Child Support Payments

[Guest psgross]

Can a participant's plan assets be attached for child support payments? I've never heard of this reason. I thought the only entities that could attach participant's retirement assets were federal tax liens and QDRO's. We received a notification to pay out a portion of a participant's balance. Thanks for your help.

[JDuns]

If the notice meets the requirements of a QDRO, you must indeed honor it and distribute the benefits. 414(p) and its ERISA equivalent both include in the definition of DRO an order that "relates to the provision of child support, alimony payments or marital property rights to a spouse, former spouse, CHILD OR OTHER DEPENDENT of a participant."

While most DROs a plan receives related to ex-spouses' marital prorperty rights, the rules clearly permit an order to be issued for child support.

[Guest psgross]

The notice was an "Administrative Order For Transmittal of Lump Sum Payment" from the County Child Support Enforcement Agency. Doesn't the notice have to come from the court?

[mbozek]

42 USC 666(b) permits the attachment of income by a county or state agency for the payment of back child suport. Payment is made to the govt agency, not the child. Paragraph (b)(8) defines income to include income from retirement or pension plans. Since 42 USC 666 is a federal law ERISA does not preempt the attachment of benefits. There are DOL opinion letters which allow the order to be issued by a state agency as long as the order meets all of the other requirements for a QDRO. Check this board for prior posts on child support orders.

[QDROphile]

Nothing in the QDRO rules says that a domestic relations order has to come from a court. Government agencies are more and more involved in domestic relations proceedings. One interesting issue is how to define domestic relations law when looking at the authority of the agency to act.

You have to be careful when paying a benefit to/for an alternate payee who is not a spouse or former spouse. The income is attributed to the particpant and it is not an eligible rollover distribution. You have to deal with other withholding rules. Figuring how withholding should apply is lots of fun. Is the amount to be delivered under the order to be net of withholding, if any? Or do you deliver the stated amount and increase the distribution to cover the withholding, if any?

[mbozek]

Q- I dont understand the need to look at state DRL. Under 42 USC 666 all states are required to establish state agencies with authority to recover back child support from income sources of the party in arreas. The plan admin only has to confirm that the state agency is collecting the back child support under 42 USC 666. This collection authority is separate from the enforcement of a QDRO for a child who is an alternate payee under state DRL.

[QDROphile]

I did not intend to inject anything into or against your response. I was describing a different potential path that starts with correction of a misconception that a DRO has to be a court order. Compare QMCSOs and the DOL advisory opinion on the subject.