A state office of Child Support Enforcement sent a letter to a Profit Sharing Plan Sponsor, stating that a participant owes a duty of child support. This is not a DRO. The letter states how much is to be withheld from gross income each month for child support. It seems to focus strictly on employee income. However, an attached information notice has a small 1 sentence blurb that states that gross income includes any payment from a pension plan. The individual in question is on disability but is not receiving monthly payments from the plan. He only has about $2,000 in the plan.

I read the Notice to mean that if a participant is receiving monthly checks from the plan, it is included as a source of income, but that is not the case here. Would you agree?

Since this is not a QDRO, does that automatically mean that his plan assets cannot be touched for child support?

Finally, the participant in question has more problems than just child support. He is about to be evicted from his house and wanted to take as much as he could from the plan as a hardship. Do you think he can still do this given the child support issue?

Thanks for any replys.

Under the Social Security law all states are required to establish child support enforcement agencies which have the power to seize income paid to employees, including pension benefits in pay status and disability income. The statute specifically notes that collection of pension benefits is not preempted by ERISA because it is authorized under federal law. The DOL has issued several opinion letters concluding that the child support orders must comply with the rules for QDROs with the exception that they are not required to be signed by a judge.

Step 1 - the plan sponsor should inform participant that due to child support order the plan cannot process his distribution request.

Step 2 - have legal counsel review the documents received from CSE, they may satisfy the DRO requirements. For what its worth the ERISA Outline Book has a discussion about child support notices under the definition of QDRO.