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Notice from state dept of social & health services garnishing 401k for child support


Guest sjpilger

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Guest sjpilger

The State of Washington has sent a letter to the administrator of a 401k plan requesting payment for back child support. Can the state force a distribution without filing a DRO and getting a QDRO?

Could this be treated as a hardship withdrawal and taxed to the participant?

It seems to me there may have been some legislation on this issue acouple of years ago, but I can't find it.

Thanks.

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Guest LVanSteeter

http://www.dol.gov/ebsa/programs/ori/advis...01/2001-06A.htm

According to the DOL,

"It is the view of the Department that an income withholding notice issued by DCSE or county child support enforcement agencies (as described in your submission) as part of the State’s IV-D program, is a “domestic relations order” as defined in section 206(d)(3)(B)(ii) of ERISA. The notice relates to the provision of child support to a child of a participant in a pension plan, enforces a child support order that is made pursuant to State family or domestic relations law, and is made by DCSE or a county child support enforcement agency, which have jurisdiction over child support matters. We note in particular that section 206(d)(3)(B)(ii) does not specify that in order for a judgment, decree, or order to be a “domestic relations order” for the purposes of section 206(d)(3) that it must be issued by a court"

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You might also wish to track down DOL Advisory Opinion 92-17A, which says that a plan administrator does not have to dig too deeply into the state law behind the terms of the order. Contrast it with Advisory Opinion 99-13A, which says that the administrator can't be completely asleep. The administrator has to determine if the submission is a domestic relations order, but agency orders may be domestic relations orders. If the agency were acting intelligently, it would explain its authority and relate it to domestic relations law.

Keep in mind that the order still has to qualify, even though it may be a domestic relations order.

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In additon to a QDRO, there are two types of enforceable orders for child support: Under Section 609(a) of ERISA, a state ct. can order that the employer's group health plan add childern of the employee and make the employee pay for the coverage from his salary. Under Section 466(a) of the Social Security Act, a state child support agency can garnish retirement benefit distributions to pay for back child support. Under DOL Opinion 2001-06 the notice issued by the State agency can be enforced if it meets the requirements for a QDRO other than the requirement that it be a ct order. You should have counsel review the letter to determine if it is valid under one of the above laws.

mjb

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  • 2 weeks later...
Guest halka

As a semi-related issue.... there is some precedent (PLR 200342007) for the fedl govt to garnish a participant's account under the Federal Debt Collection Procedures Act of 1977 (FDCPA, 28 USC 3001 et seq.). Basically concludes that the federal government's right to collect criminal fines from a participant's plan account trumps the anti-alienation rule -- essentially same as IRS levy.

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