My husband contributes to an AFTER TAX Retiree Medical Savings Plan that we cannot draw money out of until he is retired and to only pay for medical plans or expenses. Does anyone know how that gets reported, if at all, on the CSS and the FASFA?
Is it optional or mandatory that he contribute tobit?
Optional
Hmmm, it sounds like it could be similar to how a ROTH IRA is treated. (And as I think about it, my question about optional or mandatory is not necessary). So the contributions are already taxed (no effect on FAFSA or Profile) and the account -just a guess- isn’t counted as an asset since it is for retirement
Is there a formal name for this type of account based on a section of law authorizing it in the vein of a 401k or 403b? I think in the absence of that I’m not sure it can be considered a formal retirement account. Being after tax, contributions are already included in AGI.
Googling I’m seeing things about RMSAs but it seems only employers can contribute to them. I’m also seeing some things about programs offered by insurance companies for this purpose but not seeing that they are ‘qualified’ in any way for taxes or finaid.
The formal name is Retiree Medical Savings Plan. My husband works for International Paper. We put in money each month after tax and the company credits us with an amount equal to two times the amount of our monthly contribution. It can only be used once we retire and for retiree medical plans or medicare premiums. We have no access to the funds, not until my husband retires. If he terminates employment, we get our funds returned, but the company credit gets taken away. When I read the information the words “trust fund” do show up. It also does say that if you terminate “any earnings which you receive from your employee account will be taxable income and reported in a W-2 for and may not be rolled over to a tax qualified IRA or any other tax qualified plan”. When I call College Board they said to not count the balance but to check the box for “having other retirement plans”. Just not sure that is right.
I called the College Board twice and the answer they gave me was to add it into PD-175A even though it is after tax. They also said to check PD-170.