<p>I am interning this summer and the company is offering interns the choice to opt in for the 401k plan. I am not struggling with money so I am planning to put in most of my salary into the plan.</p>
<p>How will this affect my FAFSA/EFC for the 2015-2016 school year? I don't recall FAFSA asking about your personal 401k. Can someone shed some light on this? Thank you so much :)</p>
<p>Money that you pay into a retirement account this year will be included in your total income for this year on the FAFSA. But the FAFSA won’t count it this year or ever as an investment because it is in a dedicated retirement account. Print out the formula and work through it on paper so you understand better: <a href=“http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf”>http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf</a></p>
<p>There are income-based limits on how much can go into a 401k each year, so make sure you understand those as well.</p>
<p>Have a great summer!</p>
<p>Thanks, happymomo1!</p>
<p>Can you correct me if I am wrong before I sign up for the 401k plan: Say I make $300, and $25 is put into my 401k account. On my 2015-16 FAFSA, the $300 would still only be counted as earned income, but NOT be double counted as $300 earned income + $25 asset/income, correct?</p>
<p>Thanks a lot!</p>
<p>No the 401(k) won’t be count as asset.</p>
<p>You are correct that you still only have $300 in income</p>
<p>You will only have $275 in income. That’s the amount that will show on your W-2 for both taxes and for ‘income’ on the FAFSA. You will have a box on your W-2 that shows how much you contributed to the 401k and that will be tax deferred, not needed for your 1040 form. However, there will be a box on the FAFSA that will ask how much you contributed to a retirement vehicle in THAT tax year ($25) and you will report it. Then the following year, you will not report this $25 that is happily growing in to a million dollars in your retirement account.</p>