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Questions and answers on retirement changes

Below are some answers to questions about the expected changes to the MIT Retirement Plan.

What prompted these changes?

The changes to the Retirement Plan reflect not only the need to simplify and improve features of the plan, but also to address the suggestions of employees and retirees about more flexible features and greater availability of services. Additionally, some changes must be made to satisfy legal and regulatory requirements to retain the tax-qualified status of the plan.

Will the changes apply to retirees and other retirement plan participants who no longer work at MIT?

The changes will not affect retirees and other participants who no longer work at MIT if they are now receiving their MIT Retirement Plan benefits as lifetime annuity income.

However, some of the changes will apply to retirees and other terminated participants if their lifetime annuity income benefits have not yet begun. These retirees and participants will be able to transfer ("exchange") balances among the available investment options, and their Fixed Fund accounts will reflect actual fund performance. Their Fixed Fund accounts will receive a one-time market value adjustment reflecting the Fund's market value on December 31, 1998. Their share of the 401(k) Plan's operating expenses will be deducted from future investment return. Also, additional benefit payment options will be available to them. Later this month, more information about the changes affecting these participants will be mailed to them.

Why has the retirement age been reduced?

Many employees nearing retirement have expressed interest in working part-time while collecting retirement benefits for a few years before retiring fully. Federal law allows part-time employees to collect pension benefits only if they have reached the plan's retirement age. Decreasing the Basic Plan's retirement age from 65 to 62 makes this phased approach to retirement possible for more people by making it available at a younger age.

This phased approach to retirement is made available to even more people by allowing participants who have reached age 59.5 to collect benefits from the 401(k) Plan if they work less than half-time.

Is this a retirement incentive?

Although some of the changes will make early retirement more attractive for some employees, the changes to the plan do not form a retirement incentive program. Generally, such programs apply to a limited number of employees, and are temporary in nature. The changes to the plan are are meant to address the long-term needs of all participants.

What will the additional investment options be?

The menu of options has not yet been determined. However, the 401(k) Plan's Oversight Committee has been charged with creating a menu that will allow participants to create diversified portfolios that meet their specific risk and reward requirements.

In addition to new investment options, the current Fixed and Variable Funds will continue to be available.

When will detailed information be available on the changes that have not yet been approved?

The Benefits Office will keep participants informed about the status of the changes proposed to take effect after January 1, 1999. Information will be available in future editions of MIT Tech Talk, at informational sessions conducted by the Benefits Office, and at the Benefits Office web site. The Benefits Office anticipates that these proposed changes will be effective no earlier than April 1, 1999.

What do I have to do?

You do not need to do anything unless you want to change the amount of your 401(k) contributions and/or change your investments. After December 15, call toll-free 1-877-MIT-SAVE (1-877-648-7283) to change the amount of your contributions, change the investment allocation of your future contributions, and/or stop your TDA 403(b) contributions.

If you want to transfer ("exchange") investments among the available funds, complete an exchange form available at the Benefits Office or at the Benefits Office web site after December 15.

Where can I have other questions answered?

Personal calculations reflecting the plan changes will not be available until mid-Spring 1999.

Informational and educational sessions are scheduled during the month of December (see article at left) and throughout IAP and later in 1999. These sessions will be announced in future editions of Tech Talk and at the Benefits Office web site. Benefits representatives will be available at these sessions to answer your questions.

Detailed information about the changes will be available at the Benefits Office web site after December 15. You can also e-mail questions to the Benefits Office at

A version of this article appeared in MIT Tech Talk on December 9, 1998.

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