<p>Hi...my first post so pardon me if I dont do this right....most of the income we show on our tax return is from money we had to take from our 401K to live on due to unemployment....do the people at fafsa count that as regular income....my daughter really needs as much aid as she can get</p>
<p>Yes, withdrawals from a 401k are regarded as ordinary income for FAFSA.</p>
<p>FAFSA requires you to report your AGI from your tax return and distributions from a 401k are included in the AGI. There is no special treatment under FAFSA because the income is from a 401k. (our income is mostly from our 401k as well)</p>
<p>Yes it shows as income but most schools will take that into consideration so check with them how they handle that. Often there is a form you need to fill out or if they are a CSS school, it should show on there. They will probably require full copies of your tax returns. FAFSA just shows it as income though.</p>
<p>Just an FYI, if you have any further questions about financial aid or FAFSA, this would be a more appropriate place to put it: [Financial</a> Aid & Scholarships - College Confidential](<a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/]Financial”>Financial Aid and Scholarships - College Confidential Forums)</p>
<p>Welcome to CC, hope we can help! :)</p>
<p>What you would be asking for is a Special Circumstances Consideration. This would be done directly with the colleges. You would need to contact the schools to find out their process for this consideration. You would have to show evidence that you are unemployed, and your 401k withdrawals were your only source of income. Some schools will consider this if it’s a one time event…others will not. But you need to communicate directly with the schools. This money wIll appear as income on your FAFSA and Profile forms.</p>
<p>Are you working again? Will the income earned in 2013 be higher than the amount taken from the 401K during 2012? If the parent is working again & the income is a lot higher, the EFC might be lower with the 401K distribution than it would be if the new income were considered. Since you cannot request a special circumstances review until at least the late spring for most schools, sit tight. See what the EFC is, then do an EFC calculator using the 2013 income - that way, you can see the difference.</p>
<p>Of course, if you are still unemployed in late spring, it will certainly be to your benefit to request the review.</p>