<p>I have two related questions regarding FAFSA and what should be reported as investment assets.</p>
<p>1) I know IRAs should not be included in assets. But what about inherited IRAs (also called beneficial IRAs)? Since an inherited IRA is still an IRA, I would assume they are an excluded asset.</p>
<p>2) If it's true that an inherited IRA is excluded, what if you are a beneficiary to a trust whose only asset is an inherited IRA (the trust was named as the beneficiary)? In my case, the trust is treated by the IRS as a "look through" trust, i.e. the distribution schedule is based on the trust beneficiaries' life expectancy, and IRA distributions are immediately transferred to the trust beneficiaries, who are liable individually for the taxes on the distributions. It's clear to me that the distributions would be reported as income on FAFSA, but I'm not sure if the proportionate share of inherited IRA should be reported as an asset.</p>
<p>I asked this question of a college fin aid counselor, but based on their answer, I get the feeling they've never had the question and were guessing at the answer.</p>