<p>My father will be losing his job. He will be getting a severance package, though. Also, he will be getting his money from his 401k. Both his severance package and 401k are going to an IRA (this is what he's planning). </p>
<p>How would this affect my financial aid? </p>
<p>Of course, I would have to write an appeal letter, correct?</p>
<p>Well...the severance package will be viewed as income. When my husband left a job, he ROLLED his 401K over into an IRA and that was NOT considered income. </p>
<p>Most schools will not review a loss of job for a certain period of time after the job is lost. They will not review at ALL before the job loss. </p>
<p>When your dad loses his job, contact the college and find out what they require for a special circumstances consideration based on job loss. To be honest, at this point, since your dad is not yet laid off...don't expect them to do ANYTHING. But find out how LONG he has to be laid off before consideration.</p>
<p>What if my father puts the severance package and the 401k to the IRA? My mother makes enough income for the family.</p>
<p>What if my father puts the severance package and the 401k to a Retirement IRA?</p>
<p>Money from the severence package put into an IRA will be added back as income for the FAFSA.</p>
<p>Unless things have changed a lot I think there are fairly strict limits on how much can be put into an IRA in any one year. It seems unlikely that an entire severance package could be put into an IRA (unless it is a fairly small package).</p>
<p>As jjc said - money from the severance package put into an IRA would still be considered as income for the year. For FAFSA purposes you cannot reduce income by making an IRA contribution. The balance in the IRA would be a protected asset though. However income generally has a larger effect on the EFC than assets except where assets are fairly substantial.</p>
<p>Money put into an IRA (not rollover, but new) would could as income in the year it was deposited so that would still be income :(</p>
<p>One possibility is to request that the severance pay be considered an asset rather than income - that would be more favorable. However, you can't even do this until next year - and you won't know whether or not the financial aid office will make that adjustment until then. Professional judgment is case by case & there are no guarantees one way or the other. My advice is for your family to do what's best for your family. If your family needs the severance to live, then putting it in retirement doesn't make sense. If they don't need it to live, then I would be tempted to consider it available to be used to pay for college.</p>
<p>My father lost his job in January, and now we're on a $60,000 income. We didn't get any financial aid from WashU. </p>
<p>My guess is that they assets are a big part of financial aid packages.</p>
<p>WashU probably didn't adjust your income to reflect the loss of income - the job loss is very recent. If your dad doesn't get a job (or gets a lower paying job) this year, that fact will be reflected in next year's EFC and aid.</p>
<p>nattyx09, you can appeal to WashU to get aid.</p>
<p>I don't think severance can be placed in an IRA.... and it will have to be reported as income on 2009 taxes. Happened in my family. What is income in a year cannot be treated as assets by FinAid. That would be a huge loophole ... which dozens of enrolled students will take advantage of. </p>
<p>Too premature to worry. How do you know your father will not be able to get another job?</p>
<p>The severance pay would be considered income so if you have income you can contribute to IRA. I think this step is for future year, converting income to retirement asset which won’t be counted.</p>
<p>You should probably write a letter/call the school to tell them what’s going on. Probably too late to change the FAFSA but maybe they can help you anyway.</p>
<p>You cannot change the FAFSA … the info on the FAFSA must be the actual circumstances. Only an aid officer can make the determination to count income as an asset or otherwise adjust items in the formula. That requires a special circumtances adjustment request, which may or may not be approved. The feds are very clear on this.</p>