Are you one of the man people in Wisconsin who is getting divorced and faces the prospect of paying either child support or spousal support or both? If so, you are not alone and you no doubt feel some level of angst about how in the world you are going to be able to afford these court-mandated payments especially knowing that your everyday cost of living will be higher as a single person than it was when you were part of a married household.
As the United States Department of Labor explains, you may be able to leverage the funds in your 401K or other employer-sponsored retirement account to help you satisfy your child support or spousal support obligations. Through the creation of a qualified domestic relations order, you can legally establish your former spouse, child or dependent as an alternate payee on your retirement account.
The QDRO allows your plan to make payments directly to the alternate payee. If money is paid to your former spouse for alimony, they will be responsible for any taxes although rolling the money into another retirement account may avoid this at the time of receipt. If the money is paid to satisfy a child support obligation, you will retain tax liability as you would for any other means of paying child support.
If you would like to learn more about how you may be able to afford to make your required child support or spousal support payments, please feel free to visit the qualified domestic relations order page of our Wisconsin family law website.