Does FAFSA require reporting 401(k) to 401(k) transfers? Confused about pension rollover question

You don't need to report it. I did something similar when I changed jobs last year and moved my 401k. Since it wasn't a taxable event and doesn't show up on your tax return, you don't need to include it on FAFSA.

Actually, this is a bit more complicated. The FAFSA question specifically asks about rollovers that are reported on your federal tax return. Direct 401(k) to 401(k) transfers are generally not reported on your tax return because they're not taxable events. However, if the rollover was reported on your tax return with a corresponding code in Box 7 of your 1099-R indicating it was a non-taxable rollover, THEN you would need to report it on the FAFSA and answer "yes" to that question. Check if you received a 1099-R form for this transaction. If you did, look at Box 7 for the distribution code. If you didn't receive a 1099-R or if nothing was reported on your tax return related to this transfer, then you would answer "no" to the FAFSA question.

Wait im confused!!! So does a 401k rollover count for fafsa or not???? I rolled over my 403b to an IRA last year and my tax guy said it wasn't taxable but now im freaking out that I might have answered wrong on my kids FAFSA! Did I mess up there financial aid????

I had this EXACT SAME issue last year. Called FAFSA 12 TIMES and got disconnected every single time trying to get an answer. Their phone system is a complete joke. Finally got through and they told me if the rollover isn't on your tax return, don't include it. Simple as that. They only care about what's reported to the IRS.

The key distinction for FAFSA purposes is whether the rollover appears on your federal tax return. Direct 401(k) to 401(k) transfers are typically not reported on your tax return and therefore don't need to be reported on FAFSA. However, rollovers that generate a 1099-R with a code indicating a rollover (typically code G for direct rollovers) might appear on your tax return even if they're non-taxable. Here's what to check: 1. Look at your 1040 form, lines 4a and 4b (for IRA distributions) or 5a and 5b (for pensions and annuities) 2. If your rollover amount appears on 4a/5a but shows $0 on 4b/5b, then it was a non-taxable rollover that was reported on your return 3. If nothing related to your rollover appears on these lines, then it wasn't reported on your return Only report rollovers on FAFSA if they appear on your tax return, even if they show as non-taxable ($0).

This is one of those questions that the FAFSA doesn't explain well at all. I work in financial aid at a university, and we see this confusion ALL THE TIME. The intention of this question is to identify retirement funds that were rolled over and reported on your tax return (usually with a note that it was non-taxable). Since these rollovers can artificially inflate income on FAFSA calculations if not properly identified. If your direct 401(k) to 401(k) transfer wasn't reported on your tax return at all, then answer "no" to the rollover question. The FAFSA is specifically looking for rollovers that appear on the tax return but weren't actually income.

I think everyones overthinking this. if it didnt show up on ur tax forms dont put it on fafsa. simple as that. fafsa just pulls from ur tax info anyway

OK so i just checked my tax forms and my 403b to IRA rollover DOES show up on line 4a but line 4b is $0. So I should have answered YES to the rollover question?? My FAFSA is already processed and my kid got her aid package. Will they take away her financial aid now??? Should I submit a correction???

I'm in a similar situation and this thread has been really helpful! I did a direct 401(k) to 401(k) rollover last year when I changed jobs and was worried I might have messed up my son's FAFSA. From what I'm reading here, the key is whether it shows up on your tax return or not. I checked my 1040 and there's nothing on lines 5a or 5b, so it sounds like I answered correctly by saying "no" to the rollover question. It's frustrating how unclear the FAFSA wording is on this - they really should provide better examples or explanations for these situations that are so common when people change jobs.

This thread has been incredibly helpful! I'm a newcomer to FAFSA and was completely lost on this rollover question. My spouse did a 401(k) to 401(k) transfer when changing jobs in 2023, and I've been stressing about whether we answered correctly. After reading all these explanations, especially from the financial aid professional who explained the purpose behind the question, I'm much more confident now. The key takeaway seems to be: if the rollover doesn't appear anywhere on your tax return (lines 4a/4b or 5a/5b), then answer "no" to the FAFSA rollover question. It's really frustrating that FAFSA doesn't provide clearer guidance on these common situations, but I'm grateful for communities like this where people share their real experiences and knowledge!

As someone new to FAFSA, I really appreciate this detailed discussion! I'm in a very similar situation - my husband transferred his 401(k) when he changed jobs last year and I've been second-guessing our FAFSA answers ever since I submitted it. After reading through all these responses, especially the clear explanation from the financial aid professional about what FAFSA is actually trying to capture with this question, I feel much more confident. I checked our tax return and there's nothing on lines 5a or 5b related to the transfer, so it sounds like we answered correctly by selecting "no" for the rollover question. It's such a relief to find a community where people actually explain these confusing aspects of the process! The FAFSA instructions really could be clearer about common scenarios like job changes with 401(k) transfers.

As a newcomer to the FAFSA process, this discussion has been incredibly enlightening! I'm dealing with a similar situation where my spouse had a 401(k) rollover during a job transition last year, and I've been absolutely terrified that I might have answered incorrectly and jeopardized my child's financial aid. Reading through all these detailed explanations, especially from the financial aid professional who clarified the actual purpose behind this confusing question, has given me so much peace of mind. The step-by-step guidance about checking specific lines on the tax return (4a/4b for IRAs, 5a/5b for pensions) is exactly what I needed. It's frustrating that FAFSA doesn't provide clearer instructions for these common scenarios, but I'm grateful for communities like this where experienced members share their knowledge and help newcomers like me navigate these complex forms without making costly mistakes!

As someone completely new to FAFSA, this entire thread has been a lifesaver! I'm filling out my first FAFSA for my daughter and got stuck on this exact same rollover question. My husband did a 401(k) to 401(k) transfer when he switched companies last year, and I had no clue whether to report it or not. The FAFSA wording is so confusing - they really need to provide better examples for common situations like job changes. After reading all these explanations, especially the breakdown from the financial aid professional about checking specific lines on your tax return, I finally understand what they're looking for. I checked our 1040 and there's nothing on lines 5a or 5b, so it sounds like we should answer "no" to the rollover question. Thank you all for sharing your experiences and helping nervous newcomers like me navigate this process!

As a newcomer to the FAFSA process, I can't thank everyone enough for this incredibly detailed discussion! I'm filling out my first FAFSA for my son and was completely stumped by this rollover question. My wife had a 401(k) to 401(k) transfer when she changed jobs in 2023, and I've been second-guessing our answer for weeks. The FAFSA instructions are so vague - they really should provide clear examples for common situations like job transitions with retirement account rollovers. After reading through all these responses, especially the explanation from the financial aid professional about what FAFSA is actually trying to identify, I finally feel confident about our answer. I checked our tax return and confirmed there's nothing on lines 5a or 5b related to the transfer, so answering "no" to the rollover question was correct. This community has been such a valuable resource for navigating these confusing forms - thank you all for sharing your knowledge and experiences!

As a complete newcomer to FAFSA, this thread has been absolutely invaluable! I'm working on my first FAFSA application for my daughter and was totally confused by this rollover question. My husband did a 401(k) to 401(k) transfer when he switched jobs last year, and I had no idea whether we needed to report it. The FAFSA wording is so unclear - they really need better explanations for these common workplace situations. After reading everyone's detailed responses, especially the financial aid professional's explanation about checking specific tax return lines, I finally understand what FAFSA is looking for. I verified that our rollover doesn't appear anywhere on lines 5a or 5b of our 1040, so it sounds like we answered correctly by selecting "no" for the rollover question. Thank you all for sharing your knowledge and helping anxious newcomers like me navigate this overwhelming process! It's such a relief to know other families face the same confusing scenarios.

As someone completely new to the FAFSA process, this entire discussion has been a huge help! I'm filling out my first FAFSA for my son and got completely stuck on this rollover question. My spouse had a 403(b) to 401(k) rollover when switching from a nonprofit to a corporate job last year, and I've been panicking about whether I answered correctly. The FAFSA instructions are so confusing - they really should include clear examples for these common employment transitions. After reading through all these detailed explanations, especially the breakdown about checking specific lines on your tax return, I finally feel like I understand what they're looking for. I went back and checked our 1040, and there's nothing on lines 4a/4b or 5a/5b related to the rollover, so it sounds like we were right to answer "no" to the rollover question. Thank you to everyone, especially the financial aid professional, for breaking this down in such clear terms. It's such a relief to find a community where people actually explain these intimidating forms instead of just telling you to "call FAFSA" (which we all know is nearly impossible)!