Child Support Enforcement Automatic DCSS Levy on Father’s IRA

The payment of child support is a clear public policy of California. There is simply no safe harbor when the state DCSS seeks to collect child or spousal support arrears. Many of us in the family law field may have been misguided in thinking that individual retirement accounts (IRAs) and other pension plans are exempt from collection. This clearly was the father’s contention when he sought an exemption and later moved for injunctive relief to quash the collection proceedings. Under Family Code 5103, the levy was proper. More importantly, regardless of whether the children are receiving public assistance or the support was assigned to the state, the IRA was subject to a levy for both child and spousal support arrearages.

We must be mindful that California has devised a system of ensuring automatic payment of child support arrears by means of levying on support obligors’ assets in financial institution accounts. Financial Institutions are required to provide notice of an order, and to withhold from an obligor’s accounts the amount of the arrearages [see Fam. Code sections 17453, 17545]. The only way to minimize the levy is for the obligor to claim a hardship. The trial court then must determine the amount of the exemption based on financial hardship by considering the needs of the parties and the other persons the obligor is obligated to support. Regardless of whether the father was the custodial parent or noncustodial parent, the state has the authority to levy on any IRA or any other retirement account.

The LaMoure decision is instructive and provides a clear and unequivocal holding that an IRA cam and will be reached to satisfy support arrearages. There is no safe harbor, not even with an ERISA plan. Federal courts have consistently held that a garnishment order on a pension benefit subject to ERISA may be used to satisfy court-ordered family support payments. In this case, the IRA was tapped, but the father’s pension account was left alone. With this clear directive, we must instruct our clients that a retirement account is simply not a safe harbor.

Aside from admonishing your client, should you have a client facing a levy on his or her retirement account, please carefully review Family Code Section 17520. Based on my read of this statute, there is no language that restricts an obligor’s right to file a motion in the underlying action for (1) modification, (2) to fix a payment schedule on arrearages accruing, or (3) for a judicial finding of compliance with the judgment or order. These remedies are expressly preserved for future court consideration [see Fam. Code section 17520(j)].

References: CALIFORNIA FAMILY LAW PRACTICE AND PROCEDURE, 2nd ed., section 140.23[2][b] (execution on IRA accounts), 141.08, 141.09 (property available to enforce support obligations), 141.123 (enforcement of child support obligation by support agency), 141.126[2] (levy by local child support agency), 141.129[2] (support enforcement by Financial Institution Data Match system), 160.33[3] (tax effects of transfers from IRA accounts, generally).