Sens. Warren and Lee Applaud Committee Passage of Bipartisan Bill to Help Graduate Students Build Retirement Savings
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Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Mike Lee (R-Utah) applauded the unanimous passage of the Graduate Student Savings Act of 2016 by the Senate Committee on Finance. This bipartisan bill would allow funds from a graduate student's fellowship or stipend to be deposited into an Individual Retirement Account (IRA). Stipend or fellowship funding that is currently taxed as income by federal and state governments does not qualify as "compensation" for retirement purposes and so cannot be saved in an IRA.
"This bipartisan bill will open an important opportunity for graduate students and postdoctoral fellows who want to start building their retirement savings," said Senator Warren. "By removing a barrier preventing graduate students from putting some of their income into tax-deferred accounts, this bill will help encourage more people to save. I'm glad it was approved by the Finance Committee - now, the full Senate should pass the legislation."
"The complexity of our tax code has made it difficult for many post-graduate researchers to take advantage of tax-deferred retirement savings programs like IRAs," Senator Lee said. "It is encouraging to see a simple fix to this problem, the Graduate Student Savings Act, successfully advance through committee."
A majority of doctoral students report receiving some of their financial support during graduate school from fellowships or grants, and about a third of all students report that fellowships or grants were their primary source of funding. The median doctoral student takes about seven years to finish a degree - meaning that, for the better part of a decade, a student can be prohibited from saving major portions of her income in a tax-advantaged account. This bill would remove this unnecessary hurdle so that students and postdoctoral fellows can start saving today.
The Graduate Student Savings Act of 2016 is supported by Fidelity Investments; the International Union, United Automobile, Aerospace, & Agricultural Implement Workers of America (UAW), Service Employees International Union (SEIU); National Association of Graduate-Professional Students (NAGPS); TIAA; Betterment; and American Federation of Teachers (AFT).
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