How does FAFSA treat an IRA CD?

Hi there! We have a long-term IRA CD at Ally bank for retirement. My understanding is that a traditional IRA plan would be excluded, but a traditional CD would be included. But what about an IRA CD? I want to be sure I account for it in the right place on the application if necessary or not. Thanks!

If it’s in a designated retirement account-- IRA, 401K, Roth-- it will not be considered as “available” for financial aid. If it’s just designated in your head- “this is my retirement money”-- it will be considered available.

So the actual composition of the assets in the account- shares of Walmart common stock, a CD, bonds-- doesn’t matter. As long as the legal account name shows that it is part of an IRA.

You should ask a financial planner about the wisdom of holding retirement assets as a CD. If you are going to need the money soon- then yes, it’s probably a good idea. But if you aren’t retiring for another decade, there may be better investments (higher yield, take advantage of the capital gains which build up in your IRA tax free for now). Get a professional’s help if this is your main retirement asset!


What exactly IS an IRA CD? Please explain.

As an IRA, this is a retirement account regardless of the investment vehicle.

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Thanks! Yes, we have a planner and a complete, diversified strategy.