Life Changes and Your 401(k) Plan

Life Changes and Your 401(k) Plan

Whether you take a leave of absence or sabbatical, get a divorce, or experience a disability, significant changes in your life may have an impact on your MIT 401(k) Plan benefits.

If You Take a Paid Leave of Absence or Sabbatical

You are considered Retirement Benefits Eligible while on Paid Leave. If you are on a paid leave of absence or sabbatical during which you are paid by MIT, contributions to your 401(k) account continue by payroll deduction unless you specify otherwise. The allowable amount of your contribution is based on your salary during your leave or sabbatical. MIT continues to make its matching contributions to your account.

If You Take an Unpaid Leave of Absence

You are not eligible for retirement benefits while on unpaid leave. Neither you nor MIT may contribute to your 401(k) account when you take an unpaid leave of absence or an unpaid sabbatical because you are not paid by MIT during that time. The balance in your account continues to be invested according to your specifications, and you continue to receive quarterly statements. Contributions automatically resume when you return to eligible status.

If You Become Disabled

You do not contribute to your Supplemental 401(k) account if you become disabled. If you start receiving benefits from MIT's Long-Term Disability (LTD) Plan, the Institute currently contributes to your 401(k) account an amount equal to 10% of your pay before you became disabled for as long as you receive long-term disability benefits from MIT's LTD Plan.

If You Divorce

The value of your 401(k) account may change if a Qualified Domestic Relations Order (QDRO) stipulates that your former spouse is to receive all or part of your retirement benefits. A QDRO is a court order instructing a retirement plan to make certain payments to a spouse, former spouse, or dependent, often referred to as an "Alternate Payee". In effect, the QDRO is a set of instructions from the court to the retirement plan.

Under the terms of a QDRO, MIT may be required to:

  • transfer all or part of your retirement benefit to your spouse, former spouse, child or other dependent as part of a divorce property settlement.
  • use all or part of your benefit to satisfy your child support obligations.

Fidelity Investments will notify you at your address of record if the 401(k) Plan receives a QDRO that affects your benefits. Copies of the 401(k) Plan's procedures and model documents pertaining to QRDOs are available to you and your (former) spouse via Fidelity Investments by calling (877) MIT-SAVE or (877) 648-7283.

If You Die

The balance of your MIT 401(k) Plan account at the time of your death will generally go to your named beneficiary, so it is important to keep your beneficiary designation up to date. If you are married, your sole beneficiary will be your spouse. If you are married and you designate a person other than your spouse as your beneficiary, your spouse must consent in writing to the designation. However, if you retired before your death and were receiving monthly lifetime income (annuity), a death benefit will be paid only if your form of annuity payment provides for payment after your death. If you have no named beneficiary, your balance will go to your estate.

Learn More

Visit the Life Events section of this website for further information on how changes in your life can affect your benefits.