What Retirement Savings Do You Have to Report on the FAFSA?

Q. My husband and I have $350k in a brokerage account earmarked for retirement. It is not in an IRA or 401(k), even though it is intended for retirement. Do we need to report that on the FAFSA? If so, where?

A. Retirement savings don't have to be reported as an asset on the Free Application for Federal Student Aid, but—and this is a big "but" in your case—only if the money is in a qualified account.

You can't leave an asset off the aid application simply because you intend it for retirement. It has to meet the legal definition of a retirement account, says David Sheridan, a financial aid director and member of the National Association of Financial Aid Administrators, who participated in Money's recent FAFSA chat on Twitter.

Qualified retirement accounts include an IRA, 401(k), 403(b), or pension plan. Unfortunately, a brokerage account is not on that list, so you'll need to report it as an investment, says financial aid expert Mark Kantrowitz. (It goes on page 9 of the 2016-17 FAFSA in the parental income and assets section.)

Assuming your child will be starting college next fall, there's not a lot you can do this late in the game to shield that money from being counted as an asset by the federal government. If you have taxable compensation from a job, you could put some of the money in an IRA, but contributions to those accounts are limited to $5,500 a year (or $6,500 if you're over 50).

In general, Kantrowitz says, people have two basic options for sheltering a large sum of money on the FAFSA: Use the money to pay down consumer debt, such as your mortgage, auto loans, or credits; or invest it in an annuity.