Do retirement accounts (IRA/401k) count as assets on FAFSA? Urgent clarification needed
I'm trying to finish my FAFSA application for the 2025-2026 year and I'm stuck on the assets section. My parents have both IRA and 401k retirement accounts, and I'm getting totally different answers from everyone about whether these count toward our net worth on the FAFSA. My guidance counselor says retirement accounts aren't included, but my friend's mom who works in financial planning insists they should be reported. The FAFSA website isn't super clear to me either. Can someone who actually knows the rules confirm whether retirement accounts (specifically IRAs and 401k balances) should be included in the assets/net worth section? This could seriously impact my aid eligibility so I'm really anxious to get the correct answer before submitting.
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Aisha Mahmood
Good news - retirement accounts are NOT counted as assets on the FAFSA! This includes 401k plans, traditional IRAs, Roth IRAs, pension funds, and annuities. The Department of Education specifically excludes these from asset calculations when determining your SAI (Student Aid Index). You should only be reporting: - Cash/savings/checking accounts - Investment accounts (non-retirement) - Real estate (not including primary home) - Business assets over certain thresholds Your guidance counselor was correct. Hope this helps!
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Mateo Sanchez
•Thank you SO MUCH for the clear answer! That's a huge relief. My parents have most of their savings in retirement accounts, so this will definitely help our SAI score. Just to double check - this is definitely true for the new 2025-2026 FAFSA too, right? I heard they changed some things this year.
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Ethan Moore
my dad works in finance and says ur supposed to list ALL assets on fafsa but then they have some formula were they dont count retirement accounts in the final calculation. so technically u should list them but it wont hurt ur aid
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Aisha Mahmood
•That's actually incorrect. The FAFSA instructions explicitly state NOT to include retirement plans in the asset section. You don't list them at all. The form specifically says to exclude "retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)" from your reported assets.
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Yuki Kobayashi
I made this EXACT mistake last year and it almost cost me thousands in financial aid!!! I included my parents' retirement accounts thinking I was being thorough and honest, but it MASSIVELY inflated our assets. Thankfully our financial aid officer caught it during verification and had me correct it. DO NOT include retirement accounts on FAFSA!!! The CSS Profile is different though - some schools using CSS DO want retirement account info (but they calculate it differently).
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Carmen Vega
•Wait, so CSS Profile counts retirement? My daughter is applying to 3 schools that use CSS and 2 that just use FAFSA. This is so confusing!
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Yuki Kobayashi
•Yes, some schools using CSS Profile DO ask about retirement accounts! But they typically only count a portion of them in their institutional methodology. Each school handles it differently. Check each school's financial aid website or call their aid office to ask how they treat retirement assets specifically.
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QuantumQuester
Financial aid counselor here. To clarify officially: 1. FAFSA: Retirement accounts are EXCLUDED from asset reporting. Don't include 401k, 403b, IRA, Keogh, pension plans, etc. 2. CSS Profile: Some schools DO ask about retirement accounts on the CSS Profile, but most only use this for informational purposes or apply a different formula than regular assets. 3. Important distinction: If you have a non-retirement investment account that you're personally earmarking for retirement (but it's not an official retirement vehicle like an IRA), that DOES count as an asset on FAFSA. 4. For 2025-2026 FAFSA, the treatment of retirement accounts remains unchanged from previous years despite other formula changes.
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Mateo Sanchez
•Thank you for the clear explanation! That point #3 is really important - I think that's where some confusion came from. My friend's mom probably meant regular investment accounts need to be reported even if someone is planning to use them for retirement someday. Makes sense now!
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Andre Moreau
I spent TWO HOURS on hold with Federal Student Aid trying to get this exact question answered last month!! They finally confirmed retirement accounts are NOT reported on FAFSA, but I wasted an entire afternoon just trying to reach someone. If anyone else needs to contact FSA directly, I found this service called Claimyr that got me connected to an agent in under 10 minutes instead of waiting hours. Their site is claimyr.com and they have a demo video at https://youtu.be/TbC8dZQWYNQ. Saved me so much frustration when I had more questions about reporting my mom's small business assets.
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Zoe Stavros
•does that service actually work? i tried calling fsa 3 times about my dependency override and got disconnected every time after waiting 45+ min
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Andre Moreau
•Yes, it definitely worked for me! They basically hold your place in line and call you when they get an agent. I was skeptical too but I was desperate after my second disconnection. Way better than listening to that hold music for hours.
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Jamal Harris
DONT BELEIVE THE PEOPLE SAYING DONT INCLUDE RETIREMNT!!! My cousin works for a college financial aid office and she said people get REJECTED for aid all the time for leaving stuff off!!!! Better to include EVERYTHING and let them decide what counts!!!!!
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QuantumQuester
•This is incorrect and potentially harmful advice. The FAFSA instructions explicitly state NOT to include retirement accounts. People get selected for verification for many reasons, but following the official instructions won't be one of them. Including retirement accounts when they specifically say not to could actually reduce your aid eligibility until corrected.
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Mateo Sanchez
Thanks everyone for the help! I've submitted my FAFSA WITHOUT including the retirement accounts as assets, following the official instructions. What a relief to get this clarified! I really appreciate all the expertise and personal experiences shared here.
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Aisha Mahmood
•Great decision! If you get selected for verification later (which happens randomly to many applicants), just make sure you have documentation about your family's assets ready. But you've done it correctly!
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Carmen Vega
So this whole thread is making me wonder...do TSP accounts count? My husband is military and has a Thrift Savings Plan. Is that considered a retirement account for FAFSA purposes? Anyone know?
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QuantumQuester
•Yes, the Thrift Savings Plan (TSP) is a federal government retirement plan similar to a 401k, so it is excluded from FAFSA asset reporting. You don't need to include TSP balances on the FAFSA.
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Amaya Watson
This thread has been incredibly helpful! As someone who just went through this process with my oldest child, I want to emphasize how important it is to follow the official FAFSA instructions exactly. The retirement account exclusion has been consistent for years - 401k, 403b, traditional/Roth IRAs, pension plans, and TSP accounts are all excluded from asset reporting on FAFSA. One tip that might help others: when you're filling out the FAFSA online, there's actually a helpful tooltip next to the assets section that specifically lists what NOT to include, and retirement accounts are clearly mentioned there. If you're ever unsure about any financial question on FAFSA, those little question mark icons throughout the form provide official guidance that can save you from second-guessing yourself. Good luck to everyone working on their applications!
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Mia Rodriguez
•Thank you for sharing that tip about the tooltips! I'm just starting my FAFSA journey as a first-generation college student and honestly feeling pretty overwhelmed by all the financial terminology. It's reassuring to know there's built-in help right on the form itself. I'll definitely look for those question mark icons when I get to the assets section. This whole thread has been a lifesaver - I was planning to ask my parents about their 401k balances but now I know I don't need them at all!
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