“Enter the amount of payments (paid directly or withheld from earnings) to tax-deferred pension and savings plans your parents made or expect to make in 2014 including, but not limited to, amounts reported on W-2 Forms in Boxes 12a through 12d, codes D, E, F, G, H, and S. Include untaxed payments to 401(k) and 403(b) plans.”
Do you guys think that the higher amount you put for this question, the better the aid they will give? I have an amount of 13k for this field. Wanted to know if this will make a significant difference?
NO. My experience is that they will add this back to your parents income, making your aid lower, not higher. Reasoning is they could have put it into savings for college instead of savings for retirement. It only helps them pay less in taxes, it is considered income in the financial aid formula. So, if their taxable income was $80,000 and they entered $13,000 to 401k, the financial aid officers will consider that their income was $93,000.
Once the money is IN the 401k, it typically is not used against you.
Be honest because much of that is already reported to the IRS from the brokers and banks. USC requires you to give them permission to pull information from the IRS if they want to audit for financial aid forms.
Honesty is the best policy - even if it might hurt.