<p>This asks for amount of payments to tax-deferred pension and savings plans made. In the past, I have not included payments to a Roth IRA because it is not tax-'deferred', it is actually tax 'free'. </p>
<p>Is</a> A Roth IRA Tax Deferred? </p>
<p>Will someone please confirm this?</p>
<p>A Roth *contribution *is not tax deferred or tax free. Contributions to regular IRAs and 401ks etc are tax deferred because you don’t pay tax on the contribution in the year you earned the money, but will pay taxes on the contributions and their earnings when they are distributed to you some time in the future. The reason FAFSA and CSS both ask the question about tax deferred contributions is that they reduce your AGI on your tax return. For FA purposes they do not allow you to reduce your income by contributing to retirement accounts, so they add tax deferred contributions back to your AGI. </p>
<p>Contributions to a Roth do not reduce your AGI. If you were to report them as tax deferred, which they are not, that income would be double counted. For instance if you contribute $5,000 to a Roth, that $5,000 is already in your AGI. If you report the contribution as tax deferred, $5,000 will be added to your AGI so the available income will include $10,000 of income where you only actually have $5,000.</p>
<p>Roth *contributions *are not tax free at all. You pay tax on that money in the year you earn it. The *distributions *are tax free when the time comes.</p>
<p>swimcatsmom–Thanks for clarfying! I have not reported contrbutions to our Roth on CSS PI-190. I HAVE reported 401K contributions. It seems that both have been correct. </p>
<p>Now I am concerned that for PD-175 and PD-270 (current value of tax-deferred retirement, pension, annuity, savings plans, 401K) I have been reporting ALL IRAs we have, including Roth, Traditional, Rollovers…and now after your explanation, think it should only have beeen the tax deferred ones (Traditional and 401K). What do you think about this? Thanks for your help!!</p>
<p>Yes it sounds like you have been reporting the contributions correctly.</p>
<p>I have not done CSS as my kids were at FAFSA schools. FAFSA does not require retirement accounts to be reported as it does not take them into account. My guess would be that CSS wants to see all savings reported in some way or another so the Roth probably has to be reported somewhere in CSS, but I don’t honestly know where. Hopefully someone else with CSS experience will chime in.</p>
<p>lynnmo - I think you do NOT report the Roth anywhere on the CSS Profile. It seems odd but the 2 lines for reporting retirement (PD-175 & PD-270) specifically call for tax deferred accounts (in the instructions they list various types to include) which would exclude the Roth IRA.
I specifically saved money in a Roth IRA for a back-up for college “just in case”. I haven’t had to use any of it yet! But a nice back up to have if I really need it - I can take out the base amount I put in after 5 years for college expenses with no penalty and it won’t count as income. I put money in with the plan that the accounts would be ‘old’ enough as my youngest hit college.
I even rolled a small IRA to a Roth while my oldest was in college (I spoke to FA first and even though I had to count it as income and pay tax the college subtracted that amount before figuring my “EFC”).</p>
<p>Roth is treated strangely because it is a hyprid. You don’t include contributions made to the Roth, because they are made after taxes are already included in your income. You do not have to report the interest and gains for the Roth because it is a qualified plan. You do have to report distribution from a ROTH which is unfair. You include ROth on PROFILE in the same place as you do the IRAs, is what I thought one was supposed to do. The Roth accounts are no more taken into consideration than a 401 K or IRA, but like them, PROFILE wants to know what’s there.</p>
<p>From the 2013-14 CSS/Financial Aid PROFILE FAQ’s and Glossary: </p>
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</p>
<p><a href=“https://finaidonline.collegeboard.com/fin/VignetteServlet/VignetteServlet.srv?relativePath=/profile/pdfs/profile_faqs_glossary.pdf[/url]”>https://finaidonline.collegeboard.com/fin/VignetteServlet/VignetteServlet.srv?relativePath=/profile/pdfs/profile_faqs_glossary.pdf</a></p>
<p>This is right from the horse’s mouth, so I would consider it definitive.</p>
<p>Notrichenough–Thank you so much! I had looked at this glossary before, but never scrolled down far enough to see the FAQs! Now I know I’ve been completing the CSS form correctly for the Roth IRA values. I will definitely read through it all.</p>
<p>There have been a couple of threads about this in the recent past. Roth Payments should ot be reported as they are not tax deferred, meaning they are included in the income your reported in the CSS. The value of your roth should be included in the line that asks for the value of all retirement accounts.</p>