New procedures for principal residence loans and hardship withdrawals from your FedEx Corporation Retirement Savings Plan. Frequently asked questions

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1 New procedures for principal residence loans and hardship withdrawals from your FedEx Corporation Retirement Savings Plan Frequently asked questions FedEx is changing the process for obtaining principal residence loans and hardship withdrawals from the FedEx Corporation Retirement Savings Plan (FedEx 401(k) Plan). Beginning July 1, 2012, if you request a principal residence loan or hardship withdrawal, you will receive an application. You must return the application to Vanguard with documentation that shows your eligibility for the principal residence loan or hardship withdrawal. The new application process means that the process for obtaining a principal residence loan or hardship withdrawal will take longer than it does currently. You should keep this in mind when requesting a principal residence loan or hardship withdrawal. This document provides answers to frequently asked questions about the new process for obtaining principal residence loans and hardship withdrawals, including the types of supporting documentation that will be accepted. Please read on for more information. Principal residence loans Q. What is a principal residence loan? A. A principal residence loan is a loan taken from your plan account to help cover the costs of purchasing a principal residence, including the down payment and closing costs. You can take this type of loan only for the purchase of a new home you ll live in. The proceeds cannot be used for purchasing a second residence or vacation home or for expenses related to your existing home. Q. Why will I get an application before I get my check? A. Beginning July 1, 2012, Vanguard will review all requests for principal residence loans before they are processed. To accommodate Vanguard s review, you will receive an application and must return that application to Vanguard with documentation that shows your eligibility for the loan. Q. How long will it take to process my loan? A. It depends. You should receive your application in the mail within seven to 10 days of initiating your loan. If you have registered for secure online account access, your application will also be available for download through the Secure Message Center within two to 24 hours of your request. You must log on to your account at vanguard.com to access it. The application will remain valid for 45 days from the date on the application. Upon receipt of your application and supporting documentation, Vanguard will review your request and, if your paperwork is in good order, process your loan within three business days. Please allow seven to 10 days for delivery of your check via U.S. mail. Q. Is there any way to get my money sooner? A. There are a few ways you can help ensure your loan is processed as quickly as possible. Make sure your application is in good order by remembering to: Complete all sections of the application. Sign your application. Request an amount that is no greater than your need as substantiated in your supporting documentation. Enclose appropriate supporting documentation (a copy of your purchase agreement or mortgage agreement dated within 90 days of your loan request).

2 Rather than receiving a check, you can have your loan proceeds deposited in your bank account through Electronic Bank Transfer (EBT). You must set up the EBT when you request your application. It can take up to three business days after your loan is processed for the proceeds to appear in your bank account. Q. What supporting documentation must I send? A. You must send a copy of your purchase agreement or your mortgage agreement. The documentation must be dated within 90 days of your loan request. Q. What if the amount I need changes after I receive my application? A. The application will be prefilled for your loan request, including the amount you requested. If your supporting documentation shows that you qualify for less than the amount you requested, Vanguard will attempt to call you so that your loan can be approved for the lesser amount. If Vanguard cannot reach you by phone, a letter will be sent to you to validate the lesser amount. This will delay processing of your loan. If you need more than you requested, you must contact Vanguard to cancel the original application before it is processed. If the original request has not been processed, you may request a new application. If the original request has been processed, the transaction cannot be reversed. Q. Will any of the other loan procedures change? A. No. Only the process for requesting a principal residence loan will change. Here are the plan s loan provisions: Minimum loan amount: $1,000. Maximum loan amount: 50% of your vested account balance up to $50,000 (or less if you have had an outstanding plan loan in the past 12 months). Maximum outstanding loans: one. Repayment: up to five years for a general purpose loan; up to 10 years for a loan taken to purchase a principal residence. Loan application fee: non-refundable $100 fee applies for each loan initiated through vanguard.com or the Vanguard VOICE Network. The fee is $150 for each loan initiated through a Vanguard Participant Services associate. 12-month waiting period for another loan after the previous loan is fully paid. Q. How do I request a principal residence loan? A. You can initiate a principal residence loan by contacting Vanguard: Online. Log on to your account at vanguard.com. If you have not registered for secure online account access, go to vanguard.com/register. You ll need your plan number: By phone. Call Vanguard s 24-hour interactive VOICE Network at For personal assistance. Vanguard Participant Services associates are available to assist you with transactions and answer your questions at Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time. Hardship withdrawals Q. What is a hardship withdrawal? A. A hardship withdrawal allows you to withdraw money from a portion of your account for unpaid expenses resulting from a serious financial hardship, including: Purchase of a principal residence. Unreimbursed medical expenses. Tuition and fees for post-secondary education. Prevention of eviction or mortgage foreclosure.

3 Funeral or burial expenses for a parent, spouse, child or dependent. Certain expenses for repairing your principal residence if the expenses qualify as a casualty deduction. Before making a hardship withdrawal, you must first exhaust your available loan and withdrawal options for all FedEx retirement plans in which you are eligible to participate. In addition, you cannot contribute to the plan for six months after the withdrawal. Note: Beginning July 1, 2012, a processing fee of $125 will be deducted from your plan account once your withdrawal is processed. This fee will not be assessed if you do not return your application or if your withdrawal request is rejected. Q. How often can I make a hardship withdrawal? A. The plan does not limit the number of hardship withdrawals you make, as long as you qualify for them. There is a $500 minimum per hardship withdrawal. Please remember that you must first exhaust other available withdrawal and loan options. Q. Will I owe taxes on my withdrawal, even if it s for a hardship? A. Yes. You will be responsible for paying any federal, state, local or foreign taxes on a distribution or withdrawal. Early withdrawals may be subject to a 10% federal excise tax. To the extent required by law, Vanguard will make the appropriate withholding for tax purposes. Q. Why will I get an application before I get my check? A. Beginning July 1, 2012, Vanguard will review all requests for hardship withdrawals before they are processed. To accommodate Vanguard s review, you will receive an application and must return the application to Vanguard with documentation that shows your eligibility for the withdrawal. Q. How long will it take to process my withdrawal? A. It depends. You should receive your application in the mail within seven to 10 days of initiating your withdrawal. If you have registered for secure online account access, your application will also be available for download through the Secure Message Center within two to 24 hours of your request. You must log on to your account at vanguard.com to access it. The application will remain valid for 45 days from the date on the application. Upon receipt of your application and supporting documentation, Vanguard will review your request and, if your paperwork is in good order, process your withdrawal within three business days. Please allow seven to 10 days for delivery of your check via U.S. mail. Q. Is there any way to get my money sooner? A. There are a few ways you can help ensure your withdrawal is processed as quickly as possible. Make sure your application is in good order by remembering to: Complete all sections of the application. Sign your application. Request an amount that is no greater than your need as substantiated in your supporting documentation. Enclose appropriate supporting documentation. (See the next section for more information about supporting documentation.) Rather than receiving a check, you can have your withdrawal proceeds deposited in your bank account through Electronic Bank Transfer (EBT). You must set up the EBT when you request your application. It can take up to three business days after your withdrawal is processed for the proceeds to appear in your bank account. Q. What supporting documentation must I send? A. The type of supporting documentation you send depends on the reason for your financial hardship. See the following charts for specific documentation requirements. To protect your privacy, please black out any information that is listed on the supporting documentation but not relevant to your hardship withdrawal (for example, credit card account numbers).

4 Note: All supporting documentation must be dated within 90 days of your withdrawal request. Purchase of a principal residence expenses directly related to the purchase of your principal residence (excluding mortgage payments). The withdrawal does not cover moving expenses, vacation homes, rental properties, or mortgage payments. Land purchases will be considered only in conjunction with construction of a principal residence or if proof of principal residence can be provided through a construction loan or mobile home lot. A signed purchase agreement or sales contract detailing the purchase price. It must be accompanied by a good faith estimate of settlement and closing costs. A letter itemizing a private purchase, including the purchase price, with notarized signatures for both parties, accompanied by a good faith estimate of settlement and closing costs. Dated and itemized bill(s) or receipt(s) for construction materials accompanied by documentation of a construction loan. Unreimbursed medical expenses expenses incurred or necessary for medical care for you, your spouse or your dependents. The withdrawal does not cover expenses for cosmetic surgery or another similar procedure which does not meaningfully promote the proper function of the body or prevent or treat illness or disease. An Explanation of Benefits (EOB) from an existing medical plan indicating the amount not covered. Dated and itemized bill(s) or receipt(s) (must be accompanied by EOB). A letter from a physician on letterhead or with notarized signature detailing the medical necessity (must be accompanied by EOB). Lodging away from home primarily for and essential to medical services. Expenses up to $50 per night will qualify. (Documentation must be accompanied by EOB which indicates the location of the medical services being provided.) Supporting documentation for dependency or marital status: o Previous year tax forms o Birth or adoption certificate o Marriage certificate

5 Tuition and fees for post-secondary education tuition and related educational fees, including room and board, for the next 12 months of postsecondary education for you, your spouse or your dependents. The withdrawal does not cover expenses for school loans, seminars, continuing education or past education expenses. A tuition bill or itemized account summary that includes the student s name, the amount due and the due date. Receipt(s) for educational expenses and room and board. Notarized letter from the school on letterhead that includes the student s name, the amount due and the due date. Supporting documentation for dependency or marital status: o Previous year tax forms o Birth or adoption certificate o Marriage certificate Prevention of eviction or mortgage foreclosure expenses to prevent your eviction from your principal residence or to prevent foreclosure on the mortgage of your principal residence. The withdrawal does not cover overdue or late payment notices. A notice of eviction that includes the amount in arrears and the due date. A delinquency notice with threat of imminent eviction or foreclosure that includes the amount in arrears and the due date. (Overdue or late payment notices are not acceptable.) A notarized letter from the owner or other individual that details imminent foreclosure or eviction, the amount in arrears and the due date. This documentation will be accepted if a delinquency notice cannot be obtained. A court order (must be accompanied by eviction or foreclosure notice that includes the amount in arrears and the due date). Note: If the address on your plan account does not match the address on the documentation, you must provide a copy of your state identification, driver s license, utility bill or other documentation that demonstrates the property is your principal residence.

6 Funeral or burial expenses for a parent, spouse, child or dependent funeral or burial expenses for your parents, spouse, child or dependents. The withdrawal does not cover pre-paid funeral or burial plans. Dates and itemized bill(s) or receipt(s) for funeral or burial expenses. Death certificate. Supporting documentation for dependency or marital status: o Previous year tax forms o Birth or adoption certificate o o Marriage certificate Your birth certificate (for hardship due to a parent s death) Repairs to your principal residence repairs of your principal residence that qualify for the casualty deduction under Internal Revenue Code 165 (determined without regard to whether the loss exceeds 10% of your adjusted gross income). The withdrawal does not cover expenses for home improvements that are not associated with the loss. Newspaper articles that explain how the loss occurred will not be accepted as supporting documentation. An explanation of insurance benefits indicating the amount of loss not covered and the loss date. Itemized bill(s) or receipt(s) for repair of damage to principal residence (must be accompanied by insurance claim). Official police or fire report itemizing the loss (must be accompanied by insurance claim). A letter from a contractor on letterhead or with notarized signature that itemizes the cost(s) (must be accompanied by insurance claim). A lease or rental agreement outlining renter s financial obligation to pay for repair. Q. What if the amount I need changes after I receive my application? A. The application will be prefilled for your withdrawal request, including the amount you requested. If your supporting documentation shows that you qualify for less than the amount you requested, Vanguard will call you to discuss the amount you can receive. If you need more than you requested, you must contact Vanguard for a new application.

7 Q. Will I be charged a fee for my hardship withdrawal? A. Yes. A fee of $125 will be deducted from your plan account once your withdrawal is approved and processed. It will be shown as a deduction on your quarterly account statement. If you request an application but do not return it to Vanguard, or if your hardship withdrawal is rejected, the fee will not be deducted. Q. Will any of the other hardship withdrawal procedures change? A. No other changes will be made to the plan s withdrawal procedures. You are still required to exhaust your loan and withdrawal options for all FedEx retirement plans in which you are eligible to participate before requesting a hardship withdrawal. In addition, you cannot contribute to the plan for six months after the withdrawal. Q. Are there any other types of withdrawals? A. Yes. Depending on your eligibility, you may be able to take in-service withdrawals from your account. These withdrawals can be made for any reason. You are not required to complete an application or return documentation that shows a financial hardship. Some of the in-service withdrawal options include: After-tax withdrawals Age 59½ withdrawals Profit Sharing withdrawals Rollover withdrawals For complete details, please refer to the current Your Retirement Benefits (YRB) book, which can be found on the intranet (keyword: YRB). Before taking an in-service or hardship withdrawal, be sure to carefully consider the tax implications as well as the impact the withdrawal may have on your long-term financial goals. Tax implications: You will be responsible for paying any federal, state, local or foreign taxes on a distribution or withdrawal. Early withdrawals may be subject to a 10% federal excise tax. To the extent required by law, Vanguard will make the appropriate withholding for tax purposes. Q. How do I request a withdrawal? A. You can process an in-service withdrawal or initiate a hardship withdrawal by contacting Vanguard: Online. Log on to your account at vanguard.com. If you have not registered for secure online account access, go to vanguard.com/register. You ll need your plan number: Note: You will not be able to request a withdrawal online for seven days after you register. By phone. Call Vanguard s 24-hour interactive VOICE Network at For personal assistance. Vanguard Participant Services associates are available to assist you with transactions and answer your questions at Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time.

8 Connect with Vanguard For more information about the changes to the principal residence loan and hardship withdrawal policies, call a Vanguard Participant Services associate at Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time. This communication is applicable to eligible employees of the following Operating Companies: Federal Express Corporation (FedEx Express) (excluding employees residing in Puerto Rico); Federal Express Virgin Islands, Inc.; FedEx Corporate Services, Inc.; FedEx Corporation; FedEx Custom Critical, Inc.; FedEx Freight Corporation; FedEx Freight, Inc. (excluding employees residing in Puerto Rico); FedEx Ground Package System, Inc. (excluding employees classified as package handlers); FedEx SmartPost, Inc. (excluding employees classified as parcel assistants); FedEx SupplyChain Systems, Inc.; FedEx TechConnect, Inc.; FedEx Trade Networks, Inc.; FedEx Trade Networks Trade Services, Inc.; FedEx Trade Networks Transport & Brokerage, Inc.; FedEx Truckload Brokerage, Inc.; and World Tariff, Limited. NOTE: This communication does not apply to pilots whose benefits are the subject of a collective bargaining agreement between Federal Express Corporation and the Air Line Pilots Association, International The Vanguard Group, Inc. All rights reserved. BBBBFDST