<p>As I read the instructions for the FAFSA, you should exclude pretax contributions to 401(k)/403(b) plans in calculating your income. Is my understanding correct?</p>
<p>...but I can tell you how I filled out our FAFSA (and after a brief conversation with the financial director at WashU, I think I took the right approach):</p>
<p>Refer to FAFSA Worksheet B - Report Annual Amounts (page 8, the last, if you have the hardcopy): fill in your pre-tax contributions on the first line ("Payments to tax-deferred pension and savings plans...."). </p>
<p>Good luck.</p>
<p>SallyK is correct - you have to add back 401K etc contributions on schedule B. However the balance in your 401K etc accounts does not have to be reported under assets.</p>
<p>But CSS Profile has started asking about retirement assets this year</p>
<p>Yes the CSS Profile has added info about retirement account balances in addition to contributions BUT there is some discussion as to how this info is being used. My understanding is that colleges KNOW the limitations and penalties on early withdrawal of these accounts (age 59 1/2usually for no penalty). The closer the older parent is to retirement age, the less likely the college will expect them to use retirement accounts which are typically not accessible without penalty. If a parent is significantly younger, perhaps in their 40's, what I have heard is that they still have time to replenish their accounts as where a parent close to retirement would not. To be honest, the use of these account balances is likely being done on a college by college basis. Perhaps Nikki can comment on this. My info is hearsay only....I don't have any personal experience with this.</p>