I am a US citizen but I have worked most of my life overseas. So I qualify for the "foreign earned income exclusion" which makes my tax bill basically zero. Because of this I haven't been trying to put retirement income away in retirement accounts, but have just been investing them normally. I know they are retirement funds, but they aren't in a 401k or roth or etc.

My oldest son is getting close to college age. Now I'm starting to realize my retirement strategy may have a fatal flaw. Are the schools going to count all my retirement I've saved over the last 20 years as assets and calculate my EFC on 5.x% of that?!

Any suggestions?

  • Here is a similar question on Motley Fool forums. It's quite ancient by now but there may be some useful tips there. Have you established an IRA or 401k at all? How long before you'll be filling out the FAFSA? – BrenBarn Mar 18 '15 at 2:24
  • My son is in 10th grade, so he starts university September 2017. I do have a Roth IRA that I've been contributing to, but that requires US-earned income so it is only periodically that I can contribute to that. I have a SAR/SEP from a previous company where I worked for just a short time and I could open 403b with my current company - I just didn't do it because it didn't seem worthwhile. – Peter Bowers Mar 18 '15 at 7:04

According to the FAFSA info here, they will count your nonretirement assets when figuring the EFC.

The old Motley Fool forum question I mentioned in my comment suggests asking the school for a "special circumstances adjustment to your FAFSA". I don't know much about it, but googling finds many pages about it at different colleges. This would seem to be something you need to do individually with whatever school(s) your son winds up considering. Also, it is up to the school whether to have mercy on you and accept your request.

Other than that, you should establish whatever retirement accounts you can and immediately begin contributing as much as possible. Given that the decision is likely to be complicated by your foreign income, you should seek professional advice from an accountant versed in such matters.


Are the schools going to count all my retirement I've saved over the last 20 years as assets and calculate my EFC on 5.x% of that?!


  • Any suggestions? – Peter Bowers Mar 18 '15 at 7:08
  • @Peter any US retirement account has annual limits, and you cannot carry forward your unused limits from past years. For future years - deposit into IRA and shelter at least some of the money, but otherwise - nothing much you can do. – littleadv Mar 18 '15 at 7:12

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