This section describes the Distribution Options of the MIT Pension Plan for MIT faculty and staff hired before July 2, 2012. (See distribution options for employees hired on or after July 2, 2012.)
If the cash balance account of your Pension Plan benefit is $10,000 or less or you have been an MIT employee for 10 years or fewer, you may choose either a single lump-sum payment or a lifetime pension.
If the cash balance account of your Pension Plan benefit is more than $10,000 and you have been an MIT employee for longer than 10 years, you will receive a monthly lifetime pension
If the cash balance account of your Pension Plan benefit is $75,000 or less or you have been an MIT employee for 15 years or fewer, you may choose either a single lump-sum payment or a monthly lifetime pension.
If the cash balance account of your Pension Plan benefit is more than $75,000 and you have been an MIT employee for longer than 15 years, you will receive a monthly lifetime pension.
If you are eligible for a lump sum option, you receive the entire current value of your benefit in a single payment. MIT uses IRS required assumptions with respect to current interest rates and average life expectancy to calculate the present value of your benefit. If you are married when you receive your lump-sum payment, your spouse must consent in writing to your selection of this option.
Under these options, you receive monthly pension payments for as long as you live. You may specify that these payments continue to be paid to your survivor after your death (referred to as joint life annuity payments), or you may specify that these payments end upon your death (referred to as single life annuity payments). You must select only one of these options before your payment begins.
If you select either a single life annuity or a joint life annuity, you may add an option that continues payments for a minimum number of years. This minimum payment period, known as a period certain, may not exceed your life expectancy (or the joint life expectancy of you and your joint annuitant).
The period certain option is available in 5, 10, 15 and 20 year periods and can be likened to an insurance policy of sorts. The period certain can be added to any one of the benefit options available under the MIT Basic Retirement Plan, e.g., 50%, 66 2/3%, 75% and 100% Contingent Annuities or the Single Life Annuity. It's a "guarantee" that in the event of the participant's death, within the elected Period Certain, that the benefit will continue to be made payable to the beneficiary until the end of that Period Certain.
Example: A participant elects the "50% contingent Annuity option with a 20 year Certain Period" and unfortunately passes away after receiving his benefit for 5 years. His spouse would then receive the participant's monthly benefit for the remaining 15 years of the Period Certain. After the 15 years, the spouse's benefit decreases to 50%. However, if she passes away after receiving this benefit for only 5 years, the remaining 10 years of the Period Certain would then go to the beneficiaries on file. In this case, the children are the designated beneficiaries and the remaining benefit is to be divided equally among them for the remaining 10 years, after which there is no further benefit.
If you are married when benefit payments begin, your spouse must consent in writing to your election of this option. This option will reduce the amount of your monthly lifetime pension payment.
Your monthly retirement payments are taxed when you receive them. If you are eligible and elect a single lump-sum payment payable to you:
If you roll over your lump-sum payment into another qualified retirement plan or traditional IRA, it is a non-taxable event and the payment is subject to the rules governing that plan.
If you do not roll over your lump-sum payment to the MIT Supplemental 401(k) Plan, an IRA, or other qualifying retirement plan: