Contribution Options

Contribution Options

You contribute to your 401(k) account through deductions from your MIT paycheck. Beginning January 1, 2017, you can contribute on a pre-tax basis, Roth post-tax basis, or a combination of both. You may change your contribution preferences any time through Fidelity Investments.

Fidelity NetBenefits

Comparing Traditional Pre-Tax and Roth Post-Tax Contributions

The following table compares key features of the two types of contributions. Speak with MIT’s dedicated Fidelity onsite representative or your financial or tax advisor to help you decide how best to save today.

Feature Traditional Pre-Tax Roth Post-Tax

Annual contribution limit

The IRS limits your total contributions each year – Roth, pre-tax, or a combination. The 2017 combined limit is $18,000 ($24,000 if you are age 50 or over).

Current income taxes

None.

Taxed as part of your pay at the time you contribute.

Enrollment

You must make an active contribution election – no automatic enrollment.

Investment options

The same investment options are available for both pre-tax and Roth funds. Visit Fidelity NetBenefits for more detail.

Loans

Yes – Pre-tax contributions are available to borrow.

No – Roth contributions are not available to borrow (but are counted as part of your account balance in determining the maximum loan amount).

MIT match

The 5% MIT match applies to combined pre-tax and Roth contributions. 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.

Taxes on plan payouts

Contributions and investment earnings will be subject to income taxes at the time you receive payment and, if paid before you reach age 59½, an additional 10% penalty tax.

None if paid out to you after age 59½ and it has been five or more calendar years since you made your first Roth contribution. Otherwise, investment earnings on your Roth contributions will be subject to income taxes and, if paid before you reach age 59½, an additional 10% penalty tax.

Vesting

You always own 100% of your contributions – both pre-tax and Roth – as well as the MIT match, along with all associated investment earnings.

When you can receive a plan payout

Any time after your employment with MIT ends.

Roth Details

See information on withdrawals while you are working, converting existing pre-tax contributions, and rollovers from a previous employer's retirement plan. Learn more.

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.