Invasion of Your Ex’s Retirement Account for Unpaid Child Support, Alimony, College Costs, and Related Fees
Almost everyone who has gone through a divorce knows that QDROs (qualified domestic relations orders) are used to divide specific retirement assets between spouses in a divorce. And, “some people” who have gone through a divorce have also been forced to deal with a former spouse who refuses to comply with court orders, regardless of the court’s efforts to compel compliance. In these “bad” settings, despite all efforts, the former spouse simply refuses to pay their obligations in child support, alimony, college costs, etcetera. No matter what is done, the result remains the same and the money owed remains unpaid. Excluding drastic measures taken by the court, no mechanism currently exists in New Jersey to address the issue of unpaid child support, unpaid alimony, college costs, and unreimbursed health care from a recalcitrant nogoodnik, until now.
A recent New Jersey Appellate Division decision may change this setting by allowing the former spouse to use a QDRO to invade the non-compliant spouse’s retirement assets to satisfy unpaid child support, unpaid alimony, college costs and the legal fees incurred to collect the same. Orlowski v. Orlowski, 2019 N.J. Super. LEXIS 62 (App. Div. 2019) suggests QDROs may now be used as a tool to invade a former spouse’s ERISA-protected retirement assets (i.e. Pensions and Annuities) to recoup legal fees, unpaid alimony, unpaid child support, college costs, and unreimbursed health care costs.
In the Orlowski case, the former husband refused to pay outstanding alimony, child support and college costs despite repeated court orders requiring him to do so. The court recognized that the former husband undertook intentional actions to shield his income and non-retirement assets from his the wife through the creation of a trust. The court determined that absent extraordinary action taken against the former husband, any efforts to obtain compliance with the court orders would be meaningless.
In recognition of the husband’s shady actions, the court authorized the invasion of his retirement assets by QDRO to address the outstanding orders for costs and fees related to the unpaid child support, unpaid alimony and the husband’s unpaid share of the children’s college costs. This decision is a departure from the conclusion reached in Johnson v. Johnson, 320 N.J. Super. 371 (App. Div. 1999). Essentially, the Orlowski court said the mistake made in Johnson was in the procedure the court followed in efforts to invade the retirement assets.
The Orlowski decision provided a roadmap for how to correctly use a QDRO to invade a former spouse’s retirement assets. The QDRO must meet three strict
requirements: (1) the QDRO must only establish either the former spouse or a dependent of the nogoodnik as the alternate payee; (2) the QDRO can only address outstanding orders related to unpaid child support, unpaid alimony, or unpaid shares of college costs; and (3) the QDRO cannot violate any provision present in the retirement-account plan nor create any benefit not already available within the retirement-account plan. If these three requirements are satisfied, it is now possible to use a QDRO to invade a recalcitrant spouse’s retirement assets for unpaid child support, unpaid alimony, college costs, and related fees.