FAQs: Retirement Savings for Graduate Students and Postdoctoral Scholars

As financial circumstances and priorities differ for each student and postdoc, it is difficult to answer this question other than in a general manner. While we all face the daily expenses of life and ponder other financial goals like paying off debt, purchasing a home and financing future family needs, the earlier you begin to save for retirement, the more time your funds have to accumulate.

Most savers begin by making regular deposits into accounts earmarked for retirement. Peruse Mind Over Money Learning Modules to help navigate your early steps of saving, including budgeting and financial planning.

If you receive (or, if you file a joint tax return your spouse receives) taxable compensation during a year, you may be eligible to make contributions to an Individual Retirement Account (IRA), which has certain tax advantages. Graduate students and postdocs should review Internal Revenue Services (IRS) Publication 590-A at www.irs.gov for more information about eligibility to contribute to an IRA.

Compensation generally includes wages, salaries, and other amounts that you receive for providing personal services. Compensation also includes income paid to you to aid you in the pursuit of graduate or postdoctoral study, such as taxable fellowship and stipend payments. See IRS Publication 590-A at www.irs.gov for more information.

Non-U.S. citizens who have U.S earned income may open an IRA. Postdocs and graduate students who are not U.S citizens or permanent residents should consult with a tax advisor to understand the U.S. and foreign tax implications of an IRA (with respect to both contributions and distributions).

Contributions to so-called “Traditional IRA” accounts may be eligible for “before tax” treatment, so that the amount of the contribution is deductible (i.e., not included in your taxable income). Eligibility for before tax treatment will depend upon whether the student or their spouse is covered by an employer-provided retirement plan and the taxable income of the student and their spouse for the year. If you are not eligible to make contributions to a Traditional IRA on a before tax basis, you may make contributions on an after tax basis. Contributions to so-called “Roth IRA” accounts are made “after tax”, meaning that the amount of contribution is NOT excludable from your current taxable income. Eligibility for Roth IRA contributions is determined by your taxable income (and your spouse’s) for the year. Qualifying distributions from a Roth IRA account (including investment gains) are not taxed. In contrast, distributions from a Traditional IRA (except the amount of any after tax contributions made to a Traditional IRA account) are taxable. Please refer to IRS Publications 590-A and 590-B at www.irs.gov for further important details regarding IRA contributions and distributions.

The IRS sets the limits for IRA contributions on an annual basis. Visit www.irs.gov to confirm current contribution limits.

If you are a salaried postdoc, you are eligible to make employee contributions to the Tax Deferred Account (TDA) portion of the Stanford Contributory Retirement Plan (SCRP). Students whose primary affiliation with the university is as a regularly enrolled student, such as graduate students, are not eligible for the SCRP. If you are eligible, you can choose to make before-tax contributions and/or after-tax Roth contributions to your TDA under the SCRP. You are able to contribute to the TDA only from income that you receive from the university as salary, NOT as stipend. You may contribute any amount up to an annual limit of $19,500 ($26,000 if you are age 50 or older) for the calendar year 2021. No matching contributions are made with respect to employee TDA contributions. Please see the SCRP’s Summary Plan Description for more information about the TDA.