<p>I am just starting to look at what we will need to do starting my daughters junior year in high school and one of the major items is completing FAFSA form. I have not read much on FAFSA yet, but I understand that the schools will take into account the parents finances for financial need. Where I do not own anything or have much in the bank, I do have stocks from a prior job. Would I be wise to roll them over to my 401K at my current job? I have the feeling that the value of the stock while not incredibly high could cause us to lose possibly several thousand in aid. Anyone able to advise? Thanks</p>
<p>You will report the value of all investment assets, but not retirement assets, when you fill out FAFSA next year. The number you use is a snapshot of the value of your assets at the time you start your FAFSA filing (typically January or February of your daughter’s senior year). There’s an asset protection allowance, so assets under $50K or so do not have any effect on EFC. The actual allowance is based on parent age and marital status. </p>
<p>Stocks are considered assets unless they’re in a non-reported retirement account such as a 401K or IRA. Are your stocks in a 401K now? If so then they won’t have any effect on your EFC. </p>
<p>Here’s the formula: <a href=“http://ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf</a></p>
<p>Thank you for the information and no my stocks are not in a 401K, but I will roll them over into one. I also have mutual funds, but they are under 50K so they should not be a problem for now. Thanks also for the link. There is so much to learn, it is mind boggling…</p>
<p>@harley: A great resource for learning about FAFSA is “Paying for College Without Going Broke” by Kalman Chany. It’s about $15 and is terrific at explaining FAFSA and the CSS Profile. He gives advice on how to legally maximize your fin aid.</p>
<p>Can you explain how you can roll stocks over into a 401k? I wasn’t aware that this was possible. </p>
<p>Also be aware that if you sell stock in order to make after-tax contributions to a Roth IRA (for an example of another type of retirement account), then any capital gains would appear on your taxes for that year, and would count as income on the FAFSA form. So there’s little net benefit to moving stock from a reportable account to a non-reportable account for FAFSA if it’s done in the base year. If it had been done when your daughter was a sophomore, for example, then it wouldn’t be reported on FAFSA.</p>
<p>You might want to do some what-if scenarios to see the effect of all of this on your EFC, since income (from capital gains, for example) has much more of an impact on the EFC calculation than do assets.</p>
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The $50k number may not apply to you. The asset protection amounts vary according to the number of parents in the family and the age of the older parent. The $50k of asset protection would be for a family with 2 parents and the older parent aged 51. If you are a two parent family where the older parent is younger then the asset protection will be lower, if the older parent is older then the asset protection will be higher. If you are a single parent the asset protection will be considerably lower than that of two parent families - for instance a single parent who is 51 would only have $17,100 in asset protection compared to the $50k the 2 parent family would have.</p>
<p>I am a single parent, age 54, so I will have to find out what the max is. thanks for the information. As for rolling over my stocks to my 401K, I am going to find out what I need to do. The stocks are from a past employer so that may differ then others, I have no idea, this is all a new experience. My daughter is a sophomore and I would think that if I roll over in 2011 I should be ok, but we will check on that also. I have just ordered the book and will read that thoroughly, just trying to get some information now.</p>
<p>You are very smart to be looking into this now. I agree that you can use the FAFSA calculator to run different scenarios with your assets in different forms to maximize your position for aid.</p>
<p>If the stock from a past employer is already in a 401k, then there’s no problem rolling the entire account into a rollover IRA. This will have no effect on your EFC regardless of what you do with the stock, since it’s in a retirement account.</p>
<p>The asset protection allowance for a single parent, age 54, is $18,400.</p>
<p>You should also familiarize yourself with the requirements for reporting non-custodial parent income, as some schools ask for this information. It’s not reported at all on FAFSA; only the custodial parent income and assets are reported there. But about a third of the schools that use an alternate form, called the Profile, ask the non-custodial parent to fill out a form as well.</p>