{3:00 minutes to read} Most people know that QDROs can be used to divide up any kind of retirement plan as part of a divorce settlement. What is not so well known is that they can also be used to collect child support or maintenance/spousal support/alimony as well. At times, they can be especially useful in collecting arrears of child support or maintenance.
Recently, I was asked to draft a couple of QDROs dealing with child support arrears. In both of them, the arrears had mounted to more than $50,000. These arrears certainly could have been avoided if the collection of the child support and maintenance had initially started from the pension plans – by using a QDRO. The flexibility of QDROs for initially collecting child support is often overlooked by family law attorneys, so very few litigants are aware of this option.
Using QDROs in this fashion is very similar to using a payroll deduction garnishment. The use of garnishment is now extremely common in most courts for cases involving child support. However, even when the QDRO was not used initially, its use in collecting arrears is also an incredibly handy tool for family law attorneys or litigants.
One of the peculiarities of this approach is that the amount that can be paid to the alternate payee can sometimes be far more than the amounts paid pursuant to a payroll garnishment. The federal law governing the collection of money from corporate or union pensions limits the amount that can be withheld for arrears to pretty much the same as that which could be withheld by way of a payroll garnishment. However, state pension plans are not subject to those rules and will often permit 100% of the net amount to be used for payment of arrears.
So if someone is in arrears for child or maintenance support, the retirement plan can be garnished via a QDRO, but only when the pension is in pay status, meaning the debtor is already receiving monthly checks. In addition, the QDRO can be used to collect arrears from a 401K plan or any similar type of retirement plan.
To take advantage of this option, you have to do the QDRO. I draft the paperwork, get the judge to sign it, and then submit it to the plan administrator or HR.
Using a QDRO to collect child and/or spousal support may be worthwhile. If you think you need such an option or have any questions, please contact me.
Steven L. Abel, Esq.
101 South Broadway
Nyack, NY 10960
(P) 845-638-4666
(E) [email protected]
