<p>Rolled over or not, it won't likely be invisible at an LAC, as they usually ask for the Profile. There is nothing wrong with the employee asking to have the retirement funds (if that is how they are currently classed) rolled into a properly vested retirement plan, they will still have to show that amount on CSS.</p>
<p>If it is something like the techy people who get once in a lifetime options to exercise (think MicroSoft, etc) and not retirement, it is possible the funds are not really retirement, they still ought to fund a SEP with as much as possible, not to hide from finaid, but for their own retirement.</p>
<p>They can also choose to pay off their home and see how that is viewed. At a FAFSA school if that were all home equity or bonified retirement, then it would not count at all in finaid.</p>
<p>Even at a FAFSA school...the amount put IN to the retirement account for the tax year IS counted as part of income for the year. In other words, if someone puts money into their retirement account in 2007, that amount is added back in as income on even the FAFSA. The amount of money that is already in the retirement account is not viewed as an asset like a savings account would be.</p>
<p>I hope something works out for this college student. I personally just don't see how this extra money can be overlooked in the 2007 tax year. It's there.</p>
<p>Rollovers are not income in the year they roll. They were already in a retirement account, not current income as new payments to the account are. I know, I've been there when our company sold. It's a wash transaction into an IRA. If it were income, it would be taxable plus penalties for an early withdrawal. It may not be a retirement account however, in which case it could be a taxable payout (bonus) as described.</p>
<p>Perhaps the OP can clarify this for everyone. In the OP, it is stated that the mom is receiving a $700,000 bonus and that the parents will not pay for college...thus implying that the student will not be eligible for finaid because of this bonus. This would make it seem that it is a bonus...not a retirement rollover. Perhaps the OP should speak to her parents about this "bonus" and find out if it is indeed a rollover into a retirement account. Once that information is available to the OP, options for financing college will be able to be determined by the family.</p>
<p>Former pension admin here...if this $700K is a distribution from a qualified profit sharing plan or other type of retirement plan (as defined under Section 401 of the IRC, blah, blah, blah) it can be transferred directly from the plan to a receiving qualified plan or IRA without incurring tax liability or contructive receipt. They can send her the check -- as long as it's made out to the successor trustee of her retirement account (i.e., Vanguard FBO Jane Doe).</p>
<p>If this parent has been working her entire life for low wages (as it sounds, given that the OP was on full need FA), then it may well be in the parents' best interest to roll this into a pension/IRA account. You can't borrow money for your retirement! We made the decision to borrow as needed for college, but we will not suspend retirement contributions while the kids are in college.</p>
<p>If she decides to take a partial distribution (some cash, some to IRA, then what's taken as taxable will count as income for FA). Reminder: mandatory withholding does not mean that enough will actually be withheld. Plan accordingly.</p>
<p>If the money is from non-retirement distributions, it's going to be income, and the OP is going to have to have a long chat with parents and FA folks. Not sure that setting up the $700K in a non-retirement annuity helps here, either.</p>
<p>I just reread the OP and she/he is looking for advice on how to continue school in the absence of financial support from parents. The student is currently at an expensive private school. If cost really ends up being an issue it might be worth transferring to one of the public universities in CA (she said UCLA was a choice for instate...so I'm guessing CA is the state of residence). UCLA is only one of many fine public universities in CA. And the cost would certainly be less than the private school currently is. Also, there is likely more than one state university that is recognized as a fine place to get a teaching degree in CA. </p>
<p>Re: teaching..it is a fine profession and sadly less and less folks are entering this field. I applaud the OP for pursuing this degree and vocation. </p>
<p>I hope she/he finds a way to get through this financial issue, and can continue to pursue the dream of becoming a teacher.</p>
<ol>
<li><p>Meet with you FA advisor, let them know the change in your family circumstance, that it is a one time bonus and whether it will be treated as income or retirement, how that asset will affect your future FA eligibility, and let them know it will affect whether you will stay enrolled at that school.</p></li>
<li><p>Apply as a transfer to UCLA or two or three other schools that are more reasonably priced than the private as a backup plan. Even at $20,000/year, you can manage that working a part time job (about $10,000 per year), $4,000 loan, and perhaps $6,000 from your parents.</p></li>
</ol>
<p>Let's say, for the sake of argument, that the 700K is not capable of being rolled over into an IRA and is really "income" for this year. Between federal and state taxes nearly half of it will be taxed away so the impact on assets will be only about 400K. It will disqualify you from aid for a year. But after that if you were qualified for 45K before you will still qualify for about 25k. So see if you can drop down to part time status for a year, get a job and take out a loan. Then next year return to full time status and keep the job part time. You will graduate with some debt but not an outrageous amount.</p>
<p>post # 19
"but $700K is not much of a retirement plan if that is all you have. "</p>
<p>Most people can only fantasize about a retirement account that big. based on what I have already in retirement savings, I would have to save over 28K a year for the next 20 years to get to that 700K level. Considering my take home pay (after taxes, health insurance, retirement) is only about 35K, that is not going to happen.</p>
<p>If you just put that bonus money (let's say 400K after taxes) in a 5% account, it could generate 20K a year interest.</p>