What Are My Loan Repayment and Withdrawal Options?

Loans

• • The minimum loan amount is $1,000.
  • The maximum loan amount is 50% of the account balance, up to an aggregate of $50,000.

Loan Repayments

Repayment Methods

• • Active Employees: Must repay plan loans, including principal and interest, through payroll deduction.
  • Former Employees: Participants who leave the company with outstanding loan balances must either:
    • Repay the unpaid principal balance(s) in full no later than 60 days following the last missed payment date.
    • Continue to make loan payments via electronic debit (ACH) through the participant’s financial institution.

Consequences of Default

• • The outstanding principal balance is treated as a deemed distribution and is reported as taxable income to the IRS.
  • This distribution may be subject to ordinary income taxes and, potentially, a 10% early withdrawal penalty if the participant is under age 59 1/2.
  • A participant who defaults on a loan is generally restricted from taking any new loans from the plan.

Suspension of Loan Payments During Leave

• • Non-Military Leave (Unpaid): Loan payments may be suspended for up to one year if the participant is on a non-military leave of absence without receiving full pay. Payments must resume upon the earlier of the participant's return from leave or one year from the suspension date.
  • Military Leave: Loan repayment may be suspended for the duration of a military leave for which the participant does not receive full pay. The original loan payoff date can be extended by the length of the military leave.

Withdrawal and Distribution Options

Phillips 66 Savings Plan (Defined Contribution)

• • Traditional After-Tax Contributions: The entire account balance accumulated from these contributions can be withdrawn at any time.

  • Before-Tax and Roth 401(k) Contributions: The entire account balance accumulated from these contributions (plus earnings) may be withdrawn if the participant is at least age 59 1/2 or is deemed disabled.

  • Hardship Withdrawal: Must meet IRS rules proving a financial hardship.
    • Hardship distributions must be in cash.
    • Must be used for eligible expenses, such as medical costs, preventing eviction/foreclosure, costs related to buying a principal residence, or post-high school education fees for the next 12 months.
    • The participant must have already taken any other available distributions from the plan or any other deferred compensation plan maintained by the company.

Phillips 66 Retirement Plan (Defined Benefit)

• • General Rules (Applicable to most Titles)
    • Small Benefit Lump Sum (Automatic Distribution): If the vested benefit or account value is $1,000 or less and there is no other benefit from another title of the Phillips 66 Retirement Plan, distribution will be made automatically in a lump sum.
    • If Benefit Exceeds $1,000: If the vested benefit is greater than $1,000, the participant can choose among monthly annuity options or, if available under the specific plan, a lump sum.
    • Spousal Consent Requirement: If a participant is married, spousal consent is required to elect:
      • A lump-sum payment.
      • A single life annuity.
      • A joint and survivor annuity that provides less than the required 50% continuation percentage for the spouse.
      • A non-spouse beneficiary.

Annuity Payment Options 

• • Normal Form (Single Participant): The benefit is paid as a single life annuity (monthly payments for the participant's lifetime, ending at death).
  • Normal Form (Married Participant): The benefit is paid as a 50% joint and survivor (J&S) annuity. Reduced monthly payments are made during the participant’s life, with 50% continuing to the surviving spouse. 

Optional Forms of Payment (If Benefit is greater than $1,000)

• • Lump-Sum Payment: Generally available as an optional form of payment for most Titles (subject to spousal consent).
    • Alliance Refinery Cash Balance Formula (Title III): Participants in this formula can choose to receive their benefit as a single lump-sum cash payment (with spousal consent if married).
  • Optional Joint and Survivor Annuities (J&S): Options typically include 25%, 75%, and 100% continuation percentages (depending on the specific plan title).
  • 10-Year Certain and Life Annuity: Pays the participant for life, but guarantees a minimum of 120 payments to the designated beneficiary or their estate if the participant dies before the 120 payments are made.
    • Available only for Title III benefits accrued prior to December 31, 2013.

Rollover Options for Distributions

• • Direct Rollover: The distribution is transferred directly to the custodian of the IRA or trustee of the other qualified plan.
    • No federal taxes are withheld on the amount of a direct rollover.
      

• • Indirect Rollover: The participant receives a check made payable to them.
    • Federal (and applicable state/local) taxes are generally withheld (20%) from the distribution amount.
    • The participant must deposit the money into another qualified plan within 60 days of receiving the check.
    • If the participant wishes to roll over the full original distribution amount, they must replace the amount withheld for taxes using funds from another source.

• • Net Unrealized Appreciation (NUA): Special tax rules apply if a lump-sum distribution from the Savings Plan includes an in-kind distribution of Phillips 66 or ConocoPhillips stock, allowing the NUA portion to be excluded from income tax in the distribution year if the distribution qualifies as a lump sum.

Real Wealth Questions

Do you have any outstanding 401(k) loans, and how should you handle repayment post-retirement?

Do you have better options than hardship withdrawals or in-service distributions to meet financial needs and goals?

How do early withdrawal penalties and taxes affect short-term needs versus long-term goals?

Questions? Visit the Philips 66 Benefits Glossary.