QDRO for Child Support – from Retirement Plan Assets
Under federal pension plan law (ERISA), retirement plan assets can be tapped through the use of a QDRO to get child support payments.
A QDRO can be used to collect child support in Colorado even if an earlier QDRO was used to split a retirement plan for the benefit of a former spouse.
A defined benefit pension plan can be used to collect a stream of monthly child support payments.
A defined contribution plan is a good asset to obtain a lump sum for child support arrears.
This is true of the law of all states, not just Colorado.
Why Income Tax is Different for Child Support QDROs
Under the traditional QDRO which is used to divide martial assets, the income tax is paid by the former spouse who received the QDRO account, at the time that the money is withdrawn.
However, if the QDRO is used to pay child support, the income tax on the money withdrawal is paid by the plan participant (employee).
This is consistent with the general rule that child support is not tax deductible to the payor and it is not taxable income to the recipient.
A child support QDRO is especially effective if an arrears is owed.