How Solo 401k Plans an IRAs Affect Financial Aid
Solo 401k plans and IRAs can affect various forms of financial aid in the following ways:
Student Financial Aid
When applying for financial assistance from the U.S. Department of Education Office of Federal Student Aid, an applicant is required to report many types of assets (the parents’ and the student’s). Those applying may wonder whether retirement savings accounts are included in these reportable assets.
Balances in solo 401k plans and IRAs, whether owned by the parent or the student are not included in the calculation.
HOWEVER, any contributions to a solo 401k plan or IRA for the tax year of which asset information is gathered are counted. See the instructions for completing the FAFSA application for more on this.
Distributions from solo 401k plans an IRAs that are referenced for FAFSA will also count as income. See the following. https://www.savingforcollege.com/
For more frequently asked questions regarding solo 401k plans, VISIT HERE.