IRAs and child support calculations

 Income for purposes of calculating child support pursuant to the Maryland Child Support Guidelines is defined by the Family Law Article of the Annotated Code of Maryland as actual income. This includes, but is not limited to, salary, wages, pension income, social security benefits and disability insurance benefits.

 Withdrawals from one’s IRA accounts are also deemed to be income to a party pursuant to the Family Law Article as they are taxable income. However, issues have arisen as to whether the amount in a payor’s IRA can be deemed a potential source of income for the payor. Along with that comes the question that if the payor chooses not to take any withdrawals from this account, would that refusal lead a court to believe that the payor is purposefully diminishing his income in order to pay a lower amount of child support. If the Court deemed this to be true, then the income (annuitized) could potentially be imputed to the payor for child support purposes.

There is no definitive answer to the above issue. Courts in other jurisdictions have been reluctant to impute annuitized IRA income to the payor that were not actually made, especially those withdrawals that would trigger an early withdrawal penalty. However, an argument can be made that this income could be imputed to payors who have reached the age in which penalty-free withdrawals are permissible, or if the payor has no other available income and the child is in need (best interest of the child).

 Cynthia H. Clark & Associates, LLC is an Annapolis-based family law firm serving clients throughout the state of Maryland. If you have a child support-related issue, please contact our firm to reserve a consultation time at our office.