jani

401k forced distribution to pay child support

9 posts in this topic

Can a Plan Administrator be required by the Court/District Attorney to make a distriution to an ex-spouse for past due child suppot payments from the vested account balance of a plan participant? Is the answer the same if the plan participant is an active employee or terminated employee? If yes, to all, can future distributions be requested (frequency?) if defaults continue?

Thanks for any insight on this issue!

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likely a QDRO could be fashioned, but it does not appear that it could force current distributions, unless the plan permits in service distributions.

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If you are looking for more "reading material", try this forum:

http://benefitslink.com/boards/index.php?showforum=89

If you are the participant, and if your attorney does not know the term "qualified domestic relations order", find one who does.

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There are two separate concepts in play here:

1. Child support can be ordered by the court under a QDRO but this will be subject to a divorce decree. If the court reserved jurisdiction over the case then the court can review the actions the non custodial parent after divorce. If the court did not mandate child support from the pension benefits the custodial parent would have to bring an action to commence collection of the support payments owed under the divorce decree from the employee' s pay, not his pension benefits since garnishment of pension benefits outside of a QDRO is prohibited under ERISA. District attorneys have no authority to order the pension plan to pay child support from benefits.

2. Back child support can be collected by a state agency under 42 USC 666(b) if the state agency is designated under state law to collect such payments. The benefits have to be in pay status and order has to conform to the requirements for a QDRO but does not have to signed by a judge.

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What could constitute a QDRO, and whether or not a divorce decree or a judge is involved, depends on the the state's domestic relations law. I can imagine that child support enforcement would be part of a state's domestic relations law, so an agency order could be a domestic relations order. Then the question is whether or not the order meets qualification requirements of federal law.

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There are two separate concepts in play here:

1. Child support can be ordered by the court under a QDRO but this will be subject to a divorce decree. If the court reserved jurisdiction over the case then the court can review the actions the non custodial parent after divorce. If the court did not mandate child support from the pension benefits the custodial parent would have to bring an action to commence collection of the support payments owed under the divorce decree from the employee' s pay, not his pension benefits since garnishment of pension benefits outside of a QDRO is prohibited under ERISA. District attorneys have no authority to order the pension plan to pay child support from benefits.

2. Back child support can be collected by a state agency under 42 USC 666(b) if the state agency is designated under state law to collect such payments. The benefits have to be in pay status and order has to conform to the requirements for a QDRO but does not have to signed by a judge.

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There are two separate concepts in play here:

1. Child support can be ordered by the court under a QDRO but this will be subject to a divorce decree. If the court reserved jurisdiction over the case then the court can review the actions the non custodial parent after divorce. If the court did not mandate child support from the pension benefits the custodial parent would have to bring an action to commence collection of the support payments owed under the divorce decree from the employee' s pay, not his pension benefits since garnishment of pension benefits outside of a QDRO is prohibited under ERISA. District attorneys have no authority to order the pension plan to pay child support from benefits.

2. Back child support can be collected by a state agency under 42 USC 666(b) if the state agency is designated under state law to collect such payments. The benefits have to be in pay status and order has to conform to the requirements for a QDRO but does not have to signed by a judge.

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Thanks to all who offered insight to my question. The available benefits of ex- spouse were accrued after the divorce (sorry, I should have added that info) so a QDRO was not a potential source/force.

mjb, you give us a ray of hope - thanks!

jani

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I agree with QDROphile. The order doesn't have to be part of a divorce decree, just a "domestic relations order." A child support order would be considered a domestic relations order. You'd have to look at the document and decide whether the document met the requirement as an order.

Also, the Plan itself has to be reviewed. Many plans are drafted to allow immediate payment of an amount to an alternate payee if ordered by a domestic relations order. (I'm not positive that the plan can allow immediate payment of a 401(k) contributions account (old age) - but I think it can.)

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