<p>I'm filling out the CSS Profile for the first time. I'm confused about what to do about Roth IRSs and Roth 401ks. For this year and last year, we have had no regular IRAs or 401ks, just Roths. </p>
<p>The CSS Profile asks about the current value of the parent's TAX-DEFERRED retirement plans (PD-175A and PD-270A). When I called, they said they I should report Roth IRA and Roth 401k here, along with regular IRAs and regular 401ks. </p>
<p>I'm skeptical. Is this correct? </p>
<p>The helpdesk agent did say to not include Roth 401k on line PP115WH which is the untaxed income section. This was only AFTER I questioned her answer that I should include it.</p>
<p>Hopefully when Roth 401ks become more common, the College Board will make this more clear in the instructions.</p>
<p>Roth 401(k) is taxed income, already included in your AGI, so I agree not to include it in the untaxed income section.</p>
<p>I can’t think of any reason you wouldn’t include it as an asset; if there’s not an obviously more-appropriate line, I’d lump it in with other IRA / 401(k) money. If you had a non-deductible IRA, or 401(k) with after-tax (non-Roth) contributions, presumably you’d use that same line even if you had enough basis that none of it would be taxed on withdrawal.</p>
<p>The answer you got is correct. The on-line glossary and questions for the CSS profile indicates the exact same answer that you got on the phone. The glossary and questions states…</p>
<p>“Q:Should I report the value of my Roth IRA?
A: Yes, the total value of of all retirement accounts as of December 31 should be reported for the student in SA-105 and for the parent in PD-175 or PD270.”</p>
<p>They do. Roths are treated as tax free retirement accounts as assets. But contributions to them are NOT added back to income because they are deducted. If you take any money out of that Roth account during a PROFILE year, however, that money is treated as income because the Roth is treated just like a tax deferred plan even if it is not. It is a hybrid plan in that you do not get to deduct contributions to it, but the earnings can grow on a tax free basis. By treating it as a tax deferred account, it is consistent to its purpose and so distributions are treated by PROFILE just like a distribution from a regular IRA or 401K Plan.</p>
<p>This is correct. Roth IRA is after-tax contributions. Thus it is already included in your W2 income - if you report it as untaxed income, you are including it twice!</p>
<p>As for reporting it as an asset, yes put it with the regular IRA and 401K balances. While they are not tax-deferred, they are retirement savings, and are treated differently than other assets (pretty much protected). You want to report that money as retirement savings, not as anything else that won’t be protected.</p>
<p>Incidentally, a Roth IRA is a great way to save for college, because after the initial waiting period, you can take your contributions back out, without penalty, to pay the education expenses. That money has already been taxed, so it is not treated as income, it is just usage of an asset.</p>
<p>CTScoutmom is correct. However, a warning. A distribution from Roth accounts are treated as income for financial aid. Because you are getting a “free pass” in not having those assets treated like a regular savings acccount but just like tax deferred accounts, any distributions from those accounts are treated that way too. So if you take the money out, thinking that it is not a tax deferred account, you will get hit with it hard since it will be additional income for that year. If you have kids on fin aid, those are not the years to take distributions from any retirement accounts including the Roths. Borrow the money instead.</p>
<p>Thanks, everyone, for your quick replies. It threw me off that both asked for “tax deferred”, but only one of the questions really meant that. If the assets question just asked for retirement accounts without saying “tax deferred,” it would have been more straightforward.</p>
<p>I’m a bit concerned about the accuracy of my Profile. We took a trial run last week, and since then I’ve found several answers that I need to change beyond the Roth 401k. Another is the mortgage payment. The hepdesk said to only include the P&I portion, not taxes and insurance. I wonder what else is wrong that I didn’t think to ask about. I’ll look over each answer a couple of more times before submitting it, but I don’t have much time left.</p>
<p>The Roth accounts are partially tax deferred in that gains and earnings are. The problem with just saying “retirement accounts” is that there are investment vehicles than I can even imagine out there with that sort of label and it means nothing in terms of qualifying for that category on PROFILE. There are all sorts of things out there that are between the lines on these statements. Fortunately, the Roth situation is pretty much covered. I think that it should be specifically mentioned since it is a commonly used vehicle. </p>
<p>You’ll be in good shape in filling out the FAFSA after going through the PROFILE.</p>