Do retired parents need to report 401k to IRA rollover on FAFSA?
I just retired 6 months ago and rolled over my company 401k (about $230k) into a managed IRA with Fidelity. Now my daughter is filling out her FAFSA for the 2025-2026 year and I'm confused about whether we need to report this rollover somewhere. It's not income since I didn't cash anything out, just moved it from one retirement account to another. The FAFSA asks about "untaxed income" in one section and "investments" in another - does my IRA count for either of these? I don't want to mess up her aid by reporting things wrong.
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Brandon Parker
yes u have to report all retirment stuff on fassa
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Chloe Zhang
•That's what I was afraid of! This is going to completely destroy her chances of getting any aid. We're not rich, I just saved for 30 years. This system is so unfair.
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Adriana Cohn
Actually, traditional retirement accounts like 401(k)s and IRAs are NOT reported as assets on the FAFSA. The rollover from 401(k) to IRA is just moving money from one qualified retirement plan to another - neither would be counted as an asset on the FAFSA. However, make sure that 1) the rollover was direct (trustee-to-trustee) so it doesn't appear as income on your tax return, and 2) you don't report the value of your retirement accounts in the investment section. Only non-retirement investments need to be reported there.
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Chloe Zhang
•Oh thank goodness! Yes, it was a direct rollover, I never touched the money. So just to be 100% clear - I don't need to mention this $230k anywhere on her FAFSA?
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Jace Caspullo
When I did my son's FAFSA last year, I kept getting contradicting info about retirement accounts. I ended up calling FSA directly and after being on hold for almost TWO HOURS they finally confirmed that retirement accounts are NOT reported as assets. But honestly, what a nightmare getting through to anyone who could actually help!
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Melody Miles
•I had a similar experience trying to get through to FSA about my daughter's verification issue. After getting disconnected three times, I tried using a service called Claimyr (claimyr.com) that got me through to an agent in about 20 minutes. They have a video showing how it works here: https://youtu.be/TbC8dZQWYNQ. Was worth it to get my question answered without spending my entire day on hold!
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Nathaniel Mikhaylov
I WASTED MY TIME reporting my 401k on my kid's FAFSA last year!!!! No one told me retirement accounts don't count! I'm SO MAD right now because we qualified for ZERO aid and I bet this is why. The financial aid system is DESIGNED to punish people who save responsibly. They want us broke so they can control us!!!!
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Adriana Cohn
•I understand your frustration, but reporting retirement accounts shouldn't have affected your aid eligibility since they're not included in the SAI calculation. If you qualified for zero aid, it was likely due to other factors in your financial situation. The FAFSA instructions specifically state that retirement accounts shouldn't be reported in the investment section.
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Eva St. Cyr
To add some technical clarity here: The official FAFSA instructions specifically exclude "qualified educational benefits or education IRAs" and "retirement plans (pension funds, annuities, IRAs, Keogh plans, etc.)" from being reported as investments. However, if you did a NON-direct rollover where you received a check that you then deposited into your IRA (even if within the 60-day window to avoid taxes), that amount might show up on your tax return as a distribution that was subsequently rolled over. This could potentially appear as untaxed income on the FAFSA. The safest approach is to make sure your accountant properly coded this as a rollover on your tax forms. For 2025-2026 FAFSA, you'll be using your 2023 tax information, so if the rollover happened in 2023, just verify it's properly documented on your tax return.
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Chloe Zhang
•Thank you for this detailed explanation. The rollover was in 2024, so it won't appear on the 2023 tax return we're using for the FAFSA. And it was definitely a direct trustee-to-trustee transfer - I never received any money. This is a huge relief knowing we don't need to report it!
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Kristian Bishop
When my wife retired last yr, we were super confused about the whole FAFSA thing too. Her 403b rollover to an IRA was like $175k and we thought for sure it would kill our daughter's financial aid. But nope - retirement accounts don't count as assets! Just make sure when you're filling out the form you don't accidentally include your IRA in the investment section. That part can be confusing becuz they ask about "investments" which sounds like it could include retirement accounts, but it doesn't. Our daughter still got her Pell Grant!
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Brandon Parker
•wait so none of my 401k counts?? i put it on my kids fafsa applciation last month!!! how do i fix it???
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Eva St. Cyr
•You can submit a correction to your FAFSA. Log into studentaid.gov, click on 'Apply for Aid', then 'Correct your FAFSA form'. Find the asset section and adjust the amount to remove your retirement savings. Just be sure to only remove qualified retirement accounts, not other investments.
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Chloe Zhang
Thanks everyone for the great information. Just to update, I checked with my daughter's financial aid office at her college and they confirmed what most of you said - my IRA rollover does NOT need to be reported as an asset on the FAFSA. Such a relief! They did mention I should double check my tax return to make sure the rollover was properly coded so it doesn't appear as income, but since it was a direct transfer, it should be fine. I really appreciate all the help!
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Nia Davis
Great to hear you got confirmation from the financial aid office! That's always the best source for peace of mind. For anyone else reading this thread, it's worth noting that while retirement accounts don't count as assets, any distributions you take FROM those accounts (other than rollovers) would count as income on the FAFSA. So if you're retired and taking regular distributions to live on, those would be reported. But sounds like you're all set with just the rollover situation!
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Zane Gray
•This is such valuable information! I'm new to this whole FAFSA process and was really worried about how my husband's retirement savings would affect our son's aid eligibility. It's reassuring to know that as long as we're not taking distributions, the retirement accounts themselves won't hurt his chances. Thanks to everyone who shared their experiences - this thread has been incredibly helpful for understanding the difference between retirement assets and regular investments on the FAFSA!
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Freya Ross
This is such a helpful thread! I'm dealing with a similar situation - my husband just retired and we have both a 401k rollover AND a pension lump sum option we're considering. From reading all these responses, it sounds like the 401k rollover to IRA won't be reported as an asset, but I'm wondering about the pension. If we take the lump sum and roll it into an IRA, would that be treated the same way? Or would a pension lump sum be considered differently on the FAFSA? We want to make sure we make the right choice before our daughter starts college next year.
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NeonNebula
•Great question about the pension lump sum! If you do a direct rollover of the pension lump sum into a qualified IRA, it should be treated the same as a 401k rollover - meaning it won't count as an asset on the FAFSA. The key is making sure it's a direct trustee-to-trustee transfer so it doesn't show up as taxable income on your return. However, pension rules can be more complex than 401k rollovers, so I'd definitely recommend talking to both your pension administrator and a tax professional to make sure you understand all the implications before making that decision. The timing could also matter depending on when you'd take the lump sum versus when you'll be filing the FAFSA.
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