About now, you may be getting requests from your schools for you to update your FAFSA using the IRS Data Retrieval Tool (IRS DRT). They will ask you to log in to your 2013-14 FAFSA, go to the Financial Section and link directly to the IRS using your PIN. This link should work as long as you have waited three weeks from the date your return was electronically filed. This process started last year and the purpose of this is to verify that everything you reported from your 2012 tax return is, indeed, true.
As with every new process, there are bugs. The one major bug we have found is that the IRS will report any IRA or pension rollovers as income. This can drastically increase your Expected Family Contribution (EFC) number and in some cases, make you ineligible for financial aid. The schools are aware of this error and have the authority to override it. We just have to hope they catch the error when it happens.
If you have any figure on line 16a of your tax return and it is a rollover, you will need to know what to do to correct this. You should submit the IRS Data Retrieval as is and call the college’s Office of Financial Aid to make sure they are aware this error has occurred. Wait two days to log back into your FAFSA, manually make the correction and re-submit your FAFSA.
Hopefully, this will be straightened out for next year!