Pluses and Minuses – Balancing the checkbook.

Natoya Peart, PhD.

On November 29, 2017, an email from the Office of the Vice Provost for Research alerted the postdoctoral community at Perelman School of Medicine (PSOM Postdoctoral Community) to some changes coming to our paycheck. Effective January 1st, all non-NRSA postdocs would have their stipends subject to FICA withholding and automatic deduction of our federal taxes. I for one, welcome the withholding of the federal taxes as I have dreaded the estimated tax payments. With those quarterly payments whose due dates were so easy to miss, I wondered, “Was I miscalculating the amount due? Did I even really have to make this payment?” (A few of my fellow postdocs do not).

Personally, I am a fan of withholding because I like having a refund. But coming to Penn, I was shocked when I received my first paycheck. It was a lot more than I expected and when I checked my paystub – I saanw that federal taxes were not withheld. I will admit to not knowing much about the US taxes besides that it must be paid.  So I was confused why there was no federal taxes being deducted (a little forewarning would have been nice). Upon consulting a senior postdoc in my lab I learned that UPenn did not withhold Federal Taxes on Postdoc stipends*, and following a google search that led me to an old link on the BPC page (https://www.med.upenn.edu/bpc/tax-issues.html**) I learned that Penn policy was such that for my postdoc category Federal taxes were not withheld, but I was still responsible. So with this began my new life, learning to budget in anticipation of paying taxes.

This was perhaps the life for many postdocs at Penn, but we are in for a change. With the new changes which redefine postdoc stipends as wages, federal taxes will now be withheld, which I can live with. This money was never mine in the first place. However, the change was the FICA (Federal Insurance Contributions Act).

Penn was generous and to mitigate the suddenness of the change and to help alleviate the burden that this change places on the strained stipend, Penn offered a one-time stipend supplement of $2500 to the affected non-NRSA postdocs. This was initially disclosed at the Town Hall for the Penn Medicine post-docs held on Thursday, December 14, at 1:00 PM in the John Morgan Building, Reunion Auditorium. It was attended by the beleaguered postdocs, and with the presence of one tenured faculty member in the audience we learned more about the implications of the changes for not only the postdoc take home pay, but also for the PI’s grant that supported our research.

I am told I am trainee, which justifies the stipend that we are paid as we acquire more experience. But suddenly, our stipends have been redefined and now can is considered wages (which are compensatory in nature) so we are contributing to FICA. But for some, the questions are, What is FICA? What does it mean that my stipend “wage” is compensatory – since we can debate whether this compensation reflects how and how much I work? And more importantly, what does this mean for our take home pay? Will there be additional changes afoot? Will postdocs qualify for Penn retirement plans (the answer is yes, we can enroll in the Supplemental Retirement Annuity (SRA) Plan: https://www.hr.upenn.edu/PennHR/benefits-pay/retirement-news-detail/2018/01/02/non-nrsa-post-docs-eligible-for-sra-plan)? Will postdocs (especially foreign postdocs) reap the FICA benefit in the long run? Has the postdoc track/option (if you don’t qualify for an NRSA grant) gotten less attractive? What are your thoughts? And as a final reminder, check your paycheck and set a plan for your fiscal future.

* Some postdoctoral fellows/researchers do have federal taxes withheld automatically, usually postdoctoral researchers holding a H1B visa and some J1 visa holders.

** Recently updated, but as of January 17, 2018 does not reflect the new FICA changes nor the automatic withholding.