FAFSA wrongly counted my 401k rollover as income - how to fix this mistake?

omg same thing happend to me last year!! the system just automatically pulls all these numbers from the tax transcript and doesn't know any better. you have to submit a correction and specifically explain that its a 401k rollover not income

This is actually a common issue with the FAFSA. The system pulls your AGI directly from your tax return, and if Box 4a on your 1040 shows the rollover amount, FAFSA can't automatically distinguish this from regular income. Here's what you need to do: 1. Submit a correction to your FAFSA application through studentaid.gov 2. On the income section, check the box indicating you want to use different figures than what was imported 3. Submit documentation to your school's financial aid office showing the rollover (usually your 1099-R form which should have code G or H in box 7) 4. Follow up with a written explanation to the financial aid office The school has the authority to make this professional judgment adjustment once they have proper documentation. Don't panic - this is fixable!

I can help with this! I'm a financial aid counselor and see this issue frequently. What you're experiencing is called the "Retirement Rollover Issue" and it's actually mentioned in the FSA handbook guidelines for financial aid administrators. You'll need to complete a special form called the "Income Adjustment Request" or sometimes "Professional Judgment Request" at your daughter's specific school. Each institution handles these differently, but they all have a process for this. Bring these documents: 1. Your 1099-R showing the distribution code (should be G or H) 2. Documentation showing the money went into another qualified retirement account 3. A written statement explaining the situation Don't just rely on FAFSA corrections alone - you need the school's financial aid office to make the adjustment in their system too.

If you've been trying to reach someone at Federal Student Aid and keep getting disconnected, I'd recommend trying Claimyr (claimyr.com). I was in the same situation last month with a verification issue and was going crazy trying to reach someone. Claimyr held my place in line and called me back when an agent was available. Saved me hours of hold time. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ

THE WHOLE FAFSA SYSTEM IS BROKEN!!!! I've had nothing but problems with the new FAFSA and this 401k issue is just ONE MORE EXAMPLE of how badly they've messed things up. My son's college fund (529) got counted as income AND assets which is DOUBLE COUNTING and when I finally reached someone after DAYS of trying they told me "that's just how the system works" - WHAT?!?!?! They're making up rules as they go and it's RUINING financial aid for deserving students. I'm so ANGRY about this whole process!!!!

not to go off topic but this makes me wonder what other stuff is getting messed up on my application....like does anyone know if they also mess up home equity loans? cause i took one out last fall and now im worried 😬

Update: I called the financial aid office at my daughter's school this morning and explained the situation. They knew exactly what I was talking about! Apparently this happens a lot with the new FAFSA system. They're sending me their "Income Adjustment Request" form and said once I provide the 1099-R showing the rollover code, they can make the adjustment on their end. Still frustrating but at least there's a process. Thanks everyone for your help!

i dont get why they design a system that automatically pulls tax info but then cant figure out which parts shouldnt count?? like isnt that the whole point of the fancy new system?? my kids are in elementry school so i have a few years to go but hearing all these horror stories makes me dread dealing with fafsa when the time comes

I'm new to this community but dealing with a similar issue right now! My husband did a 403b rollover last year and we're worried it might show up as income on our FAFSA too. Reading through all these responses has been incredibly helpful - I had no idea that schools could make professional judgment adjustments for this kind of thing. Going to check our 1099-R forms right away to see what codes we have. Thanks to everyone who shared their experiences, especially the financial aid counselor who explained the step-by-step process!

This thread is so helpful! I'm dealing with a similar situation but with a Roth IRA conversion that got counted as income. Reading through everyone's experiences, it sounds like the same process applies - I'll need to contact my son's school's financial aid office with documentation showing it was a conversion, not regular income. The frustrating part is that this seems to be such a common issue, yet the system hasn't been updated to handle these situations automatically. At least now I know there's a clear path to get it fixed through the professional judgment process. Thanks to everyone who shared their stories and especially to the financial aid counselor for the detailed steps!

I'm going through this exact same nightmare right now! My 401k rollover from when I switched jobs last year ($32,000) got automatically pulled in as income and it's completely screwing up my daughter's financial aid. I've been trying to reach someone at Federal Student Aid for over a week but keep getting disconnected after hours on hold. This is so stressful because acceptance letters are coming out soon and we need to know what our real aid packages will look like. Thank you all for sharing your experiences - at least now I know I'm not alone in this mess and there's actually a way to fix it. Going to call my daughter's college financial aid office first thing Monday morning with my 1099-R in hand!

I'm new here but had to jump in because I just went through this exact same situation! My wife and I had a 401k rollover last year ($28,500) that got automatically counted as income on our FAFSA. Like everyone else mentioned, the system just pulls everything from your tax return without understanding what's actually income versus account transfers. Here's what worked for us: I contacted our son's school's financial aid office directly (skipped trying to call FSA after reading horror stories about hold times) and they had a "Professional Judgment Appeal" form specifically for situations like this. The key document you need is your 1099-R form - make sure it shows code "G" in box 7, which indicates it was a direct trustee-to-trustee rollover. The whole process took about 2 weeks once I submitted everything, and they were able to adjust his aid package. Our EFC went down by almost $8,000! Don't panic - this is definitely fixable, you just need to work directly with each school's financial aid office rather than trying to fix it through FAFSA itself.

I'm new to this community but going through the exact same situation! Just discovered that my 401k rollover from last year ($41,200) got pulled in as income on my FAFSA and my daughter's SAI is completely wrong as a result. Reading through all these responses has been incredibly helpful - I had no idea that schools could make professional judgment adjustments or that this was such a common issue with the new FAFSA system. I'm definitely going to skip trying to call Federal Student Aid (sounds like a nightmare) and go straight to contacting my daughter's school's financial aid office with my 1099-R form. It's such a relief to know this is fixable and that other families have successfully gotten it corrected. Thank you to everyone who shared their experiences, especially those who provided the step-by-step process and specific terminology to use when contacting the schools. This community is a lifesaver during such a stressful time!