Can We Garnish a 401(k) for Spousal Support?

Can We Garnish a 401(k) for Spousal Support?
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The Employee Retirement Income Security Act of 1974 protects employer-sponsored retirement plans from garnishment, with some notable exceptions. Although specific rules and procedures regarding 401k garnishment are subject to state law, a spouse who owes back alimony payments might find all or part of his 401k account garnished, depending on how much he owes. However, securing a garnishment order requires several legal steps.

Qualified Domestic Relations Order

If your spouse is behind on alimony payments and your attempts to resolve the matter failed, you might need a qualified domestic relations order from your state court or agency. This order enforces your right to receive payments from a retirement plan. The order is a judgment, decree or order, according to the Department of Labor.

Your divorce agreement is not in and of itself a domestic relations order, and it won't be recognized by your ex-spouse's retirement plan provider as evidence of back alimony.

Basic Rules

According to the Employee Retirement Income Security Act, the 401k's "alternate payee" must be the ex-spouse, child or dependent of the plan participant. A valid qualified domestic relations order must contain the names and last known addresses of the participant and each alternate payee, the name of the retirement plan, how much the alternate payees will earn, and the number of payments to be made by the plan provider. Some plan providers might use their own form for this order, so checking with the provider in advance can save headaches later on.

What a Qualified Domestic Relations Order Can't Do

The order cannot force the plan provider to offer a new or increased benefit to the alternate payee that wasn't available to the participant. In addition, if a previously issued qualified domestic relations order is in place, the new order cannot supersede it. The order cannot make a payment to the alternate payee as a "joint and survivor annuity" payable to the alternate payee and a new spouse, according to the Department of Labor.

Additional Provisions

A qualified domestic relations order might apply to multiple providers and plans from the same participant, if the plan names and payments are clearly identified on the order. In addition, if the alternate payee is not legally competent or is underage, the order might force the provider to make payments to a parent or guardian acting in loco parentis.

Finally, if an ex-spouse dies owing back alimony, a qualified domestic relations order can still be issued in favor of the surviving ex-spouse.