At MIT’s ‘Innovations in Health Care’ conference, industry experts discuss how to maintain quality while reining in costs.
Following is another in an occasional series of question-and-answer articles about the changes in the MIT Retirement Plan first announced in the December 9, 1998 issue of MIT Tech Talk.
Should I stop my TDA/403(b) and increase contributions to my 401(k)?
MIT increased the amount you can contribute annually to a 401(k) plan to the lesser of 20 percent of pay or $10,000. Most employees no longer need both a 401(k) and a TDA, as they can contribute the full amount of their current combined contributions to the 401(k) plan. Increasing your contributions to the 401(k) plan and stopping your TDA/403(b) contributions is a convenient way to consolidate your retirement savings.
If you would like to learn more about the MIT 401(k) and TDA plans, the Benefits Office will be sponsoring a seminar on January 13th at noon and January 20th at 1pm. Both presentations will be in Twenty Chimneys in the Student Center.
Does the maximum 401(k) contribution "the lesser of 20 percent of pay or $10,000" include MIT's match?
No, you can contribute the lesser of 20 percent of pay or $10,000. The $10,000 limit is the maximum you can elect to defer in both the 401(k) and the TDA/403(b) plans. This is an annual limit and is subject to an inflation increase.
When will information on the additional investment options be available?
You currently have three investment options: the Variable Fund, the Fixed Fund and the Money Market Fund. Additional options will be available in late spring. The Benefits Office will send you information on the new investment options in March and will sponsor educational seminars on the investment options.
When can I take a loan from my 401(k) plan?
It is estimated that the 401(k) loan feature will be made available in early summer of 1999. Loans will only be available to active employees and will be repaid through payroll deduction.
Can my Fixed Fund account balance both increase and decrease?
In the past, the Fixed Fund maintained relatively stable performance by spreading its gains and losses out over five years. As of January 1, 1999, the Fixed Fund is valued monthly based on the actual market performance of its underlying investments. Although members will see more fluctuations in their monthly Fixed Fund account balances, the Fund will continue to be a balanced fund with 70 to 90 percent of the portfolio invested in bonds and 10 to 30 percent of the fund invested in stocks.
How can I increase my contributions to the 401(k) plan?
Call 1-877-MIT-SAVE toll-free (1-877-648-7283). You will be asked to set up a Personal Identification Number (PIN) the first time you call. You will enter the percentage you want to contribute as a whole number between 0 and 20 inclusive. Your contributions will stop automatically once you reach the $10,000 limit.
How frequently may I change my election?
You may change your election as often as you like or as frequently as once per pay period. The final election for monthly payroll is the 15th of the month and for weekly payroll your election must be made on Thursday to be effective in the next week's pay.
How do I know my transaction was completed?
Upon completing a transaction on the phone system, you will be given a 13-digit confirmation number immediately following your transaction. A paper confirmation will be sent to your home three to five days later.
How can I review my elections?
You can call 1-877-MIT-SAVE at any time to review your latest elections.
When will I be provided with my 401(k) account balances?
Annual statements reflecting balances as of December 31, 1998 will be sent in February. A statement showing the one-time market value adjustment on your Fixed Fund account balances will be sent shortly after you receive your annual statement. Starting in April, you will receive regular quarterly statements on your balances in the Supplemental 401(k) Plan. Later this year, your account balances will be available on the phone system and also on the web for those who would like online access.
A version of this article appeared in MIT Tech Talk on January 13, 1999.