SECURE Act: Stipends Treated as Compensation

Several provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) pertain to IRAs. One of these affects stipends and non-tuition fellowship payments received by graduate and post-doctoral students.

Prior to 2020 and the passage of the SECURE Act, these stipends, grants and benefits paid to aid a student in the pursuit of post-graduate study or research were not treated as compensation for purposes of making IRA contributions, since such contributions are only allowed to the extent that the taxpayer has sufficient compensation (i.e., earned income). Section 106 of the SECURE Act expands the definition of compensation so students may now begin saving for retirement earlier in their careers.

Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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