New Jersey Courts May Garnish a Retirement Plan to Pay Overdue Child Support, Alimony

Even after a divorce is all said and done, many people find themselves back in court when their ex refuses to pay. Ex-spouses may drag their feet when it comes to paying child support, alimony, health care and college expenses, and other related fees. A New Jersey court recently addressed the unusual circumstances under which the court may invade one party’s retirement plan in order to collect these unpaid figures. Continue reading for details on the case, and contact a knowledgeable New Jersey divorce and alimony attorney with any questions.

Court invades ERISA plan to pay spousal support, college expenses, related fees

Retirement plans like pensions and annuities are assets that are divisible in a divorce, but they require special treatment. If retirement assets are part of a divorce, a New Jersey court will issue a qualified domestic relations order (QDRO), which allows the spouse, child, or other dependent of a plan participant to collect retirement benefits as if they were a plan participant. QDROs must be approved by the retirement plan. A New Jersey court recently approved a lesser-known use of a QDRO: Garnishing the retirement funds in order to enforce other aspects of a final divorce decree that are being ignored by a plan participant.

The case of Orlowski v. Orlowski concerns a divorced couple, Robert and Joanna, with two sons. Robert was a member of an engineers’ union who held substantial ERISA-protected money in the union’s pension fund. Following the divorce, Robert refused to pay alimony, child support, college expenses for their children, and other related fees and costs. Joanna obtained several court orders enforcing the divorce settlement, but Robert continued to ignore them. He also took significant measures to protect his income and other non-retirement assets from being attached for non-payment of his support obligations, including hiding assets and creating a trust, as well as filing frivolous lawsuits like a civil rights case against Joanna and her attorney. The court determined that extraordinary measures would be necessary for Joanna to collect any of the amounts Robert owed.

Enforcing Outstanding Court-Order Support

The appellate court ultimately authorized the use of a QDRO to invade Robert’s retirement assets in order to collect the overdue support, as well as related litigation costs and fees Joanna incurred in obtaining the various enforcement orders. The court held that a QDRO can be used to enforce outstanding court-ordered support as long as certain requirements are met:

1. The QDRO is used for the benefit of the former spouse or child of the plan participant. A previous case rejected the use of a QDRO to pay a lawyer’s fees because the specific use was in favor of the lawyer, not the ex-spouse.
2. The QDRO can only be used to enforce amounts owed pursuant to a specific court order. The QDRO does not give a party carte blanche to go after anything they might be owed; they need an enforcement order already in hand.
3. QDROs should only be used as an extraordinary measure when other assets are either unavailable or have been made unavailable by the obligor.
4. QDROs cannot be used to create a benefit that is not already available under the plan.

For example, the alternate payee (i.e., the spouse or child of the plan participant) cannot demand immediate payment if the plan participant would not be able to collect before reaching a certain age in the future.

Contact a New Jersey Family Law Attorney

If you’re in need of compassionate, experienced, and talented legal help with a divorce or alimony dispute in New Jersey, contact the Union offices of family law attorney John B. D’Alessandro at 908-964-0102.