<p>Kennedy…any monies deposited into your 401k account in the FAFSA year are added back in as income. But the balance IN those accounts would not be considered an asset. Goosed thinking as long as you are not already contributing the maximum allowed.</p>
<p>OP…right…cashing in and getting capital gains is income. Having it in your accounts is an asset also. BOTH.</p>
<p>It’s too late now, but yes…this is something not to be done while kids are in college…especially if that additional income will affect need based aid.</p>
<p>yup, but unfortunately sometimes that is what you are doing, selling mututal funds etc, to make the tuition bills (not the retirement accounts hopefully)…and then you get slapped the next year by the IRS and the school.</p>
<p>Wow. Thanks for letting me know. We did not know that. Also, my employer this year changed their policy on the company match for our 401k so I need to deposit 6% of my salary and now 6% of my bonus into my 401k to get the match. So next year that will hurt me too as that will be added back as income. In effect it decreases our monthly cash flow to pay the two COAs.</p>
<p>How are losses in stock account that is not 401k or IRA counted? Are they subtracted twice? Just curious…</p>
<p>Just to clarify, the capital gain isn’t ‘counted twice’ (unless the stocks sold had a zero basis and the gain equals the proceeds).</p>
<p>For example, if the cost basis was $7,000 and the proceeds were $10,000, then there is a capital gain of $3,000 included in income (assuming no capital loss carryover) on the tax return (and in the EFC). The reinvested $10,000 proceeds would have been included as an asset in the EFC calculation regardless of the sale (assuming assets exceeded the protection allowance).</p>
<p>Thumper, thanks for the heads up, I didn’t realize that the FAFSA added back in 401K contributions. But wait - I am at my max contribution so what does that mean in terms of employer match? My employer’s match is discretionary so not everyone get one every year making it difficult to plan ahead.</p>
<p>We are in a somewhat similar position with a top LAC - D is supposed to be a freshman. Were told initially that sibling tuition would be deducted from EFC but just got final bill and that didn’t happen. So I called and was told it “should be” adjusted and now I need to wait. Very frustrated since I did everything right from the beginning in order to avoid just this scenario, AND if they don’t come through we just can’t do it. Give that it’s July this is devastating. But I am trying to wait it out and not panic, definitely a dispositional challenge for me :< Glad to know this happens often as it certainly kicks the school off that pedestal I had it on.</p>
<p>Yes, realized gains, dividends, all of that is considered income. You do have to report it as income on taxes as well. And it is counted as an asset as well. Just like if you save some of your pay, it gets treated as income by Fafsa and again as an asset if it is sitting there on the day you fill out the report. 401K matches by the employer are not reported for FAFSA. It 's just that FAFSA does not recognize the deduction one gets for contributing to a 401K or IRA, so that deduction you take for tax purposes gets added back in.</p>
<p>thank you all for the advice. We submitted an appeal in July and recently got an updated package that practically mirrors last year’s package. We had to provide some additional detail to show that the business loss was exactly that and not just depreciation and we had to show more data on the capital gain. We showed that no money left the account. I feel the package is fair. Thank you again for the advice and insight. We are much relieved now that the aid package is similar to last year.</p>