Does my husband's 401k need to be reported on FAFSA application?

Great news - you do NOT need to report 401k accounts on the FAFSA! Retirement accounts (401k, IRA, pension plans, etc.) are specifically excluded from the assets you need to report. This is actually one of the most common misconceptions about FAFSA. The federal methodology doesn't count retirement savings when calculating your Student Aid Index (SAI). Just make sure you're not reporting that $78k anywhere on the form.

my cousin didnt report his 403b (same as 401k but for teachers) and they flagged him for verification...had to send in all kinds of extra paperwork to prove he wasnt hiding money

Just to be super clear on this: 401k accounts are EXCLUDED from FAFSA reporting. Here's the exact wording from the Federal Student Aid website: "Retirement plans (401k plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.) are NOT considered investments for the FAFSA." However, if you've just recently contributed a large amount to the 401k, that might show up as a discrepancy between your reported income and taxes. The FAFSA doesn't ask about the 401k itself, but they might notice if there's a big gap between income and what's available.

Everyone keeps saying don't report 401ks but CSS Profile is DIFFERENT!!! If your daughter is applying to private schools that use CSS Profile THEY DO count retirement sometimes especially if you have a lot saved!!! The CSS Profile has different rules and some schools will look at retirement as available assets especially if you're close to retirement age!!! Just FYI this tripped us up last year!!!

Wait im confused...so my husbands 403b doesnt count but what about the Roth IRA? Thats different right? And what about our HSA? Sorry this is all so complicated lol

Have you tried calling the Federal Student Aid Information Center to get clarification? I was stuck on the phone for HOURS trying to get through last month when I had questions about reporting my husband's retirement accounts. Finally used this service called Claimyr (claimyr.com) that holds your place in line and calls you back when an agent is available. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent confirmed retirement accounts aren't reported on FAFSA but gave me specific instructions for our situation since my husband is self-employed with a SEP IRA.

One more thing to consider: if your husband took a loan from his 401k, the outstanding balance of that loan is NOT considered an asset for FAFSA purposes either. I see people get confused about this all the time. Regular student loans aren't reported as assets, and neither are 401k loans. Also, make absolutely sure you're looking at the 2025-2026 FAFSA rules since they changed a lot of things with the FAFSA Simplification Act. But the retirement account exclusion has remained consistent.

my daughters SAI came back way higher than we expected even tho we didnt report any retirement stuff...turns out they look at income more than assets now with the new formula. just be prepared that having retirement savings doesnt help that much if your income is decent

Thank you all so much for the helpful responses! Just to summarize what I've learned: 1. Don't report 401k or any retirement accounts on the FAFSA 2. CSS Profile (for private schools) might have different rules 3. The new SAI formula focuses more on income than assets anyway 4. Keep good records in case we're selected for verification I feel much better about tackling this application now. I was worried we'd be penalized for doing the responsible thing by saving for retirement!

You're absolutely right to be cautious about this! I just went through the FAFSA process with my son last year and had the same confusion. The key thing to remember is that retirement accounts (401k, 403b, traditional IRA, Roth IRA) are completely excluded from FAFSA asset reporting. This is actually written right into the federal guidelines because they don't want to discourage people from saving for retirement. Your husband's $78k in his 401k should NOT be reported anywhere on the form. The only time retirement accounts might matter is if you took early distributions - then those would count as income. But the account balance itself? Nope, leave it off completely. You're doing great by asking these questions upfront!

As someone new to the FAFSA process, I'm so glad I found this thread! I was having the exact same worry about my spouse's 401k. It's such a relief to learn that retirement accounts are completely excluded - I was genuinely concerned that being responsible savers would hurt our daughter's chances for financial aid. The clarification about CSS Profile being different is also super helpful since we're looking at some private schools too. I'll definitely need to research each school's specific policies. Thanks to everyone who shared their experiences - it makes this whole process feel less overwhelming when you know others have navigated it successfully!