Are you saying they did an IRA rollover of $20,000 in 2016? Is that what you mean?
Or did they just add to their IRA from a regular savings account.
Rollover would matter. There is a place to indicate this ON the FAFSA form. If it’s a rollover, and they didn’t indicate this properly on the FAFSA, it was treated as income. You can get this corrected by contacting your financial aid office.
Their contributions to a tax deferred account in 2016 would be counted as income.
What exactly did they do??