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College Station, TX
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QDROs and child support

Texas parents who must pay child support after getting divorced often find themselves concerned about how they might be able to afford this additional expense. The shift to living as a single person versus as part of a married couple generally already increases one's living costs and the addition of child support payments can put a serious strain on a monthly budget. The use of money from a 401K account may provide an opportunity to satisfy this debt.

The Internal Revenue Service explains that with the use of a qualified domestic relations order, a person can identify another party as an alternate payee on a 401K account. This would allow money to be taken out of the retirement account and paid directly to that alternate payee. A QDRO may be used for select situations involving legal domestic orders including child support.

According to the United States Department of Labor, a child or another dependent may be named as an alternate payee to receive money for child support payments. If the child or dependent is a minor, a guardian or other legal repreentative may also be allowed to receive the money on behalf of the child or dependent.

When money is taken from a 401K per a QDRO for child support payments, the plan owner remains responsible for any taxes but may be able to avoid paying early withdrawal fees that may otherwise be incurred when money is taken from a retirement account for non-retirement purposes. Payments for child support may be made in installments or in lump sums.

 

 

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