Child Support or Maintenance Unpaid? Do They Have a Retirement Plan?

Often overlooked, retirement plans can be a source to finally receive long past-due child support and maintenance payments. There are tricks and limitations in Illinois, though.

If you were divorced in Illinois, you ability to get funds from a 401(k) or retirement plan to pay child support or maintenance may be limited to the value of the plan at the time of the divorce. One appellate court has issued such a ruling, but it seems the ruling was poorly reasoned and I think if it is challenged in a subsequent appeal, the law very well could be changed.

Not only should you be able to get the past due amount, you may be able to “garnish” payments to make sure you receive current support if there is no other payment mechanism. The court could also include attorney fees and interest in its determination of the amount and lump it into the amount to be withdrawn from the retirement plan if the child support payor is in contempt. Its important to ensure that the trial court’s order actually includes in one lump sum all amounts you want the plan to withhold from the retirement account in order to qualify.

You also need to take into account taxes. Child support is normally not taxable. If you are the alternate payee of a retirement plan distribution, you will have to pay tax. The total amount to be distributed from the retirement plan should be sufficient to either pay the tax or make alternative provisions to pay those taxes: you should not have to have your child support reduced by taxes simply because the payor refused to pay support.

In Illinois divorces, these types of Qualified Domestic Relations Orders (QDROs) are tricky and you really should have the help of an attorney to use this tactic. If you need a qualified attorney in Woodstock or McHenry County Illinois to help you obtain past-due child support, contact me.