Does my Child’s Retirement Account affect their Ability to obtain Financial Aid?

22 03 2012

Parents nation-wide are worried about their child’s eligibility for college financial aid.  This is especially true for those parents with children whom have a small retirement nest egg from earned income.

The facts – retirement accounts (such as Roth IRAs, 401ks) are not reported to the Financial Aid board (FAFSA) if distributions (a/k/a withdrawals) are not being made.  Once assets are withdrawn, they are considered “income” and will be factored into the FAFSA application.  Besides, it doesn’t make ‘financial sense’ to withdraw funds from retirement accounts prior to retirement age – you will end up paying early withdrawal penalties and taxes on money withdrawn.  The best advice is to withdraw funds during retirement age in intervals.

A great article about the topic is found here.

Advertisements

Actions

Information

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




%d bloggers like this: