For example, remember above when I said that you can withdraw up to the amount you’ve contributed to a Roth IRA at any time without tax or penalty? That’s still true, but it WILL be counted as income on your FAFSA application, which will likely hurt your child’s chances for financial aid.
One way around this is to simply wait until your child’s last year of college to withdraw money from a Roth IRA, but of course you may need the money before then. And even if you don’t, that strategy could hurt a younger child’s financial aid eligibility.
Just know that if you are applying for financial aid, you need to be very careful about withdrawing money from a Roth IRA.
