Glossary of Benefits Terms
401(k) Plan
A retirement investment account that enables eligible employees to make contributions that are deducted from their pay on a pretax basis. MIT makes matching contributions to its 401(k) Plan on behalf of eligible employees.
Learn about MIT's 401(k) Plan.
403(b) Plan
A 403(b) Plan, also known as a tax-sheltered annuity plan or TSA, is a retirement plan for eligible employees of tax-exempt organizations. MIT no longer offers a 403(b) Plan, but many employees who enrolled in this benefit when it was offered still hold active 403(b) Plans.
Learn about MIT's 403(b) Plan.
457(b) Plan
A deferred compensation plan to which eligible employees make contributions from their salaries. Earnings and contributions are not taxed until the assets are distributed to the employee. This plan is no longer offered.
Learn about MIT's 457(b) Plan.
Annuity
Income paid in a series of regular payments.
Beneficiary
A person or entity named in a will or financial contract as the inheritor of income or property when the owner dies.
Domestic partnership
MIT defines a domestic partnership as a same-sex or opposite-sex partnership in which both parties are at least 18 years old, unmarried, financially interdependent, and have shared a common residence for at least four months with the intention of doing so indefinitely. Domestic partners consider themselves life partners and share an enduring mutually exclusive relationship as well as joint responsibility for their common welfare. They cannot be related by blood to a degree of closeness that would prohibit legal marriage in Massachusetts. Another term for domestic partner is spousal equivalent.
Flexible spending account (FSA)
Flexible spending accounts allow an employee to contribute a predetermined percentage of pretax pay to an account that he or she can then use to pay for qualifying expenses. Depending on the type of FSA, those expenses might include childcare or medical costs that aren't covered by health insurance. At the end of the plan year, any unspent money in an FSA is forfeited.
Learn about MIT's Health Care FSA and Dependent Care FSA.
Imputed income
Imputed income is income that does not come in the form of cash—for example, the money that MIT puts into an employee's Basic Life Insurance policy.
Joint life annuity
Payments issued on behalf of two individuals that continue in whole or in part until both individuals die. Also called survivor annuity.
Level income payment
A fixed payment—one that will not change—as opposed to a variable income annuity, which may increase or decrease.
Pensionable compensation
The amount of an employee's pay used as a baseline for determining the amount of benefits he or she is eligible to receive.
Period certain
Instead of opting to receive a lifetime monthly income from a benefit such as a retirement plan, employees sometimes have the option of allocating that monthly income over a set time period—20 years, for example. This set time period is called a period certain. You receive a higher monthly payment with a period certain because the total income does not have to cover you for the balance of your life, only for the specified period.
Retirement age (under the MIT Basic Retirement Plan)
MIT considered age 62 the "Normal Retirement Age" during the period between January 1, 1999 and December 31, 2003 with respect to benefits accrued under the Career Pay benefit.
After January 1, 2004 MIT considered age 65 the "Normal Retirement Age" for the Career Pay benefit and the Cash Balance benefit. If a participant elects to commence their benefit prior to age 65 it is then considered "early retirement."
Spousal equivalent
See domestic partner above.
Variable income payment
A payment that may increase or decrease as opposed to a level income annuity, which is fixed.
Vested
When a benefit is vested, an employee has a right to the income from that benefit. For example, when an employee is vested in a retirement plan, he or she rightfully owns the funds that MIT has invested in the account in his or her name and can take possession of those funds under specified conditions.
