Order to withhold income for support

[Guest PA consultant]

Can an Order/Notice to Withhold Income For Support, that was issued by the state to a local government employer, require the plan administrator to withhold the payments for child support from the former employee's pension benefits being paid from a defined benefit plan? This withholding (for child support) was not referenced in the Domestic Relations Order currently being administered to make payments from the pension plan to his former spouse.

[QDROphile]

The order is effective if it is a qualified domestic relations order. More than one QDRO can apply to a plan. The order does not have to have a particular name to be a QDRO. The question is whether or not the order is qualified, and state law will probably have a lot to do with that because the plan appears to be a governmental plan.

But you said that the order instructed the employer to withhold. You need to interpret exactly how the order applies. The "employer" is not necessarily the plan, so the order may apply only to payments from the employer and not payments from the plan.

[mbozek]

Public pension benefits may be subject to child support under a QDRO issued by a state court, state ct garnishment orders or if the order is issued by a state agency authorized to recover funds under the Child Support Enforcement Act pursuant to state law (IV-D program) where the custodial parent entitled to public assistance assigns to the state the right to recieve child support from the non custodial parent which has not been paid. In other words the state agency can collect the back child support owed to the custodial parent from pension benefits due the non custidal parent. See Dol Opinion 2002-03A. In the case of a public plan the authorization to collect the child support issued by a state agency would be sufficient without the need to conform to the QDRO requirements. You need to have the order/notice reviewed by counsel.

[Guest PeterGulia]

While you should always consult your own lawyer, here's an idea of what your lawyer might be looking for.

First, check whether the "order/notice" is directed to the plan administrator or the employer. If it was directed to the plan administrator, check whether the plan administrator received valid service of process. (Figuring out that might itself require expert legal advice.)

Next, check whether the plan recognizes any kind of domestic-relations order. If an order might be recognized, check what requirements the plan provides. Often a governmental plan's statute, regulations, or plan terms require an order to meet rules more restrictive than those of IRC 414(p).

If an order might be recognized, consider whether the "order/notice" is a domestic-relations order. Depending on the definition in the statute, regulations, or plan terms, such a notice might (or might not) be an order and (if it's an order) might be a DRO if the order is made under a state domestic-relations law. Because an income execution might be a supplemental order based in a court's inherent power to enforce its own orders, it might be unclear whether such an income execution is made under a State domestic-relations law. Since such a question turns on an interpretation of law, consider whether the plan administrator should refrain from deciding until it has considered the opinion of an expert lawyer.

Then, even if a notice is a DRO, a plan administrator still must decide whether the order meets all of the plan's further requirements.

Often, a typical income execution is not a "QDRO" because such an order might not "clearly specif[y]" either the amounts to be paid or "the number of payments or period to which [the] order applies[.]" Although these IRC 414(p)(2)(B)&© rules don't necessarily apply to a governmental plan, most state laws or governmental plan provisions or procedures have rules that are at least as strict.

All of this is a general overview of an approach to considering questions, and doesn't reflect any state law or plan provisions.

Finally, ask for your lawyer's advice about whether it might be wise to use your plan's claims procedure when communicating any decision so that either the participant or the would-be payee has a due-process opportunity to request review of the plan administrator's decision.

[mbozek]

Mandatory withholding of pension payments under title IV-D are not subject to the procedures for QDROS. Employers are required to carry out mandatory withholding after the order is received or they will be liable for the amounts which they fail to withhold. The employer is immune from liability to the employee for amounts withheld under this provision. The authorization for this legislation is at 42 USC 666(B). Subsection (B)(8) specifically includes pensions and retirement benefits as income subject to mandatory withholding. Counsel must review the notice to determine if it has been issued under the authority of Title IV-D.

[Guest PeterGulia]

As always, Matt Bozek knows his stuff. If the pension already is in pay status or is "due" and the domestic-relations court caused the child-support order on which the withholding notice is based to conform to procedures required under 42 U.S.C. 666, an "employer" must pay according to the notice (if it's regular on its face).

However, if the pension plan trustee, administrator, or other payor isn't the child-support obligor's employer, it might consider whether it is an "employer" within the meaning of 42 U.S.C. 666(B).

[Nom Deplume, Esq.]

The Office of Child Support Enforcement publishes a manual and in Chp.  11, it makes clear that a plan may reject an IWO.  In that event, they agency would have to work with obligee's counsel to obtain a valid QDRO.