QDRO AND EDRO TO COLLECT CHILD/SPOUSAL SUPPORT IN FLINT DIVORCE

FYI-Flint Divorce Bankruptcy Attorney Terry R. Bankert 235-1970, www.attorneybankert.com  asks DID YOU KNOW?.From Creative Tax and Financial Tips for the Low Asset/Underwater Case By Mary V. Ade, Stout Risius Ross, Southfieldningham JD CPA PC Troy

1. To Collect Child Support or Spousal Support ArrearagesQDROs and EDROs can also be used to satisfy child support or spousal arrearages post divorce.Most defined contribution plans can be accessed to secure a lump sum to cover either child support or spousal support arrearages. Because child support is not taxable to the custodial parent, a QDRO to secure child support payments should clearly state that the distribution is for purposes of child support arrearages and the distribution is to be taxable to the plan Participant. Some plans require that the child be named as the Alternate Payee. Because spousal support payments are taxable to the recipient, the ex-spouse should be named as the Alternate Payee and pay taxes on the distributions.
• Subsequent QDROs can be filed if additional arrearages accrue in the future!
• Caveat—Plan administrators are required to withhold 10% of the distributions for federal income tax purposes when the child is named as the alternate Payee.
2. Defined Benefit plans generally do not allow lump sum distributions, and usually are not accessible until the participant reaches retirement age as defined in the plan. However, if the participant is in pay status, a portion of each monthly payment can be assigned to pay either child support or spousal support.