There are a number of ways retirement funds can be garnished to pay for child support arrears.
Defined Contribution Plans
An IRA can be garnished to recover child support arrears. First, you must have a judgment entered against the person who owes the child support. IRAs are not exempted from execution for child support under Maryland law.
The same is true with a defined contribution plan other than an IRA. These typically include both a 401k and a 403b. Again, a judgment must first be entered, but defined contribution plans are also not exempt from execution for child support under Maryland law.
As a practice tip, keep in mind that as soon as the person owing the child support gets wind of what has happened, he or she will likely withdraw the balance in the retirement account and immediately try to hide or spend it. You might only have one shot at attaching child support arrearages from these types of retirement accounts.
If the party owing child support has a pension plan, it cannot typically be garnished for child support if the pension is not present being paid, because the person has retired and is receiving pension payments. If, on the other hand, the pension is in present payout status, drafting a Qualified Domestic Relations Order (QDRO) could be used for a periodic payout of a lump sum judgment or an ongoing child support payout.
Other Creative Ideas
If the parties are married and a divorce is pending, a person may be entitled to a portion of the defined contribution plan as property (not to collect child support arrears), but then the Court issue a separate QDRO for the payment of future child support. One must consider how these amounts are listed for tax purposes.
One Final Word
Always get your child support arrearage reduced to a monetary judgment, because it carries interest at a legal rate of 10% per annum and may be collectible some day.
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