Although most creditors can't garnish retirement benefits, particularly at the federal level, this doesn't apply to child support debts.
Not many assets or sources of income are exempt from garnishment if you owe past due child support. States fiercely protect a child’s right to financial support, and the United States government stands by ready to help. Although there’s typically a little room for negotiation where current support and income withholding orders are concerned, your retirement funds are vulnerable if you fall behind and owe arrears.
Social Security Benefits
Most creditors can’t touch Social Security retirement benefits, but federal law allows garnishment for family support obligations, including child support. Your ex-spouse – or your state if it’s trying to enforce your support order – can file a motion with family court to establish that you’re in arrears, and by how much. The judge will issue an order to garnish your benefits and your ex can serve the order to the Social Security Administration. Depending on how long it’s been since your last support payment, and whether you have other children, garnishment is permitted on up to 65 percent of your monthly benefits.
Other Federal Benefits
The federal government also allows garnishment of any payments issued from a “system or fund established by the United States,” according to the Office of Child Support Enforcement. This includes federal pensions and other types of federal retirement pay, survivors’ benefits, dependents’ benefits and annuities.
- When your retirement funds hit your bank account, they’re fair game for collection and the money is no longer subject to the 65 percent rule. Federal law requires that banks periodically check their accounts for any held by parents who owe child support arrears. **The entire balance can be garnished** up to the amount of your arrears when your account is identified.
Qualified Domestic Relations Orders
Don’t assume your retirement income is safe because it comes from a private source. Although federal law protects defined contribution and defined benefit plans from alienation or garnishment – these funds can’t go to anyone other than the worker who earned them – the law also offers a way around this for family support obligations. The Voit Econometrics Group states that your ex can go back to court and ask the judge for a qualified domestic relations order. When this order is served on the plan administrator, it directs a portion of the payments to the custodial payment for past due child support. Payments can even be diverted in lieu of current child support if you have a history of not paying and the court wants to secure your obligation. This is only possible, however, if your ex has a divorce decree or court order obligating you to pay child support in the first place. The QDRO is an additional step that allows your ex to use the decree or order to supersede federal anti-alienation laws.
- Your plan decides when payments are made according to its existing policy for distributions. Taxes may be due on the distributions, and these are your obligation because child support isn’t taxable income to the parent receiving it. Your ex can ask the court to **authorize a distribution greater than the amount of your arrears** to cover taxes that will come due, and courts are likely to comply.
- FindLaw: Can Social Security Benefits Be Garnished for Child Support?
- Fox Business: New Rule Protects Exempted Funds From Garnishment Orders
- Office of Child Support Enforcement: Garnishment of Federal Payments for Child Support Obligations
- Voit Econometrics Group: A Powerful Tool in Child Support Enforcement