<p>I understand that qualified IRA accounts are not included when applying for FAFSA.
My parents have their IRA accounts under Vanguard's STAR Fund. It is not FDIC insured.
Is this still a qualified IRA account when applying for FAFSA?</p>
<p>It’s the account registration as an IRA that’s important, not where the funds are invested or if they are FDIC insured. To answer your question – yes, it’s a qualified IRA account. It doesn’t get included as an asset for FAFSA.
– retirement plan administrator mom</p>
<p>Thank you for the reply.
As a follow up, does it make sense to transfer money from their regular savings into IRA accounts? Would that make me more eligible for financial aid?</p>
<p>It depends on many factors. First, the main thing that affects the FAFSA EFC is income. Parent assets can affect it if there are substantial assets that ae not protected (IRAs and the primary home are protected). Parents have a certain amount of asset protection depending on the number of parents and the age of the older parent. For instance a in 2 parent family where the older parent is 50, the parent assets have protection of a little over $50,000 so assets under that will have no affect on the EFC. If assets are higher than that then about 5.6% of the excess goes to the EFC. Moving them to an IRA would make them protected assets for FAFSA but you can only put a very limited amount of money into an IRA n any one year so is unlikely to make a substantial difference…</p>