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Old 01-18-2011, 12:33 AM   #1
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401K & Child Support

I live in NY and my ex was so-so about paying child support. He was fired from his job in early August. I've just recently started receiving child support again (as in the past 2 weeks).

He cashed out his 401K & blew it. He paid me a court settlement he owed me & our daughters medical bills, that he was court ordered to pay or go to jail. He told me he got 2 checks from his work & gave me $50 to buy our daughter her winter stuff.

I was discussing my frustrations with a friend recently & she mentioned that if I can prove he pulled out his 401K, he owes a portion of it for child support? She said it's because it's counted as income. I've never heard of that so I thought I'd ask on here. He told me he pulled out his 401K, but never told me how much it was. I know it was quit a bit though due to everything he bought.

My concern is that he's only receiving unemployment now (which is why I think I've gotten child support 2 weeks in a row) and if I took him to court over the 401K, then they'd lower the support he pays weekly. I don't *count* on the support each week, but it is nice when I get it. I'm thinking he had at least $10,000 in the 401K due to everything he bought (that I know of).

I've tried googling it & haven't really found any info on it which makes me think it might not be true?? I know he'd never willingly give me any of it (even if it was for our daughter) so I thought I'd ask around before I made a butt out of myself with a lawyer.

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Old 01-18-2011, 12:39 AM   #2
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Re: 401K & Child Support

I believe that your friend is correct, though I'm not 100%. But I do know that's true with tax refunds, so I would think so.
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Old 01-18-2011, 12:46 AM   #3
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Would he owe a portion of it because he owes back support or would he owe the back support & a portion of the 401K?

I know he also received a profit sharing check from his work about a month after taxes each year, so with his taxes he'd end up with about $10,000. He bragged a lot about it.

I was just curious if anyone else had heard about this, so thank you!!
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Old 01-18-2011, 12:59 AM   #4
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Re: 401K & Child Support

If he is behind on child support, can you go after his tax refund (I know it's the state offices that refer the cases to the IRS for garnishment, but I'm not sure if its something that you have to request or if they do automatically). If you have to request it, you could get some relief there (since you say that he should get close to 10k). That may be an option for you.
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Old 01-18-2011, 07:07 AM   #5
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Re: 401K & Child Support

I'm not sure about child support because I've never had to deal with it so I'm not sure if you have a right to what he took out. However from what I am thinking you may not because of this reasoning. If the court mandates that he pay 15% of each paycheck before taxes to you for child support (or whatever it is) and he has 5% of his salary already going into his 401k, well then in my eyes, that's his money that he invested and he already paid you the 15%, if he chooses to cash out a bond or stocks or 401 that he invested with his money then that's his, he already paid you. Again this is just IMO. Plus when you got divorced weren't the assets divided so you did receive some of the value of the 401k?


I'm unsure what the law says about it. Also if he took the money as a "loan" than you wouldn't be entitled to any of it since that's not counted as income.

In regards to his 401k, it will be counted as income on his taxes. I wouldn't bet that he's going to get back as huge of a tax return as he thinks he is going to. Especially if that 401k was an actual withdrawal and not a loan. With him taking out the money on his 401k (if withdrawal), he's going to get hit with increased taxes most likely due to increase in income (may push him up into another bracket) and he's going to get hit with the 10% penalty withdrawal for taking it out early.

I DO know though that you can go after his 401k for any arrears in child support, and you can go after the income taxes as well too. I just don't know/think that you are owed anything in addition because of the 401k withdrawal. I wouldn't think so, but you never know. Either way I would see a lawyer to make sure you get what you are owed with the income taxes and/or ask about how to get after the 401k. Most places don't allow you to take out everything out of your 401k. And in NY it's very common for lawyers to draw up Levy's to be filed with the IRS against someone's 401k for back support.
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Old 01-18-2011, 08:40 AM   #6
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Re: 401K & Child Support

Quote:
Originally Posted by kbz2002 View Post
I'm not sure about child support because I've never had to deal with it so I'm not sure if you have a right to what he took out. However from what I am thinking you may not because of this reasoning. If the court mandates that he pay 15% of each paycheck before taxes to you for child support (or whatever it is) and he has 5% of his salary already going into his 401k, well then in my eyes, that's his money that he invested and he already paid you the 15%, if he chooses to cash out a bond or stocks or 401 that he invested with his money then that's his, he already paid you. Again this is just IMO. Plus when you got divorced weren't the assets divided so you did receive some of the value of the 401k?


I'm unsure what the law says about it. Also if he took the money as a "loan" than you wouldn't be entitled to any of it since that's not counted as income.

In regards to his 401k, it will be counted as income on his taxes. I wouldn't bet that he's going to get back as huge of a tax return as he thinks he is going to. Especially if that 401k was an actual withdrawal and not a loan. With him taking out the money on his 401k (if withdrawal), he's going to get hit with increased taxes most likely due to increase in income (may push him up into another bracket) and he's going to get hit with the 10% penalty withdrawal for taking it out early.

I DO know though that you can go after his 401k for any arrears in child support, and you can go after the income taxes as well too. I just don't know/think that you are owed anything in addition because of the 401k withdrawal. I wouldn't think so, but you never know. Either way I would see a lawyer to make sure you get what you are owed with the income taxes and/or ask about how to get after the 401k. Most places don't allow you to take out everything out of your 401k. And in NY it's very common for lawyers to draw up Levy's to be filed with the IRS against someone's 401k for back support.
I agree with this. Though, I am almost positive that the 401k was a withdrawl...usually you can only get a loan while employed by yoru current employer and that loan is due in full when your employment ends.

Also, hopefully he set aside 40% for taxes on his 401k - you get taxed at your normal tax bracket and then get an additional early withdrawl penalty (unless he is over 60 I believe)...so he may end up OWING big time on taxes this year if he didnt.
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Old 01-18-2011, 10:17 AM   #7
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Re: 401K & Child Support

My understanding is retirement contributions, but it depends on the state, do not count toward retirement/income if it is not an optional contribution. (We had that war in court and the judge did not count it as it was a mandatory contribution not voluntary in our state vs. the child support state). Unemployment in our state only takes out 10%/lowest tax amount so if he earned more than that and is in a higher tax bracket, he may owe vs. get a return too. (we are going to be messed up with this probably as that is all they will take out) I'd call child support office and ask them if yours goes through the child support office. If you went through the court/an attorney you can call them but financially it may not be worth it.
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Old 01-18-2011, 12:52 PM   #8
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I know it wasn't a loan, it was a withdrawal. Well according to him it was a withdrawal and he's no longer employed with the company. I'm sure he didn't set aside any money for taxes, so I'm sure he will owe in. He also did the loan for the first time home owners, so he owes $500 a year for that out of his taxes. I figure the money is all gone now, so even going after it for back child support won't work. I was told, to get his taxes, I'd have to wait until he owed a certain amount, go to court first and apply months ago for it. Months ago they told me he didn't owe enough, so all I could do was wait.

It's just frustrating dealing with this. Knowing he had thousands of dollars & they can't do anything to make him pay support. :/
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Old 01-18-2011, 01:05 PM   #9
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Re: 401K & Child Support

You can get a lien against his house for the back child support till it is paid back. So if he tries to sell it for whatever reason, the money would go to you, before it would go to him.

My father got stuck with this. My parents purchased a house and then got a divorce. My dad got the house, my mom got all the furniture in the house. Well then my dad got remarried and they lived in the house. He fell behind on child support for me. Then he got a divorce from wife 2 and the house was sold. Ironically my mom ended up with my dad's money from the sale of the house. Oh and she got it after I moved out too.

I think at this point even if he was suppose to give you money from the 401K you are out of luck. The most that can happen is he would be further in the hole for back child support.
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Old 01-18-2011, 04:23 PM   #10
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The lien on the house was mentioned to me, but he bought his house from his grandma, so the family would never let him sell it.

He has 5 vehicles (1 that he's bought since he started owing the back support). He's also bought a hot tub, a 4-wheeler, a gun chest, guns, an x-box, a PS3 & a bunch of other stuff (all that he bragged to me about). I'm not trying to tell him he can't buy whatever he wants, I just think he should attempt to pay back support first??? I'm worried if I take him to court he'll complain about being broke (neither him or his GF is working, so he's "supporting" them both and the other kids in the household) and the judge will lower the amount.
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