PFS Retirement Plan

<p>Reading through old thread, many folks suggest that not putting retirement plan balance. However, this years form specifically ask that: </p>

<p>16A Enter the total value of both Parents'/Guardians' IRAs, pensions, and other retirement plans.* </p>

<p>How did you deal with that?</p>

<p>Also, Money care /provided to Grandparents qualifying for "unusual expenses"?</p>

<p>(1). I suppose honesty is key here. We have a fair amount in retirement plans, but didn't seem to have much impact on the final results (I am not sure 100% though, because some schools are more generous than others).</p>

<p>(2). We did. But don't know if it made any difference.</p>

<p>Honesty is likely the best policy in these matters.</p>

<p>I agree that honesty is most important. It looks like SSS has changed the form overtime. People in old threads said that the old form only asked for the monthly contribution. Anywhere I did mine honestly.</p>

<p>I think as long as you aren't showing low income but have billions in off shore accounts and in your 401K you should be okay. I think it's a way to look for who might shelter large amounts of their income rather than pay bills. </p>

<p>Schools don't expect you to defund retirement to put your kid in school. But if you have an annual income of $20,000 and $50 million in retirement it might give them pause :-).</p>

<p>Hello everyone,</p>

<p>I am also struggling with this Retirement Plan and I hope some of you will give me a helping hand:</p>

<p>1/ "Is there an employee retirement plan for Parent A/ Parent B?" Is this question asking whether my parent is retired already, or my parent is going to retire in the future?</p>

<p>2/ "Total value of Parents'/Guardians' IRAs, pensions and other retirement plans." If both of my parents have not retired, do I enter 0? Or do I enter the estimated retiring salary in the future?</p>

<p>Thanks a bunch!</p>

<p>09Ti08 - A "retirement plan" is an investment account set aside to pay for someone's living expenses when they eventually retire. It's like a bank account, with money in it, but the money can only be spent on retirement.</p>

<p>A person either sets up a retirement account for themselves or, possibly, an employer sets up such accounts for his or her employees.</p>

<p>In any event, it's an account, like a bank account, with a fixed sum of money in it. Either your parents have such accounts, or they don't. There's no "estimating" involved.</p>

<p>It sounds like you need some help with this . . . if your parents can't help, is there anyone who can?</p>

<p>I am struggling with a variant of this issue. I am self employed and have been investing in real estate to fund my retirement (no pre-tax plan available until very recently). When I filled out the PFS, my real estate equity is listed as an asset, not as retirement savings. The Parent Contribution calculation seems to assume I will leverage or liquidate some or all of this equity (essentially raid the retirement account to pay for BS). I don't believe the same assumption is made for retirement plan balances. As a result, my estimated contribution (offer) is miles away from the NAIS calculated value for Parent Contribution. Am I naive in thinking that retirement savings are "sacred"? Should I communicate this situation to the FA department?</p>

<p>Yes, communicate! Different schools may treat it differently, and it may or may not change their assessment of your ability to contribute, but they won't have the chance to give your circumstances special consideration if they don't even know about them.</p>

<p>Retirement accounts are not generally touchable - you withdraw at a penalty on top of normal taxes. However I suspect a family with several millions in retirement will be treated differently than a family with tens of thousands in their 401k for FA eligibility. You should explain the circumstances when you mail a complete copy of your tax returns to the school (they'll ask for you to sign a form that allows them to also pull an official copy from the IRS for comparison).</p>

<p>This a good time to remind parents that FA is a gift, not an entitlement - and a lot of otherwise qualified students who need full or partial FA (parents have few assets, mitigating family circumstances, etc. ) are being turned down because of lack of school funds to satisfy all the requests. Likewise, parents with assets are assumed to be willing to part with some of them if they're applying for a school that costs $50,000+ a year. Remember that at most schools 60-70% of the parents are paying full freight and alumni/parent/trust donations are covering the shortfall through the endowment.</p>

<p>FA officers will look at individual family circumstances and decide accordingly. But it's also honest to say that most schools are not (or no longer) "need blind" and FA requests will factor into who gets a spot from the pile of finalists. </p>

<p>The problem with buying real estate to fund a retirement is that when it is done outside of a formal retirement vehicle the owner has more flexibility to liquidate the property than they would if it were held inside of a qualified retirement plan. Even then, if the value of the property (or retirement) is exceedingly high, the parent might be deemed as able to stop "funding" annual retirement contributions in order to divert those funds to the child. (I'll assume that the real estate is income producing, flipped at a profit versus sitting idle and unused. )</p>

<p>I've heard a few people talk about a fairness issue. It's more a matter of allocating limited dollars to students who need the most help making up the tuition gap - or who are the most compelling fits for the incoming class. And although the boards talk about Full Pay versus Full FA - the vast majority of students getting FA are getting partial aid with parents stretching the budget, forgoing non-essentials, and/or borrowing to pay that bill. And the majority of those parents are still contributing to the annual fund each year.</p>

<p>So my question becomes - Are you willing to tap the real-estate (or borrow against it) to pay for part or all of the student's education if no other option exists? If not, then BS may not be the best economic decision for the family.</p>

<p>Here's something to think about. In Nepal, Sherpa families risk their lives leading climbers to the summit of Mt. Everest. It started as the chief way of generating an income to send their children to school - many go to boarding schools in Kathmandu because so few options existed locally. Over the years many Sherpa have died on that mountain, most often due to mistake by the visitors, and yet the Sherpa keep climbing to support their families.</p>

<p>Having said that, it's sad for me to hear individuals (students and families) expressing concern about tapping financial resources in an age when so many families around the world do just that to provide an education for their children - including risking their very lives. </p>