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Now I'm wondering - suppose I die before they graduate from college? I understand that in obtaining financial aid for college, the student's assets are tapped to a greater extent than the parent's assets. Are inherited IRA's tapped to the same extent as other assets? Are the parents or the student required to withdraw money from an IRA (a taxable event)in order to contribute to college expenses?

That depends on how they take the inheritance. They have the option to roll it over into an inherited IRA, the assets of which will not count on the Fafsa form, but on which they will be required to take required minimum distributions which will be counted as income on the FAFSA. The good news is that the RMD is based on their age and life expectancy, not yours. If they manage to hold on to it, and pay their bills in another way, that will give them a leg up on retirement savings.

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