<p>My son is a junior in HS and will start college in fall 2015. I've been exploring NPC's to get an idea the costs of sending him to a private college. My questions are:
1. Where do I enter amount of income contributed to a 401K plan? Is it when they ask "How much did your parents contribute to non-taxable retirement plans and/or receive in untaxed income and benefits, such as child support for the most recent tax year?"?
2. Where do I enter balances in my children's 529 and Coverdell accounts? Is is when they ask "What is the current value of your parents' investments?"? My daughter is four years ahead so she'll be out of college when my son starts. She should have money left in her 529 & Coverdell accounts. Do I need to include these amounts?</p>
<ol>
<li>Yes
2a) Yes
2b) If there is left over money in a 529/Coverdell your D can take the money out and pay tax and a 10% penalty on the earnings portion or you can switch the beneficiary to your son. In any case, if the money doesn’t become your daughter’s asset before your son files fafsa/profile, it is still your asset and should be included in the NPC and on fafsa at the time.</li>
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<p>On the simplest NPCs, yes, you enter the 401k contributions for the past year (not the entire balance) on that line that asks for non-taxable retirement plans.</p>
<p>I think the only place left to put in 529 plans is in the ‘investments’ place. However, if the 529 is in your daughter’s name, and there is not a place that asks for amounts in the name of another child, you may not have to add it. NPC are not perfect and I’ve noticed different schools ask different questions. The NPC does seem to get the amount the school will award correct (like a ‘president’s scholarship’)</p>
<p>Keep in mind that the NPCs do not work well for those who are self-employed or who take business deductions (including those who are independent contractors). </p>
<p>the colleges will “add back in” some of these deductions and income will “become” larger.</p>
<p>Thanks for all the help. Our income is relatively straightforward: not self-employed
More questions:
- I assume it doesn’t matter how much we have in our 401K & IRA’s since I didn’t see a place to put it.
- Since the calculator essentially adds contribution to a 401K (& regular IRA) back to our income, contribution to a ROTH IRA is ignored because the money’s after-tax (so still included in the wages).
- Why does the calculator ask for the wages separately after asking for a total?
- It looks like equity in our home is capped at something like 100% of our income at least for one school’s NPC that I’ve tried. Is this number common?</p>
<ol>
<li>Fafsa doesn’t ask for assets in formal retirement accounts. The profile I believe does but that doesn’t mean the schools use the amount. On the other hand if the retirement accounts are very large(excessive?) a school could count part of them.</li>
<li>Correct regarding Roth contributions.</li>
<li>You get ‘credit’ for SS and medicare taxes paid on wage income as well as fed tax paid on all income.</li>
<li>Can’t really answer if it’s common. Doesn’t seem unusual or atypical though.</li>
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<p>Keep in mind that the NPCs you are using NOW are for students enrolling in fall 2014. It is very possible that policies will change prior to YOUR student’s enrollment in 2015. Many schools update their NPCs for the current year in the summer before your kiddos senior year…or in early fall.</p>
<p>If you are running those NPCs NOW be sure you run them AGAIN in the fall of your kiddo’s senior year of high school. You might see a difference (also, you will have a better sense of your own 2014 income etc by then).</p>