<p>The 2009 IRA contribution limit is $5,000. However, if your mother will be 50 or older by the end of the year, she can contribute an extra $1,000, for a $6,000 total contribution limit.</p>
<p>These limits apply to both regular and Roth IRAs. Although your mother may be eligible to contribute to both plans, her combined contribution to both accounts cannot exceed the limit ($5,000 or $6,000).</p>
<p>Let’s look at the big picture. Depending on your mother’s age, she’ll have an asset protection allowance of $45-$50,000. That will reduce the effect of the additional $70,000 to around $20,000 (assuming no other assets). FAFSA will add 5.6% of that asset to your EFC. So that $70,000 inheritance adds around $1120 to your EFC. That’s not a lot in the whole scheme of things. If the sole purpose of trying to move the $70K into a non-reportable asset class is to avoid the FAFSA hit, you might have a lot more flexibility to just invest it in a one-year CD at 1.6%: there’s your $1120 in increased EFC right there.</p>