Can someone explain this on FAFSA - required tax-deferred pension contributions...

<p>Apparently one has to include payments to required tax-deferred pension plans which is then added to income. We were just wondering why this is if the contribution is required and the money is not accessible for any reason. My husband and I both have state-sponsored pension plans which require a certain percentage contribution. We have no choice about contribution, but more importantly the money is not accessible for college or for any other reason except retirement. </p>

<p>Am I understanding this correctly?</p>

<p>Just wondered how FAFSA can include this total amount with the EFC, when it is not possible to take it out or use it. We also have a deferred comp we participate in, which I can understand including this as it's our choice, but the other is not and can't be spent. </p>

<p>(I find I'm actually starting to feel physically ill with these FAFSA results... which is completely unlike me but it's getting worse as I plow through!!)</p>

<p>Don't try to make sense of the EFC formula. You'll go nuts. It's Congress at its best.</p>

<p>Just make sure you are only reporting the tax deferred payments. If the payment is not taken pre-tax, then it's already included in your AGI.</p>

<p>I agree with the OP...it doesn't make sense that I have to add back in a REQUIRED state pension...and especially since in MY state this is in lieu of social security for teachers. No one has to report their SS contributions...but I have to report my teachers retirement contributions...which I can only access with financial penalty prior to retirement...oh...and if I do, I'll have NO retirement income because I won't get social security (live in one of the states with the SS offset law).</p>

<p>Thumper, I feel your pain. Maybe you live in Ohio, too? No SS income for us, either. I about died when I saw that our EFC on the calculator doubled after I input the state-required retirement contributions. Someone tried to explain that it's considered income because a state board "bargains" for the state retirement pension plan rules or something like that. They didn't understand that it has nothing to do with unions, etc. - and it doesn't matter because we can't touch it (one can never take it out unless it's for very extreme circumstances, ex. someone dies, or in one case I know, a spouse went to jail and all income was lost. It has to be approved, and it's made very clear that approvals are RARE. For college tuition is not permitted.) </p>

<p>If we had a choice as to where to put our money, that's one thing. But the point is, it's like our "social security" and the govt will never have to pay us that, we are required to contribute whatever amount they say, and we can't touch it for college. So how can they count it? I can't believe we are penalized for this, and our wages are generally lower than the comparable typical non-government job. </p>

<p>So my son, who wants to go to a state school, may not be able to go there because his parents work for that state! Go figure.</p>

<p>He was very excited about Ohio State, but we don't even see that happening now with this new discovery. There is no way we can afford it from what we are seeing. Hope your experience has/had better results!</p>

<p><a href="http://ifap.ed.gov/sfahandbooks/attachments/0809AVGCh2.pdf%5B/url%5D"&gt;http://ifap.ed.gov/sfahandbooks/attachments/0809AVGCh2.pdf&lt;/a&gt;&lt;/p>

<p>Read page 15 of the pdf - Box 14 (right hand side of page). "Non-elective contributions should not be included in the need analysis."</p>

<p>Does that help? :)</p>

<p>"Non-elective contributions should not be included in the need analysis."</p>

<p>so even though they are included on the FAFSA, they are NOT included in the calculation? Oh...well that is good news!!!</p>

<p>I am not sure you put them on the FAFSA, actually. If they aren't in the calc, I assume that's because they don't need to be on the FAFSA. Where do you put them? If it doesn't specifically tell you to put them down, then I don't think you have to ... at least, that's how I interpret that sidebar.</p>

<p>Oh, good grief - I just pressed the "submit" button only 5 minutes ago!!! URGH I should have looked here again but was so sick of numbers, we just wanted to get it done.</p>

<p>I sure hope I'm reading that correctly! I'm still confused - everywhere I've looked says it must be added, including many other posters. I've never seen anything specifically on box 14 until now, no matter where I looked - thank you for adding this link, I never would have known. If we don't need the box 14 info, then that will make a HUGE difference in the EFC for us.</p>

<p>***I know I can't change anything until it's processed, but I don't think that takes too long? And surely the school would get those changes and apply them in a timely fashion?</p>

<p>I just found a training powerpoint that I can't link, but it lists these as "Not counted as untaxed income":</p>

<p>Food stamps
Subsidized housing
Foster Care payments
Flexible Spending Accounts (medical or daycare “cafeteria plans”)
Non-elective pension contributions (such as state retirement system)
Educational VA Benefits (counted as resource instead)</p>

<p>Schools are not required to review income listed in Box 14 of the IRS’s W-2 form for the following reasons:
several items reported are captured already on the FAFSA
employers could include nonelective pension plan contributions that should not be on the FAFSA
employers are not required to provide information in this box so it will not be reported consistently</p>

<p>However, if you are aware that an item in Box 14 belongs on Worksheet B (clergy or military housing), you should include it </p>

<p>From another training powerpoint (2008).</p>

<p>Don't worry, friedpasta. Your schools will use the corrected info.</p>

<p>This information is very much appreciated! Nowhere have I found anything crystal clear referring to FAFSA and the Box 14 issue. This is the first reference to it, and to anything specifically stating "state retirement plans", and I've been looking everywhere. Everything just vaguely said "tax deferred contributions". I knew Box 12 was required but have been digging for a week for the box 14 - not even the local college's financial aid office answered the question correctly, apparently. I knew enough not to add in our non-elective health insurance amount from that box, but included the state retirement info.</p>

<p>I'm sure there will be several others very pleased to see this, as well. You can bet I'll be correcting it as soon as it's processed. </p>

<p>Thanks for your well-informed posts. :)</p>

<p>I am glad to have helped. This helped me, too. I now have two great verification powerpoints to add to my training file. I know more now than I knew earlier today!</p>

<p>Thumper, I read that info as not including the Box 14 items anywhere on the FAFSA at all. I apparently mistakenly submitted the Box 14 numbers, in the "tax deferred contributions" section of the FAFSA (worksheet B).</p>

<p>The Collegeboard EFC calculator was almost to the penny with the FAFSA's EFC when I ran what I thought were the right numbers; but when I just ran them again with the adjusted "tax deferred" info - meaning subtracting the Box 14 amount - our EFC was less, and seemed much more in line with what EFC we expected from all of the good info on this site - although still seems high, but doesn't it to everyone...</p>

<p>Right ... do not list them on the FAFSA. The info in post #10 indicates that they "should not be on the FAFSA."</p>

<p>Federal</a> Student Aid - IFAP: Worksheets, Schedules, & Tables</p>

<p>here is the formula link if these details are helpful</p>

<p>I found info in one of my training manuals that shows the info in box 14 isn't put on FAFSA (unless it's the housing thing).</p>

<p>What is the AIG?</p>

<p>AGI?</p>

<p>Adjusted Gross Income.</p>

<p>Is exclusion form FAFSA as “nontaxable income” of non-elective pension contributions still correct? My father works for a city and has no choice in contributing. Where can I find newer support? Thanks!</p>

<p>Update - I was able to find an updated FSA for July 2012 with the same language “non-elective contributions should not be counted in the need analysis.” </p>

<p>For those that may be interested see link below:</p>

<p><a href=“http://ifap.ed.gov/fsahandbook/attachments/1213AVGCh2.pdf[/url]”>http://ifap.ed.gov/fsahandbook/attachments/1213AVGCh2.pdf&lt;/a&gt;&lt;/p&gt;