What can you do when your former spouse is not paying court-ordered support? Congressman Joe Walsh is only the latest in a long line of public figures who stand accused of failing to pay child support, racking up large sums in arrears owed to their former spouses. California recently announced that non-custodial parents in that state alone owe $19.2 billion worth of unpaid child support. Most of us have heard about all the "deadbeat dad" laws, which can strip non-compliant parents of their drivers' licenses or even send them to jail for failing to pay. Few people -- including most divorce lawyers -- realize that retirement plans can be used to pay child support and alimony.
Retirement plans can be divided between spouses in a divorce case. This is done by a "Qualified Domestic Relations Order," which is usually called a "QDRO." Divorce lawyers are generally familiar with the need for a QDRO to divide retirement plans. However, most of them think that QDROs can only be used to divide marital property - very few realize that QDROs can also be used to provide child support (or alimony), particularly when it is past due. I can't tell you how often divorce lawyers with successful practices are surprised to learn that QDROs are available for child and spousal support payments. Let's put it this way: I've prepared at least a thousand QDROs to divide marital property, but I've only ever been asked to do a tiny handful of QDROs for support.
If your former spouse is not paying court-ordered support, or if you are facing severe consequences as a result of not making your support payments, make sure that you are not overlooking an important source of funds. Even if the person who has a support obligation has lost his or her job, there may still be retirement funds that can be used to make support payments. This is true for both 401(k) plans and traditional pension plans - even if the employee is too young to be eligible to receive payments.
Even child support recovery agencies show a distressing lack of awareness about this mechanism for obtaining support payments. QDROs can be a powerful tool for prying support payments out of a hostile, non-compliant Deadbeat Debbie or David. If a QDRO gets properly entered by the court and submitted to the employer (or former employer), there is nothing that Deadbeat Debbie or David will be able to do to stop the funds from coming out of their retirement plan. Quitting a job, moving out of state, declaring bankruptcy - none of these will defeat the QDRO.
QDROs can also be a lifesaver for someone who does not intend to avoid paying support, but has fallen on hard times and just doesn't have the money to make support payments. I've seen many cases in which a former spouse gratefully consents to a QDRO for past-due alimony or child support, since they can't reach those funds to pay their support otherwise, and they sincerely want to pay what is owed. Entering a child support QDRO for the arrearage can keep them out of court, and stop the late payment penalties from multiplying. And, of course, it provides their children with the funds awarded for their care.
QDROs can even be used in some circumstances for support payments even before there is an arrearage - they can be set up as the mechanism by which support will be paid going forward. If you're in the middle of a divorce, and are concerned about your spouse's ability to pay support in the future (or your ability to pay it), make sure you investigate this potential source of funds.
Retirement funds are just too often overlooked as a method of making support payments. A QDRO can be the best possible solution in many cases. If you or your former spouse participates in any retirement programs, this can be a lifeline that saves you (and your children) years of struggle and expense.