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Will opening an IRA affect FASFA?
Posted on 12/23/11 at 3:34 pm
Posted on 12/23/11 at 3:34 pm
By lowering the grants I receive?
If so should I put of the IRA?
I also plan on going to grad school, I have a little in student loan debt.
If so should I put of the IRA?
I also plan on going to grad school, I have a little in student loan debt.
1
Posted on 12/24/11 at 12:36 pm to Tiger4
Everything that I have read states that retirement accounts are excluded from the federal formula used to calculate financial aid eligibility which means you have less assets to fund your education which means you get more aid. The schools use their own formulas. This is a question for a financial aid specialist or maybe a financial planner.
Posted on 12/24/11 at 3:28 pm to Hand
Thanks.
Do you think one of my schools financial aid advisor (not a cfp) would know the answer to this question?
quote:
Many parent assets are sheltered from the need analysis process. The need analysis formulas include an asset protection allowance based on the age of the older parent which shelters a portion of the family's investments. For the typical parents of college age children (age 45), this asset protection allowance amounts to approximately $45,000. In addition, money in qualified retirement plans, such as an IRA or 401(k), is disregarded by the need analysis formulas.
LINK
Contributions May Count as Untaxed Income on FAFSA
quote:
Pre-tax contributions to retirement plans during the prior tax year (and in some circumstances, these may occur as late as April 15 but be credited as though they occurred in the prior tax year) are reported on Worksheet B of the FAFSA. This includes the traditional IRA and 401(k). Even though the retirement plans are not counted as assets, the current contributions are counted as untaxed income.
Post-tax contributions to retirement plans are not reported on the FAFSA (except to the extent that they are included in AGI). For example, a Roth IRA is funded with post-tax dollars, and so the contributions are not included on Worksheet B of the FAFSA.
quote:
https://www.finaid.org/savings/retirementplans.phtml
Considering the second quote you would think that it still might be a good idea set up an IRA regardless if it is considered untaxed income. Right?
Also anyone know how often schools would consider IRAs for scholarships and grant decisions.
You have to think that skipping the IRA and going for scholarships is the better idea. Anyone know how difficult grad school scholarship are to get?
Posted on 12/26/11 at 10:36 pm to Tiger4
The traditional IRA will count as the untaxed income, but I assume that is just to point out the obvious in that your income will count regardless. Your income is the biggest factor when trying to figure out financial aid.
Yes, they should know the answer, and if they don't know, call back later to get someone else on the phone or call a different university's financial aid office to get an answer.
There's a book titled Ahead of the Curve that is an account of a journalist's time at HBS. One of the chapters has brief discussion of how some of businesses' future leaders get financial aid. It's an interesting ethical tightrope.
Yes, they should know the answer, and if they don't know, call back later to get someone else on the phone or call a different university's financial aid office to get an answer.
There's a book titled Ahead of the Curve that is an account of a journalist's time at HBS. One of the chapters has brief discussion of how some of businesses' future leaders get financial aid. It's an interesting ethical tightrope.
Posted on 12/26/11 at 11:17 pm to Hand
How do they get financial aid, and what are the ethical implications?
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