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[Anonymous]

I'm wondering if it's possible to have assets treated as retirement assets
under special circumstances. Here's a hypothetical.

Let's say a person is unable to save regularly for retirement. Maybe he is
in an unusual business -- restoring vintage autos, say -- any business
where annual income varies dramatically from year to year, which limits his
ability to save for retirement.

For example, it might take him 18 months to restore a car, and so he might
go a year with almost no earnings, and then in the next year experience a
spike in earnings. His business has been this way for 15 years. Good year
followed by one or two lean years, good year, lean years, and so on. In the
lean years he has hardly any funds to put into a qualified retirement plan
and the percentage maximum is quite low anyway; and in the good years he
must set funds aside as reserves for the ensuing lean years. Even in a good
year he's not able to save for retirement as much as he ought, and he
cannot "catch up".

Then, in one especially good year he buys a rare vintage car because he
knows it's going to be a hot item. It will appreciate much more quickly in
value than stocks or bonds. Its value exceeds by a great amount the maximum
contribution he could make that year into his qualified plans. But even with
this particular long-term investment, he will still have far less than is
typically needed for retirement.

If, as a result of his inconstant income, this person has in his qualified
plans only 15% of the retirement assets that he will typically need, by any
objective standard, will he have grounds to petition that his investment in
this vintage car be treated as a retirement asset? What conditions must be
satisfied to have assets not in qualified plans be treated as a "retirement
asset"?

Thanks

[Steve Blank]

To be considered as a retirement plan, that is not counted as an asset
on the FAFSA, it must be in a legitimate IRA, 401(k), Annuity, etc.
Simply deciding that a car, stocks, a building, or whatever is "for my
retirement" is not allowed. One reason that retirement plans are
excluded from assets is because cashing them in early for college will
trigger taxes and an early withdrawal penalty.

Since he is in the business of restoring vehicles this car is a business
asset, and business assets are treated much more leniently than personal
assets when determining ability to pay for college.


Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761