The Roth & the Grad Student

Well, my 2009 taxes have officially been filed and 3 hours I spent on hold with various IRS representatives have left me with the extremely disappointing conclusion that I cannot contribute to a Roth IRA for 2009.

Digression about my graduate school program: I am in a relatively unusual graduate school program that requires me to spend about 7-8 years doing a combination of classes and research.  We receive tuition remission and a living stipend, which is paid to us in different ways depending on whether we are in the coursework or research phases of our training program.  Right now I’m finishing up the coursework phase, for which I receive a check every 6 months (great for earning extra interest, but a budget-breaking temptation to have all that cash all at once!).  The IRS has never heard of my graduate program before (…and it’s funded by the federal government!) and after I talked with them, they decided that my fellowship only counts as earned income during the research phase (when I receive a biweekly paycheck with taxes withheld).  Has anyone else had difficulties with saving for retirement while in graduate school?

I’m so disappointed that this means I have a two-year delay in being able to contribute!  My parents told me upon my college graduation that they wanted to encourage me to save for retirement and therefore would help pay for my first year of contributions to an IRA.  While I am very grateful for their help, I wish they had started this encouragement while I was working in high school.  My plan for my future children will be to match whatever they want to contribute to an IRA if they work while in high school or college.  What did your parents to do encourage you to become a saver?

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