You choose how your contributions — and MIT's matching contributions — are invested. Administrative and recordkeeping services for the 401(k) Plan are provided by Fidelity Investments.
You are generally eligible for the 401(k) if your appointment is for at least 3 consecutive months and requires you to work at least 50% of a normal full time position. You will also become eligible after any calendar year in which you work at least 1,000 hours. Learn more about eligibility.
Who is eligible for the 401(k) Plan
- you currently have an appointment at MIT for at least three consecutive months and
- you are paid by MIT and
- you are scheduled to work continuously at least 50% of a normal full-time work schedule or
- you have 1,000 hours or more of paid service at MIT in a calendar year
Who is not eligible
- teaching or research assistant
- honorary lecturer
- summer intern
- employee/faculty on an unpaid leave of absence
- post-doctoral trainee
- paid by MITemps
- student in a work-study program
- family member who is not employed by MIT
- member of the armed services assigned to MIT
Members of collective bargaining units
All the Plan provisions are subject to the terms of your collective bargaining agreement.
Benefits of the MIT 401(k) Plan
When you enroll in and contribute to your 401(k) account, you are 100% vested – that is you fully own your contributions, MIT’s matching contributions, and all interest earned on the investments you choose through the Plan.
In addition, you receive tax benefits when you contribute to your MIT Supplemental 401(k) account. You can choose when you receive your tax benefits – right away, with pre-tax contributions, or later on, with Roth post-tax contributions.
Save on a pre-tax basis and receive tax benefits now
- Your 401(k) contributions are deducted from your paycheck before taxes are applied, reducing your current taxable income and therefore your taxes.
- In retirement, you will pay federal and state income taxes on any amount you withdraw from the plan.
Save on a post-tax (Roth) basis and receive tax benefits later
- Your 401(k) contributions are taken out of your paycheck after federal and state income taxes have been applied, so they will not reduce your current taxable income or your taxes.
- In retirement, you will pay no taxes on any amount you withdraw as long as you take the distribution after age 59½ and at least 5 years after the first Roth contribution was made.
Contributing to Your MIT 401(k) Account
You contribute to your 401(k) account through deductions from your MIT paycheck. You can contribute pre-tax dollars, Roth post-tax dollars, or a combination of both. You may change your contribution preferences any time through Fidelity NetBenefits.
Your contributions (both pre-tax and Roth) are sent to Fidelity Investments at the end of each pay period. You may contribute as little as 1% and as much as 95% of your salary (within federally prescribed limits) after amounts for Social Security and Medicare taxes and health and dental insurance have been subtracted. You may start, stop, or change your deferral or investment elections at any time.
Federal law limits the amount of your pay each year that may be recognized for determining your allowable contribution. In 2018, MIT can consider only the first $275,000 of pay for calculating your allowable contributions. This means that if your annual compensation exceeds $275,000, MIT Payroll will take 401(k) deductions from your pay until your pay for the year reaches $275,000, or one of the other 401(k) program limits has been reached (see Contribution Limits below).
- Federal law sets a limit each year on how much you are eligible to contribute to your 401(k) account(s). This annual limit applies to the total of your 401(k) contributions, pre-tax and Roth post-tax, to the MIT Supplemental 401(k) Plan and any other employer’s 401(k) or 403(b) Plan. So, the year in which you are hired at MIT, the annual limit applies to all your MIT 401(k) contributions and all contributions you made to your prior employer’s 401(k) or 403(b) plan.
- In 2018, participants under age 50 are permitted to contribute up to $18,500 annually and participants age 50 and over are permitted to contribute up to $24,500 annually.
What MIT contributes to your 401(k) Plan
- MIT matches your 401(k) contributions (pre-tax and Roth post-tax combined) dollar-for-dollar up to the first 5% of your MIT pay (subject to the annual limits specified by federal law).
- MIT only contributes a match during months in which you have made a contribution
- The MIT match is provided pre-tax, and therefore is fully taxable when you withdraw your matching contributions from the plan, along with associated investment earnings.
When contributions are invested in your 401(k) account
- Your 401(k) deferral contributions are sent to Fidelity Investments following each pay period.
- MIT’s matching contributions are sent to Fidelity Investments at the end of each month.
- Both your deferral contributions and the MIT matching contributions are invested according to your elections.
401(k) Tax Saver's Credit
You may be eligible for a special tax credit offered through the IRS if you qualify as a low- or moderate-income worker and participate in MIT's 401(k) Plan. See forms below. MIT is not the sponsor of this credit, and all questions should be directed to your tax preparer or the IRS.
Tools to Help You Learn More
- Watch this video, which helps you compare your pre-tax and Roth post-tax options.
- Read this newsletter (PDF) for more details on Roth.
- Use this calculator from Fidelity Investments to compare pre-tax and Roth contributions. Insert information specific to you and see the estimated impact on your take home pay and your withdrawal at retirement.
- Check on your account at any time by visiting Fidelity NetBenefits.