roth 401k

Paying for College
1

<p>hey experts, currently, i contribute enough to a conventional 401k to get the company match. i'm considering if switching to a roth 401k now offerred. clearly, my tax bill would go up since these contributions would be after-tax. </p>

<p>i'm wondering if this would affect our EFCs at all. got 2 kids each attending a css school. i know they ask "how much did you pay in income tax" on the profile. anyone have an idea how that entry is used? </p>

<p>i guess my bottom line question is, i'm wondering if the increase in income tax we'd pay might be partially offset by a reduction in our EFC? just wishful thinking?</p>

2

<p>I’d expect any difference to be very small.</p>

3

<p>The highest FAFSA incremental rate is 47%, which gets reached very quickly, so you are almost certainly there.</p>

<p>So your EFC will be reduced by 47% of however much you pay in taxes on the roth 401k contributions, roughly.</p>

4

<p>thx, notrich. i ran the collegeboard efc calculator a couple of times. the results were consistent with your interpretation and my expectations.</p>