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When considering retirement, there are many factors that must be considered. Some of these factors are personal and won’t be addressed in this presentation. However, this presentation will give you an overview of how the Retirement Plan works as well as how the Company’s benefit plans are affected by retirement.

Two parties are involved in the overall management of the Retirement Plan. Fidelity Investments is responsible for administering the Plan and calculating and paying retirement benefits. Marathon Petroleum is responsible for designing the Plan provisions, choosing the investment manager(s) that invest the Plan’s assets and monitoring the quality of service that is provided by Fidelity.

Please note: If there is a conflict between the language in this presentation and legal plan documents, the provisions of the legal plan documents will prevail.

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Retirement Planning

  • Plans Reviewed
    • Retirement Plan
    • Health Plan
    • Thrift Plan
    • Other Benefit Plans
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How the Retirement Plan Works

  • You do not enroll — automatic enrollment upon hire
  • Employee is vested after 3 years of vesting service — entitled to payment from the Plan at separation from employment
  • Funded by the Company — you make no contributions
  • Defined Benefit Pension Plan — the Plan pays a benefit determined by a formula defined by the Plan terms
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The Retirement Plan provides for payment of two classes of benefits

  • Cash Balance Benefit
    • Effective January 1, 2010 for all eligible employees
  • Legacy Benefit
    • Payable to those members who were participating in the Retirement Plan prior to January 1, 2010
    • If you are eligible for a Legacy benefit, your eventual benefit payable from the Retirement Plan will be your Cash Balance benefit plus your Legacy benefit
  • One Form of Benefit
    • The Cash Balance benefit and Legacy benefit will be combined for payment in one form of benefit
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Your Cash Balance Benefit

  • Your account-based benefit grows each year with Pay Credits and Interest Credits
  • Pay Credits begin to accumulate after automatic enrollment upon hire
    • 7%, 9% or 11% of your eligible pay
Age + Cash Balance Service* = Annual Percentage of Eligible Pay Credited
Under 50 7%
50 – 69 9%
70 and over 11%

* Cash Balance Service includes your vesting service as of 12/31/2009 under the Legacy Benefit formula, if applicable.

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Your Cash Balance Benefit

  • Interest Credits
    • Based on 30-year Treasury securities average monthly rates (for August, September and October) preceding the interest crediting year
    • Compounded monthly
    • Minimum annual rate you will receive is 3%
  • Payment Forms
    • At separation from employment (including retirement), a vested member is eligible for the Cash Balance amount as a lump sum
    • The lump sum can also be converted to other forms of payment, such as a stream of guaranteed monthly payments (annuity)
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Your Legacy Retirement Benefit (for those employees enrolled in the Retirement Plan prior to January 1, 2010)

  • The following slides apply only to those employees who were participating in the Plan prior to January 1, 2010
  • If you were not enrolled in the Plan prior to January 1, 2010, please click here to skip to slide 19 to continue with the presentation
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Legacy Benefit

  • A benefit is payable at separation from employment if you are vested (at least 3 years of vesting service)
  • An enhanced benefit is payable at separation if you:
    • Are age 50 or older, and
    • Have at least 10 years of vesting service
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How Your Legacy Retirement Benefit Is Calculated

  • The amount of your benefit is calculated using the following factors:
    • Final average pay (FAP) — The average of highest 36 consecutive months of income over the final 10 years of work (including base pay, overtime, shift differentials and bonuses)
    • Estimated Social Security Benefit
    • Number of years and months of participation in the Retirement Plan
    • Age at Retirement
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Retirement Legacy Benefit Formula

Legacy Benefit Formula
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Early Reduction Factors

Age at Retirement Early Retirement Factors
(Applied to Normal Retirement Benefits)
64 100%
63 100%
62 100%
61 97%
60 94%
59 91%
58 87%
57 83%
56 79%
55 75%
54 71%
53 67%
52 63%
51 59%
50 55%
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Legacy Benefit — Example Calculation

  • Employee, age 52, with 30 years in the Plan (through 12/31/2009)
Legacy Benefit Calculation
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Legacy Benefit Calculation for Employees Who Worked for Ashland

  • Click here if you are an employee who worked for Ashland prior to the formation of Marathon Ashland Petroleum
  • You can skip to the next slide if this doesn’t apply to you
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Legacy Benefit Forms of Payment: Monthly

  • Monthly Payment:
    • Lifetime (basis for all forms of Legacy benefit)
    • Joint and Survivor Payments
    • Term Certain
  • Survivor’s Benefit
  • No Deferment Provision
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Legacy Benefit Forms of Payment: Lump Sum

  • Lump Sum Payment
    • Actuarial equivalent to Monthly Lifetime amount
    • Assumes that lump sum deposit will earn an assumed interest rate as monthly withdrawals are made over your lifetime
    • Assumed interest rate (discount rate) is used in formula to arrive at lump sum — discount rate factor affects the lump sum payment amount
    • Spouse’s consent required
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Legacy Benefit: Lump Sum Discount Rate

  • How the Rate Is Calculated
    • Based on the monthly immediate annuity rate published by the PBGC, a federal government agency
    • For a particular calendar year, the rate is the lower of:
      • the previous year’s 6 month April – Sept. average, or
      • the current year’s January rate
    • If retirement date is January 1, the rate used is the lower of the current year’s rate or the previous year’s rate
    • Interest rate protection (if applicable)
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Your Legacy Benefit – Interest Rate Protection

Plan Rate Maximum Annual Participant Rate Increase
0.25 - 3.00% 0.25%
3.25 - 5.00% 0.50%
5.25% or greater 0.75%
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Your Legacy Benefit

  • How Changes in Rate Affect Lump Sum
    • The size of the calculated lump sum increases as the discount rate decreases, and vice versa
    • The lower the assumed rate, the larger the lump sum needs to be in order to generate the assumed monthly lifetime payments. If the rate is higher, the amount of payment can be smaller
    • A 1% change in the interest rate creates approximately 9% – 12% change in the opposite direction in lump sum
    18

Administration of the Plan

  • Fidelity Investments
  • See your current Cash Balance benefit and, if applicable, calculate your current Legacy benefit
  • Project future benefits using certain assumptions
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Taxation of Retirement Plan Payments

  • Your retirement funds are taxable, but you can minimize tax consequences:
    • Unless direct rollover is elected, the Plan is required to withhold 20% federal tax on any lump sum payment (Cash Balance and Legacy)
    • If you are not age 55 in the calendar year you retire, you are subject to an additional 10% early distribution penalty
    • You may want to consult a tax advisor or financial planner prior to termination
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Taxation (continued)

  • If you roll your retirement funds into your Thrift Account or IRA, the funds are not taxable until they are withdrawn
  • Rolling your retirement funds into your Thrift Account allows you to roll the funds into multiple IRAs
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Beginning the Retirement Process

  • Separation — Marathon Petroleum
    • Notify your Supervisor/HRC (generally 1 – 3 months prior)
    • Contact the Marathon Petroleum Benefits Service Center
  • Benefit Commencement — Fidelity
    • You can contact Fidelity 45 – 180 days prior to your requested commencement date
    • You’ll be assigned a Retirement Benefits Coordinator if you are a Plan Retiree
    • Payment is normally made early in the month following the requested commencement date
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Death Benefits

  • If you are a current employee and you die before you separate from employment, the Plan will provide a lump sum benefit at the time of your death
  • If married, your spouse can take the lump sum or a monthly annuity
  • If single, your estate will receive the lump sum benefit
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Thrift Plan

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Thrift Plan

  • The Thrift Plan defines a Retired Member as having met the following requirements at the time of separation from employment:
    • At least 10 years of vesting service (or at least age 65), and
    • At least age 50
  • The following slides are applicable only to individuals who meet the Plan’s definition of Retired Member
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As a Retired Member You Can ...

  • Roll funds from the Retirement Plan into the Thrift Plan
  • Transfer assets between options
  • Change beneficiaries
  • Maintain loans/take new loans
  • Take Retired Member Withdrawals
  • Take Installment Withdrawals
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Loans and Withdrawals

  • Loans
    • Existing loans can be continued
    • New loans can be taken
    • Monthly payments to Fidelity required
  • Withdrawal Options
    • Retired Member Withdrawals
      • Four per year
      • Tax consequences
        • 20% federal tax w/h unless direct rollover is elected
        • 10% early distribution penalty: if not at least age 55 in the calendar year you retire or have not yet attained age 59 ½ at the time of the withdrawal
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Thrift Plan Installments

  • Additional transaction type available only to Retired Members
  • Automatic scheduled withdrawals from your Thrift Account on an annual, semi-annual or monthly basis
  • Factors affecting withdrawal taxation — age, installment amount, current tax law provisions
  • You should consult with your financial or tax advisor before taking any withdrawals
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How Your Other Benefits Are Affected by Retirement

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Health Plan

  • Eligibility for Retiree Member Coverage
    • If hired or rehired prior to January 1, 2008:
      • At least 10 years service and age 50
      • Subsidized coverage is available for lifetime of member and surviving spouse
    • If hired on or after January 1, 2008:
      • At least 10 years service and age 55
      • Subsidized coverage lasts till Medicare eligibility age (currently age 65), for member and dependents
  • If not eligible for Retiree Health Plan coverage, you can elect to continue Active Health Plan coverage at COBRA rates, for a maximum of 18 months
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Health Plan

  • Plan provisions are the same as for active employees (including prescription drug coverage and preventative exams)
  • Amount of Company subsidy determined by years of service at separation
    • Full Company subsidy generally covers 80% of premium cost — member pays the other 20%
    • With less Company service, Company subsidy will be less, and member premium cost will be higher
31

Post-65 Health Plan Coverage

  • Partnered with Towers Watson, an independent health care plan coordinator, to offer a variety of individual policies
  • Licensed counselors will assist you in choosing the policy that is right for you; taking your benefit election over the phone
  • Guaranteed Issue
  • If hired prior to 1/1/2008 MPC provides a tax-free, annual Company subsidy to help pay for health care costs through a Health Reimbursement Account (HRA)
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Dental, Vision and EAP Plans

  • Active coverage terminates on date of separation
  • COBRA continuation of active plans is available
  • Pre-65 Retiree versions of Dental and Vision plans can be elected instead of COBRA
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Life Insurance Plans

  • Level Premium (grandfathered) — continues at no cost if considered a Retired Member of the Retirement Plan, but amount reduces over 40 months to 25% of your final active coverage amount
  • Age-Based — ends at retirement but portability/conversion options may apply
  • Company-Paid — ends at retirement but portability/conversion options may apply
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Health Savings Accounts (HSA)

  • Account remains with you at time of retirement
  • Monies can be used for qualified health care expenses and for reimbursement of some health care premiums after retirement
  • Each year you participate in the Saver HSA option of the Health Plan, the Company will contribute to your HSA according to the terms of the Health Plan
  • Certain restrictions may apply based on Medicare, VA and Tri-Care eligibility
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AD&D and LTD Plans

  • Coverage terminates upon separation from employment
  • Portability of AD&D is available
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Flexible Spending Accounts

  • Deductions will stop with last paycheck
  • Submit claims incurred prior to separation
  • HCFSA (Health Care Flexible Spending Account) can be continued through COBRA
  • Amounts not used are forfeited
  • All questions to PayFlex
37

Marathon Petroleum Health Reimbursement Account (MPHRA)

  • Effective 1/1/2016, this account became limited purpose MPHRA
38

Wellness Plan

  • Participation terminates upon separation from employment.
  • If possible submit your reimbursement claims a minimum of 30 days prior to your retirement date.
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Vacation and Holidays

  • Unused vacation will be paid in final paycheck
  • Union Contract
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Bonus Payment

  • Annual Cash Bonus Program
    • No bonus paid if retired prior to July 1 of fiscal year to which bonus applies
    • Bonus paid at the discretion of organizational VP if retired after June 30 of the plan year
  • Success Through People (STP)
    • No bonus paid if retired prior to July 1 of fiscal year to which bonus applies
    • Still eligible for last measurement year in which received pay
    • Payment typically mailed following May
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Retirement Gift

  • Eligible to receive a retirement gift of your choosing
42

Retirement Timing — Undecided About Retiring?

  • Consider the possible advantages of working another year or two
    • Your Cash Balance Benefit will continue to grow with Service and Interest Credits. Service Credit rates are higher as you grow older and have more Company service
    • Thrift Plan account — more employee and Company contributions
    • Increased Company subsidy for retiree health coverage
    • Legacy Benefit (if eligible) — interest rate protection limits negative impact on lump sum benefit. Also, the Age Reduction factor is enhanced after age 50 with 10 years of service
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