FAFSA 2025-26: Do 401K to 401K rollovers count as pension rollovers?

I had the same question last year! The FAFSA uses "pension" as a catch-all term that includes 401k plans. So yes, your 401k to 401k rollover DOES count as a pension rollover into a qualified plan. You should indicate "yes" for this question.

Financial aid advisor here. Yes, a 401k-to-401k rollover counts as a pension rollover for FAFSA purposes. The reason they ask this question is because rollovers can artificially inflate your income on tax returns. By indicating you had a rollover, the FAFSA can properly exclude those funds from counting as income in your Student Aid Index calculation. So answering "yes" to this question is actually BENEFICIAL in most cases, as it prevents that money from being counted as available income for college expenses.

Just to add my 2 cents - I almost got SCREWED on this last year by answering wrong. If you don't indicate the rollover, the FAFSA might count your entire 401k transfer as INCOME for the year, which would destroy your chances for need-based aid. Definitely mark YES.

I spent HOURS trying to reach someone at Federal Student Aid to ask about this exact question last month. Finally got through using Claimyr (claimyr.com) - they got me connected to an agent in under 20 minutes when I'd been trying for days. There's a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent confirmed that 401k to 401k transfers do count as pension rollovers for FAFSA purposes. They also explained that this actually benefits you because it signals to them not to count that money as income.

The 2025-26 FAFSA is so much more confusing than previous years! For the record, the reason they ask about rollovers is because these transactions appear on your tax return but aren't actually new income. A 401k-to-401k rollover shows up on your tax documents as a distribution from one plan and a contribution to another, which could make it look like you had more income than you actually did. By marking "yes" to the rollover question, you're telling the FAFSA system not to count this money as available funds for college.

does anyone know if this affects your SAI by alot?? i think i answered this wrong and now im freaking out

When I filed the 2024-25 FAFSA, I initially answered this wrong. During verification, I had to submit additional documentation to prove it was a rollover and not income. Took an extra 3 weeks to process and almost missed my school's priority deadline. Definitely mark it correctly the first time to avoid headaches!

One more thing - make sure to save documentation of your 401k rollover in case you get selected for verification. My daughter's application got flagged for verification, and we had to provide statements from both 401k plans showing the money going out of one and into the other on similar dates.

As someone who just went through this process, I wanted to add that the FAFSA Help page actually has a specific example about 401k rollovers that clarifies this exact situation. It states that "distributions from retirement plans that were rolled over to another qualified plan" should be reported as pension rollovers. What helped me was looking at my 1099-R form from the old employer - if box 7 has a code "G" (direct rollover), that's a clear indicator that it should be marked as a rollover on the FAFSA. This gave me confidence that I was answering correctly when I marked "yes" to the pension rollover question. For anyone still unsure, the key thing to remember is that the FAFSA is trying to distinguish between money that's truly new income versus money that's just moving between retirement accounts. Your 401k rollover isn't money you can actually spend on college - it's still locked away for retirement - so the FAFSA needs to know not to count it as available income.

This thread has been so helpful! I'm a first-time FAFSA filer and was completely lost on this question. I did a 401k-to-401k rollover last year when I changed jobs, and like many others here, I was confused by the "pension" terminology. Based on all the great advice here, I'm now confident that I should mark "yes" for the pension rollover question. It makes perfect sense that the FAFSA needs to know about this to avoid counting rollover money as available income. I'll also make sure to keep my 401k statements handy in case of verification. One quick question - does anyone know if there's a difference in how direct vs. indirect rollovers are handled on the FAFSA? Mine was a direct trustee-to-trustee transfer, but I'm curious if that matters for the reporting.

This entire discussion has been a lifesaver! I'm dealing with the exact same situation - switched jobs in 2024 and did a direct 401k rollover. I was absolutely panicking about whether to mark "yes" or "no" on that pension rollover question because I kept thinking "but it's not a pension, it's a 401k!" Now I understand that FAFSA uses "pension" as an umbrella term for all retirement plans, and more importantly, that marking "yes" actually HELPS my financial aid calculation by ensuring the rollover amount isn't counted as income. I was so worried about answering wrong and hurting my son's aid eligibility, but it sounds like answering "no" would have been the real mistake. I'm definitely going to dig up my 1099-R form to double-check for that "G" code that Kiara mentioned, and I'll keep all my rollover documentation organized in case we get selected for verification. Thank you everyone for sharing your experiences - this community is amazing for navigating these confusing FAFSA questions!

I'm so grateful I found this thread! I'm a parent filling out my first FAFSA for my daughter and was completely stumped by this question. I did a 401k rollover last year when I retired from my previous job, and like so many others here, I got thrown off by the word "pension" when I knew it was a 401k. Reading through everyone's explanations, especially from Connor about how marking "yes" actually prevents the rollover from being counted as income, makes so much sense now. I was terrified of checking the wrong box and accidentally inflating our income or making it look like we had more available funds than we actually do. I'm going to go back and check my 1099-R for that "G" code that was mentioned, and I'll make sure to keep all my rollover paperwork organized. It's such a relief to know that being honest about the rollover actually helps rather than hurts our aid calculation. Thank you to everyone who shared their experiences - this community has been invaluable for a nervous first-time FAFSA parent!