Roth IRAs and Financial Aid

You don't have to report retirement accounts on your FAFSA, but some colleges may include the balances in financial-aid calculations. Plus, answers to other college costs questions.

My daughter has earnings from a part-time job, and I would like to get her started on saving for retirement by opening a Roth IRA with a small amount of money -- less than $1,500. In the fall she will be going away to college, and I was told by one financial-aid officer that the Roth would be considered one of her assets and she would have to cash it in to help pay for school.

That doesn't sound right to me. Money in my IRA does not have to be reported on the FAFSA, so why would it need to be reported for my daughter? What are the rules for a college student's assets?

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Janet Bodnar

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.