When Child Support/Alimony Ends Unexpectedly

One of my favorite attorneys has a legal segment on our local TV channel.  I had a chance to see it this morning.  The audience poses questions that the attorney has a chance to answer, albeit in a very restricted timeframe (we must get to the commercials, you know!).  One of the questions was from a mom who was receiving child support prior to her former spouse losing his job and being unable to pay support.  This is always a tough situation, particularly in this economic time with unemployment truly being around 10%.

If one had the time to ask the questions, one of mine to the mom would be, “Does the former spouse have a 401(k) or other ERISA plan that they had been contributing to – or one that is still in effect and dormant?” 

If so, a Qualified Domestic Relations Order could be prepared by an attorney and signed by a judge. That retirement plan could then be tapped in order to catch up the back child support or alimony.  Granted, it will cost some money to have the QDRO prepared by an attorney and signed by a Judge, but it is possible in these situations to go back to tap something that might have been a marital asset in the past and might not be considered as a way to catch up the arrearage.

It’s worthwhile to know that the tax liability of raiding the retirement plan will be paid by the participant, in this case the former spouse.  While this is a process that is used a great deal across the U.S. it is not seen as often in Iowa.  Of course, many times no retirement plan exists for the former spouse. It’s worth asking the right question.

It’s a tough place to be for both mom and dad in these instances.  The key is whether this creates substantial hardship on the child.