457(b) Plan

This deferred compensation plan allows certain highly paid eligible employees to voluntarily set aside a portion of their MIT pay to enhance their retirement savings or reach other long-term financial goals.

Eligibility

You are eligible for the MIT 457(b) Plan if you are eligible to participate in the 401(k) Plan AND meet the salary threshold set by federal law. For 2023, your total 2022 pensionable pay or your December 31, 2022 annual rate of pay must be at least $257,250 to participate in the Plan.

The threshold for 457(b) Plan eligibility for 2023 new hires is an annual pay rate of at least $280,350.

How the plan works

The MIT 457(b) Plan is a savings and retirement investment account that helps eligible employees invest and save for retirement and other long-term financial goals while receiving tax advantages similar to those available through the MIT Supplemental 401(k) Plan. MIT does not match contributions to 457(b) accounts. MIT reserves the right to change or terminate the 457(b) Plan at any time.

When you enroll in the MIT 457(b) Plan, you voluntarily set aside a portion of your MIT pay on a pre-tax basis to contribute to your account. You choose how your contributions are invested from a range of options determined by MIT. You do not pay federal or Massachusetts state income taxes on your contributions or associated investment earnings until you withdraw money from your MIT 457(b) Plan account.

In addition, you may take advantage of the following benefits when you contribute to your MIT 457(b) account:

  • The annual contribution limits set by federal law for your MIT 457(b) account do not affect the contribution limits for your MIT Supplemental 401(k) Plan account. The contribution limit for calendar year 2023 is $22,500.
  • In each of the three calendar years before the year in which you reach age 65, you may make special catch-up contributions that could increase your maximum allowable contribution to as much as twice the normal limits for these years (depending on your unused contribution potential from previous years).

How to enroll or make changes to your election

Eligible employees will receive an email in November prior to the calendar year in which they have been deemed eligible to contribute. This email will contain instructions on how to enroll in the plan. If you did not receive an email and believe you are eligible, or if you are a new hire who believes you should be eligible, please email MIT Benefits at benefits@mit.edu to request an eligibility review and an enrollment form. 

If you are currently enrolled and wish to make changes to your election or stop your contributions, please complete the 2023 Form for 457(b) Plan Deferral Agreement that can be found under "Forms" below. Email the completed form to MIT Benefits at benefits@mit.edu with the subject “Change to 457(b) elections.”

Distributions

When you terminate employment with MIT, the IRS outlines specific distribution rules for certain 457(b) plans that are very different from other types of retirement plans you may be familiar with (e.g., 401(k), 403(b), public 457(b) plans). Federal regulations for non-ERISA private deferred compensation plans, such as your MIT 457(b) plan, require that upon termination:

You must proactively decide when and how to receive payment of your 457(b) account balance within the timeframe outlined by the plan (please see dates below).

Termination date Deadline to return forms to TIAA
in order to proactively defer payment
April 1 - September 30 November 30
October 1 - March 31 May 30

If you take no action, you will receive an immediate default distribution of a taxable lump-sum payment for your entire balance.

You must inform MIT and TIAA of any address changes after you terminate employment with MIT. Failure to keep MIT and TIAA informed of your address changes will result in a default taxable distribution of your entire account balance on your distribution date.

Process and next steps

  1. Once TIAA receives your termination date, TIAA will mail you a distribution election package.
  2. You must select from one of four distribution options; note that rollovers are not allowed. More details on the available options will be included in the distribution election package.
  3. Select the date you want to receive/begin receiving the distribution, no later than the Required Minimum Distribution (RMD) age, currently age 72.
  4. To avoid receiving an immediate default lump sum distribution, you must complete the appropriate forms and return them to TIAA by the date listed above. If you do not receive a distribution package from TIAA within 30 days of termination, please contact TIAA at 800-842-2252.
  5. When TIAA receives your distribution election paperwork prior to the deadline, TIAA will send you a confirmation of your election selection, and additional forms to be completed if needed.
  6. If you selected a future start date to receive payment, 60 days prior to that date TIAA will send the necessary forms based on the election you chose. These forms need to be completed and returned by the date indicated in the letter. If TIAA does not receive the completed forms with your distribution election by the date indicated on the letter you will receive the default taxable lump sum distribution of your entire account balance on your distribution date.
  7. If you change your mind regarding your distribution election, you may change the income option election up to 30 days prior to the deferral date. Note: once elected the deferral date cannot be accelerated, and you will not be able to access your funds prior to that date. However, the plan does allow a one-time option to change the deferral date to a later (i.e., future) date, but no later than the RMD age (currently age 72).
  8. Use the checklist (below) to record your initial election and your requested payment start date; we encourage you to retain this information, along with copies of your communications with TIAA, with your tax or other important documents.

If you have any questions regarding this process, please contact TIAA at 800-842-2252.