In this episode of Adam Talks, Adam Bergman, Esq. discusses changes to FAFSA for student aid. 401(k) contributions will no longer be considered income meaning you can qualify for more relief.
A New Incentive to Contribute to a 401(k) Plan
On this episode of Adam Talks, Adam Bergman discusses a new incentive for contributing to a 401(k) plan. Starting in 2024, saving through a 401(k) will no longer reduce the federal funding available for a child’s college education. Previously, 401(k) contributions were factored into the FAFSA (Free Application for Federal Student Aid), impacting the amount families could receive in federal funding. The change means that 401(k) contributions will no longer be considered as income on the FAFSA, potentially reducing the financial burden on families seeking federal aid for college.
Bergman emphasizes the importance of encouraging people to save for retirement, highlighting the impact of rising tuition costs on families’ financial decisions. He discusses the potential trade-offs between saving for retirement and saving for college, particularly for families concerned about the impact of 401(k) contributions on their ability to receive federal funding. Additionally, he touches on the evolving landscape of education and the economic considerations for pursuing higher education in the face of increasing tuition costs.
Furthermore, Bergman addresses the broader implications of rising tuition costs and its potential impact on the accessibility of higher education. He argues that the new incentive for contributing to a 401(k) removes a previous excuse for not saving through this retirement plan, as it will no longer affect the FAFSA score. He stresses the importance of saving regardless of the investment vehicle, urging listeners to prioritize long-term financial planning and emphasizing the potential for generating returns over time.
Overall, the podcast highlights the significance of the policy change, framing it as a positive development that removes a barrier to retirement saving for families concerned about college funding. It underscores the broader socioeconomic considerations related to education, retirement, and financial planning, aiming to provide guidance and encouragement for individuals navigating these complex financial decisions.
To learn more, be sure to listen to this week’s episode!