FAFSA showing 401(k) rollover as income - destroying our SAI calculation

This EXACT thing happened to me last year!! My husband rolled over his 403b (similar to 401k) when changing jobs and FAFSA counted it as income. We ended up having to contact each school individually with documentation from both retirement companies showing it was a trustee-to-trustee transfer. It was a HUGE pain but eventually got resolved. Don't bother with the IRA rollover field - it didn't work for us.

Financial aid advisor here. This is unfortunately a common issue with the FAFSA that the Department of Education still hasn't properly addressed in the new FAFSA Simplification process. Direct 401(k) rollovers should not be counted as income for FAFSA purposes, but the form doesn't have a specific field to report this correctly. Your best approach is exactly what you're doing: 1. Submit documentation to each school's financial aid office using their professional judgment forms 2. Include documentation from both the originating and receiving 401(k) providers showing it was a direct rollover 3. Provide a copy of your tax return showing the rollover was not included in AGI The IRA rollover field will not help with a 401(k) rollover - they're processed differently in the FAFSA calculation.

My nephew had this same problem with his parents' 401k rollover. Their SAI went from like 15k to 42k!!! The financial aid offices wouldnt budge and they lost so much money. The system is rigged against middle class families smdh

I dealt with this exact situation when helping my daughter with her FAFSA last year. You need to be persistent and keep excellent records. Here's what worked for us: 1. Got letters from both retirement plan administrators stating it was a direct rollover (trustee-to-trustee transfer) 2. Created a simple spreadsheet showing our income with and without the rollover amount 3. Made copies of our tax return highlighting the rollover information 4. Submitted everything to each school's financial aid office 5. FOLLOWED UP weekly with each school until resolved The key is consistent follow-up. Financial aid offices are drowning in paperwork right now, and the squeaky wheel gets the grease.

whats a 401k rollover? is that like when u cash out ur retirement?

I've been trying to get someone at FSA to explain why they count rollovers as income for THREE WEEKS. Can't get a straight answer from anyone and the wait times are ridiculous. I keep getting disconnected after waiting for 2+ hours. This whole system is designed to be confusing on purpose, I swear.

Try contacting your state's higher education assistance authority too! They sometimes have more pull with the Department of Education than individual schools do. And they might have dealt with this specific 401k rollover issue before since it's apparently common!

I still dont understand why theres fields for IRA rollovers but not 401k rollovers on FAFSA. its like they WANT to screw over families. this new simplified FAFSA was supposed to fix stuff like this but its just as bad!!!!!

Update: I finally got through to someone at Federal Student Aid after my 6th attempt. They said this is a "known issue" with the system and they're "working on it" but couldn't give me any timeline for when it would be fixed. So basically we're all just supposed to individually fight with each school to get this fixed. Cool cool cool.

We had to provide our 1099-R forms showing distribution code G (direct rollover) to prove to the financial aid offices that it wasn't income. Have those ready when you contact the schools. Most had us submit a "Professional Judgment" or "Special Circumstances" form.

This is such a frustrating situation that so many families are dealing with! I'm currently going through something similar with my son's FAFSA - not a rollover but another issue where the system is misinterpreting our financial data. From reading all these responses, it sounds like the documentation approach is really your best bet. I'd recommend creating a "rollover packet" for each school with: - The 1099-R with distribution code G - Statements from both retirement accounts - A cover letter explaining the situation clearly - Your tax return pages showing it wasn't counted as income Also, when you contact each school, ask specifically for their "Professional Judgment" or "Special Circumstances" form rather than just explaining the situation over the phone. Having the official form seems to move things through their system faster. Good luck! The fact that this is a "known issue" that FSA isn't fixing quickly enough is really unfair to families who need these aid decisions made now.

I'm dealing with this exact same issue right now! My husband had a 401(k) rollover of $65,000 when his company merged, and our SAI jumped from around $8,000 to $28,000. It's so frustrating that this "simplified" FAFSA can't handle something as basic as a retirement rollover correctly. I've been reading through all these responses and it's clear I need to get organized with documentation. Has anyone had success getting multiple schools to process these adjustments quickly? I'm worried about missing priority deadlines while we're waiting for each school to review our special circumstances forms. Also, for those who got this resolved - did it affect your aid packages significantly once corrected? I'm hoping we can get back to something closer to our expected family contribution from last year.

I'm going through this exact nightmare right now! My spouse had a $72,000 401(k) rollover when we switched jobs last year, and our SAI shot up from $14,000 to $35,000. I've been pulling my hair out trying to figure out what went wrong until I saw your post. I'm definitely going to follow the advice here about gathering all the documentation - the 1099-R with code G, statements from both accounts, and our tax returns. It's ridiculous that we have to become experts in financial aid appeals just because the FAFSA system can't properly handle something as common as a 401(k) rollover. Has anyone had luck with getting schools to expedite these professional judgment reviews? I'm worried about aid packages getting finalized before this gets resolved. Also, did any schools give you pushback on the documentation or try to say the rollover should count as income? Thanks for starting this thread - it's such a relief to know we're not alone in dealing with this mess!

This thread has been so incredibly helpful! I'm a newcomer dealing with the exact same 401(k) rollover nightmare. My husband rolled over $58,000 when his company changed providers, and our SAI went from an expected $16,000 to $31,000. I was panicking thinking we'd made some terrible mistake on our FAFSA. Reading through everyone's experiences, I'm relieved to know there's a clear path forward, even though it's frustrating we have to fight for something that should be automatic. I'm going to start gathering all the documentation mentioned here - the 1099-R with code G, statements from both retirement accounts, tax returns, and create that comprehensive "rollover packet" someone suggested. One question for those who've been through this process: did any schools initially reject your professional judgment request, or were most receptive once you provided the proper documentation? I'm trying to set realistic expectations for how many rounds of back-and-forth this might take with each financial aid office. Thanks to everyone for sharing their experiences - this community is a lifesaver when navigating these complex financial aid issues!

I'm new to this community and dealing with this exact same 401(k) rollover disaster! My husband had a $45,000 rollover when his employer switched 401(k) providers, and our SAI jumped from $11,000 to $26,000. I've been going crazy trying to figure out what went wrong with our FAFSA until I found this thread. Reading through everyone's experiences has been such a relief - I thought we were the only ones dealing with this. It's insane that the "simplified" FAFSA can't handle something as basic as a retirement rollover correctly. I'm going to start putting together that documentation packet everyone's mentioned: the 1099-R with code G, statements from both accounts, tax returns, and a clear cover letter explaining the situation. Has anyone had success getting schools to give you a timeline for when they'll review professional judgment requests? I'm worried about missing out on aid while waiting for corrections. Also, for those who successfully got this resolved - did your final aid packages end up being similar to what you would have received with your original expected contribution? Just trying to set realistic expectations for how much this correction might help our situation. Thanks to everyone for sharing their experiences - this community is amazing for navigating these complex issues!

I'm new to this community and unfortunately joining the 401(k) rollover disaster club! My spouse had a $52,000 rollover when changing jobs last year, and our SAI shot up from around $9,000 to $27,000. I was absolutely panicking thinking we'd somehow messed up our FAFSA until I found this incredibly helpful thread. It's both frustrating and reassuring to see so many families dealing with this exact same issue. The fact that this is a "known problem" that FSA isn't fixing quickly enough is infuriating when it's costing families thousands in potential aid. Based on all the great advice here, I'm putting together my documentation packet this week: - 1099-R with distribution code G - Statements from both the old and new 401(k) accounts - Tax returns showing it wasn't counted as income - A clear cover letter explaining the situation I'm planning to submit professional judgment forms to all the schools on our list rather than waiting for decisions first. Has anyone found that certain types of schools (public vs private, large vs small) are faster at processing these corrections? Just trying to prioritize which ones to follow up with most aggressively. Thanks to everyone for sharing your experiences - this thread is a lifesaver for navigating this mess!

I'm brand new to this community and unfortunately dealing with this exact same 401(k) rollover nightmare! My husband rolled over $63,000 when his employer changed 401(k) providers last year, and our SAI jumped from an expected $10,000 to $29,000. I was completely panicking thinking we had made some catastrophic error on our FAFSA until I found this thread. Reading through everyone's experiences has been such a huge relief - it's both frustrating and comforting to know so many families are facing this same system error. The fact that this is a "known issue" that FSA acknowledges but isn't fixing fast enough is absolutely infuriating when it's potentially costing families thousands in financial aid. Based on all the excellent advice shared here, I'm going to start putting together my documentation packet immediately: - The 1099-R with distribution code G - Statements from both the old and new 401(k) accounts showing the direct transfer - Our tax returns proving it wasn't counted as income - A detailed cover letter explaining the situation I'm planning to contact all the schools on our list proactively to request their professional judgment forms rather than waiting for initial aid decisions. Has anyone had experience with schools that were particularly quick or responsive with these corrections? I'm trying to figure out which ones to prioritize for the most aggressive follow-up. Thank you to everyone who has shared their experiences and advice in this thread - this community is absolutely invaluable for navigating these complex financial aid disasters!

I'm also new to this community and unfortunately joining the ranks of families dealing with this 401(k) rollover disaster! My husband had a $55,000 rollover when his company merged with another and switched 401(k) providers, causing our SAI to skyrocket from about $8,500 to $26,000. I was absolutely convinced we had made some terrible error on our FAFSA until I found this incredibly helpful thread. It's both maddening and reassuring to see how many families are experiencing this exact same problem. The fact that FSA acknowledges this as a "known issue" but hasn't prioritized fixing it is beyond frustrating when it's potentially costing families thousands in aid eligibility. I'm going to follow the comprehensive documentation approach everyone has outlined: - Gather the 1099-R showing distribution code G - Get statements from both the originating and receiving 401(k) accounts - Include our tax returns demonstrating it wasn't counted as taxable income - Create a clear cover letter explaining the rollover situation My plan is to proactively contact each school's financial aid office to request their professional judgment forms rather than waiting for initial aid decisions. From what I'm reading, persistence and weekly follow-ups seem to be key to getting these corrections processed quickly. Thank you to everyone who has shared their experiences and detailed advice - this thread has been absolutely invaluable for understanding how to navigate this mess!

I'm new to this community and unfortunately also dealing with this 401(k) rollover nightmare! My spouse had a $41,000 rollover when their company switched retirement providers, and our SAI jumped from about $13,500 to $29,000. I was completely convinced I had made some major error on our FAFSA until I found this thread. It's incredibly frustrating but also such a relief to see how many families are experiencing this exact same system error. The fact that FSA knows about this problem but hasn't prioritized fixing it is maddening when it's affecting aid eligibility for so many families right now. I'm going to follow the documentation approach everyone has outlined here: - Get the 1099-R with distribution code G - Obtain statements from both the old and new 401(k) providers - Include our tax returns showing it wasn't counted as income - Create a detailed cover letter explaining the situation I'm planning to proactively reach out to each school's financial aid office to request professional judgment forms rather than waiting for aid decisions. From reading through all these experiences, it sounds like having complete documentation ready and following up consistently are the keys to success. One additional question - has anyone found it helpful to mention in their cover letter that this is a "known issue" acknowledged by FSA? I'm wondering if that might help financial aid officers understand this isn't a unique situation requiring extensive research on their part. Thank you to everyone for sharing such detailed advice and experiences - this thread has been absolutely invaluable!

I'm new to this community and unfortunately also dealing with this exact 401(k) rollover nightmare! My husband had a $79,000 rollover when his employer switched from Fidelity to Vanguard last year, and our SAI shot up from around $14,000 to $38,000. I was absolutely convinced we had made some catastrophic error on our FAFSA until I discovered this thread. Reading through everyone's experiences has been such a huge relief - it's both infuriating and comforting to know this is a widespread system problem affecting so many families. The fact that FSA acknowledges this as a "known issue" but hasn't prioritized fixing it quickly enough is beyond frustrating when families need these aid decisions made immediately. I'm going to implement the comprehensive documentation strategy that's been so thoroughly outlined here: - Obtain the 1099-R with distribution code G - Collect statements from both Fidelity and Vanguard showing the direct transfer - Include our tax returns proving it wasn't included in our AGI - Create a detailed cover letter mentioning this is a documented FSA system issue My plan is to immediately contact all schools on our list requesting their professional judgment forms rather than waiting for initial aid offers. Based on all the advice shared, it sounds like weekly follow-ups and complete documentation are absolutely critical for getting these corrections processed efficiently. Has anyone had success getting schools to expedite these reviews by explaining the urgency of the correction? I'm worried about aid packages getting finalized while we're waiting for this system error to be resolved. Thank you to everyone who has shared such detailed guidance - this community has been absolutely invaluable for understanding how to tackle this mess!