FAFSA mistake: reported 401K accounts that shouldn't be included - how to fix and will it affect aid?

Yes, once processed your FAFSA is sent to all the schools you listed. But don't panic! You can submit a correction pretty easily. Log into studentaid.gov, click on your 2025-2026 FAFSA application, and select "Make FAFSA Corrections." Go to the financial information section and adjust the asset values to exclude retirement accounts. The good news is that schools often verify this information anyway, so they might catch this without you doing anything. But I'd definitely submit the correction ASAP. And yes, removing retirement assets could significantly lower your SAI, especially with amounts that large.

omg i did THE EXACT SAME THING last year!!! reported like $210k in retirement accts we'd been saving for 20+ yrs. our sai was insane like $45k and my daughter almost didn't go to college bc of it. we fixed it and sai dropped to $18k which still sucked but way better!!

This is actually a very common mistake. The FAFSA instructions aren't clear enough about retirement assets being exempt. To directly answer your questions: 1. Yes, your processed application with the incorrect information is already sent to all selected colleges. 2. Impact varies widely. For some families, removing retirement assets can reduce SAI by $10,000+ depending on the amounts involved. 3. You can make corrections as soon as the application is fully processed (typically 3-5 days after submission). If you're getting an error about verification, that means your application was selected for verification and you'll need to complete that process before making corrections. I recommend taking two actions: - Submit the correction online once verification is complete - Contact each school's financial aid office directly and explain the situation. Many schools will accept documentation of the correct information and adjust their calculations accordingly, even if the official FAFSA hasn't been updated yet.

You know what's INFURIATING about this? The FAFSA system KNOWS which accounts are retirement accounts because they have the account types!! Why doesn't it just automatically exclude them?! Why make families figure this out?? The whole system is designed to TRAP people into reporting incorrectly and getting LESS AID. I made this EXACT mistake and lost nearly $8000 in grants at one school because I couldn't fix it in time for their priority deadline!! The whole financial aid system is BROKEN!!!

this happened to my cousin last yr and he couldn't get through to anyone at fafsa for like 3 weeks to fix it. they kept hanging up on him lol

I've been helping families with FAFSA for years, and this retirement account mistake is surprisingly common. For those struggling to reach Federal Student Aid by phone, I recently discovered Claimyr (claimyr.com) which helped me get through to an agent in about 15 minutes instead of hours on hold. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ Regarding your specific situation - the impact on your SAI could be substantial. Retirement assets are completely excluded from FAFSA calculations, so if you reported significant 401K balances, removing them could potentially lower your SAI by thousands of dollars. This is definitely worth fixing as soon as possible. While waiting to make the correction, I strongly recommend calling each school's financial aid office directly. Explain the specific error you made and ask if they can make an adjustment on their end while you wait for the official FAFSA correction to process. Many schools have forms for special circumstances or professional judgment that could help in this situation.

i know this isnt helpful but this reminds me how my parents messed up my fafsa in 2023 by putting my stepdads income but not listing him as a contributor so it looked like my mom made way more money than she did and i got like no financial aid my first year it was AWFUL

One more thing to consider - if you made this mistake, you might have made others too. When you go in to make corrections, double-check that you've properly handled: 1. Home equity (primary residence) - this is ALSO excluded from FAFSA 2. Small business value (if family-owned with fewer than 100 employees) - also excluded 3. 529 plans for other children - these should be reported as parent assets These are the most common areas where people incorrectly report assets and end up with artificially high SAI calculations. While you're making corrections, make sure everything else is accurate too!

btw has anyone got their SAI calculated with the new formula yet?? my daughters came back like WAY different than what the online calculators said it would be and idk if its bc of the new formula or if i messed something up!!

Update: I finally got through to someone at FSA! They confirmed I need to wait until the verification process is complete before making corrections. Apparently we were randomly selected for verification (just bad luck). Once that's done, I can fix both the retirement accounts AND home equity issues. The agent estimated it could reduce our SAI by potentially $12,000-15,000! I'm going to contact all the schools today to let them know what's happening. Thank you everyone for your help!

Wow, what a relief that you got through to FSA and have a clear path forward! A potential $12,000-15,000 reduction in SAI is absolutely massive - that could be the difference between your son being able to afford his top choice school or not. Just wanted to add that when you contact the schools, it might be helpful to put your explanation in writing (email) rather than just calling. That way there's a paper trail showing you notified them about the error and when. Some schools are really good about noting these issues in their systems, but having written documentation protects you if there's any confusion later. Also, don't beat yourself up too much about this mistake - literally thousands of families make the same error every year because the FAFSA instructions are confusing. The important thing is you caught it and you're fixing it! Your son is lucky to have a parent who's staying on top of this stuff.

I'm going through this exact same situation right now! Just submitted my FAFSA last week and realized I included our 401k balances totaling around $85k. My daughter's SAI came back at $28,000 which seemed way too high for our income level. Reading through all these responses has been incredibly helpful - I had no idea home equity was also excluded! Quick question for those who've been through this: when you made the corrections and got your new SAI, did the schools automatically receive the updated information or did you have to specifically request they review the corrected version? I'm worried about missing deadlines while waiting for everything to get sorted out. Also, @Dylan Hughes - definitely follow the advice about emailing the schools. I called three different financial aid offices yesterday and got three completely different answers about how to handle this situation!

This thread has been so incredibly helpful! I'm a parent going through the same nightmare right now. We accidentally included about $120k in retirement accounts AND our home equity (house is worth way more than we paid 15 years ago). Our SAI came back at an absolutely insane $41,000 which is more than half our annual income! Reading everyone's experiences here gives me hope that we can get this fixed. The fact that @Dylan Hughes might see a $12,000-15,000 reduction is encouraging. I'm going to follow the advice about emailing all the schools immediately while we work on the correction process. One thing I'm wondering - for those who successfully corrected these mistakes, did you see the SAI change reflect immediately in your studentaid.gov account, or did it take several days? My daughter has some scholarship deadlines coming up that are tied to financial need, so timing is really crucial for us. Also, huge thanks to everyone sharing their stories. It's comforting to know we're not alone in making these mistakes, even though the whole system seems designed to trip families up!