Liquidating 401k

Statutes that were designed to protect the family assets from creditor claims, so that the family would not become dependent upon the state for support, do not afford an individual the same protection against their ex-spouse for the payment of child support or alimony arrears.

In order for a spouse to reach funds held in a retirement account, whether it be an IRA or a 401(k), there must first be an existing support order.

Once an individual is found in contempt of court, the court will then decide the total amount of the arrears, and the rate at which those arrears will be repaid.

The court does have the right to look to funds that are held in an IRA or a 401(k) to pay the arrears.

Many employers set up a 401k plan for their employees, and make it easy to use payroll deductions for employee contributions.

Contributions you make into a 401k reduce your adjusted gross income, lowering your overall tax liability.

Next, there must be a finding by the court that there are in fact arrears owed pursuant to that court order which have accrued as a result of nonpayment by the obligor.

If the court makes an affirmative finding that the obligor has willfully refused to pay support obligations, he or she may be found in contempt of court.The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation.The actual effects of your financial decisions may vary significantly from these estimates - so these estimates should not be regarded as predictions, advice, or recommendations.The 10-year average rate of return for the S&P 500 Index was 5.39% annually as of August 2016.During the same period, the Dow Jones Industrial Average returned an average of 5.02% annually. Past performance is no guarantee of future results. *Withdrawals from your qualified plan are taxed as ordinary income and may be subject to a 10% Federal tax penalty if taken prior to age 59 1/2.When your retirement accounts are growing, it’s great to see the numbers climb.

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