in full within 90 days of your termination date or contact Aon Hewitt within 90 days of your termination date to arrange to repay your loan by mailing a cashier s check, money order or certified check or via direct debit from your bank account. If you fail to repay the loan or contact Aon Hewitt within 90 days from your termination date to make arrangements for repayment, the unpaid principal and interest will be treated as a distribution from the Plan. Additionally, if you take a distribution from the Plan and do not roll over an amount equal to the unpaid principal and interest of the loan from other sources within 60 days from the date you take a distribution, you will be liable for income taxes and, if you are younger than age 55, a 10% excise tax. To protect the tax advantages of the Plan for all employees, Medtronic must ensure that each loan is repaid in full. If you are not receiving a regular paycheck from which your loan payment is deducted or if your loan payment has not otherwise been received, a default on your loan will occur 90 days following the date of the first missed payment. If you contact Aon Hewitt to arrange to repay via cashier s check, money order or certified check or direct debit from your bank account within the first 90 days of your missed payment, your loan will not be defaulted so long as you continue to make payments. The loan administrator will notify you if your loan is defaulted. If your loan is in default while you are still employed with Medtronic and you are not permitted to take a distribution from the Plan (including a hardship withdrawal), your loan will be treated as a deemed distribution and any taxable amounts will be reported to you as taxable income on a Form 1099-R in the year of the default. In addition, a 10% excise tax may apply. The loan will still show as an asset in the Plan and Aon Hewitt will continue to administer the loan. If you make a cash repayment after the loan is deemed distributed, the repayment will increase your tax basis in the same manner as if the payment was an after-tax contribution. You cannot take another loan until the defaulted loan is repaid. A loan treated as a deemed distribution is not eligible for rollover. If your loan is in default and you have terminated employment, regardless of whether you request or consent to a distribution of all or any portion of your Account, the amount of the unpaid principal and interest will be treated as a distribution to you. Unless you use money from other sources to contribute the distribution amount into an IRA or another retirement plan, you will be liable for income taxes, in the year the default occurs, on the pre-tax amounts that are treated as distributed. Similarly, unless you meet the requirements for a qualified distribution or use money from other sources to contribute the distribution amount into an IRA or another retirement plan, you will be liable for income taxes, in the year the default occurs, on a pro rata portion of the earnings attributable to any amount treated as distributed from your Roth Account. A 10% excise tax may also apply if you are under age 55 when you terminate from Medtronic, unless the default is due to your death or total disability, as defined by federal law. Loans While on Leave of Absence Your loan will not be in default if you are on an approved leave of absence of one year or less, either without pay or at a rate of pay (after federal, state and FICA tax withholding) that is less than the amount of the loan payments. Any unpaid interest accrued during your leave of absence will be added to the principal balance. When you return to work and resume payments, your loan will be reamortized over the remaining term of the loan plus the nonpayment period, provided your payments are not less than your original payments and the term of the loan does not exceed five years from the original date of the loan. Additionally, if you would rather continue to make payments while you are on a leave of absence, you may elect to do so by contacting Aon Hewitt. CAN I WITHDRAW MONEY FROM THE PLAN WHILE I AM WORKING? The purpose of the Plan is to help you save money for your retirement. In exchange for the tax benefits of the Plan, the IRS requires that you cannot withdraw the money while you are working unless you are 59½ or incur a financial hardship. Withdrawals at Age 59½ While Actively at Work Medtronic recognizes that some employees who are near retirement age may wish to continue to work but DB1/