Bipartisan bill would help grad students save for retirement
Liberal Sen. Elizabeth Warren (D-Mass.) and conservative Sen. Mike Lee (R-Utah) have teamed up on a bill to help graduate students start saving for their retirement.
The pair rolled out legislation on Tuesday that would allow graduate students to save funds from their stipends or fellowships in tax-preferred Individual Retirement Accounts (IRAs). Currently, stipend funds are taxed as income but cannot be put into an IRA because they are not considered “compensation.”
“We should be encouraging young adults to start saving early for retirement, but that’s a lot tougher than it should be for graduate students who can’t tuck away some of their income into tax-deferred accounts,” Warren said in a news release. “This bipartisan bill will open an important opportunity for graduate students and postdoctoral fellows who want to start building their retirement savings.”
The bill has the support of a number of stakeholder groups, including Fidelity Investments, the National Association of Graduate-Professional Students and the Service Employees International Union.
“The complexity of our tax code and the incentives to save for retirement have unfortunately left many post-graduate researchers in a position where they are unable to take advantage of tax-deferred retirement savings programs like IRAs,” Lee said. “This bill makes a very simple change to the code to fix this inequity.”