Unemployed, need to cash out 401K, will it be seized?

[CA help]

I live in LA, California

I lost my job two months ago and moved back to the LA area. The LA county child support division has been a nightmare to deal with and they are currently stating that I owe them back child support of approximately $10K. This is inaccurate and I am about to conduct yet another full audit with them to prove that they have made another mistake. The most I owe is about one and a half month of support.

The only thing that I have left is what little I was able to save through my company's 401K plan before I left. I want to liquidate this money (will pay 20% penalty) so that I can continue to pay my expenses while looking for a job. The county has not placed a levy on this account (yet), but they had placed one on my bank account.

Do I increase my chances of having this money levied and taken away from me once I place an order to liquidate the stocks and cash out the proceeds? Will the bank that manages this account first check with the Franchise State Tax Board, or Child support agencies before cutting me a check?

Thanks in advance for your help.

 

[LdiJ]

I live in LA, California

I lost my job two months ago and moved back to the LA area. The LA county child support division has been a nightmare to deal with and they are currently stating that I owe them back child support of approximately $10K. This is inaccurate and I am about to conduct yet another full audit with them to prove that they have made another mistake. The most I owe is about one and a half month of support.

The only thing that I have left is what little I was able to save through my company's 401K plan before I left. I want to liquidate this money (will pay 20% penalty) so that I can continue to pay my expenses while looking for a job. The county has not placed a levy on this account (yet), but they had placed one on my bank account.

Do I increase my chances of having this money levied and taken away from me once I place an order to liquidate the stocks and cash out the proceeds? Will the bank that manages this account first check with the Franchise State Tax Board, or Child support agencies before cutting me a check?

Thanks in advance for your help.

Retirement accounts cannot be levied, which is why the account has not been levied. However, as soon as you deposit the distribution in your checking account, it could very well be seized.

 

[Ohiogal]

Since you are unemployed have you filed for a modification?

 

[CJane]

Question, if retirement accounts are 'off limits', couldn't someone just put a ton of money out of their check into a retirement account and avoid paying support that way? Surely there is some type of check/balance there ... yes?

NO I'm not asking as a means for ME to stop paying support (nor am i trying to hijack the thread), however, my x-wife has been putting quite a lot in HER retirement account recently and your post had me curious if maybe this was HER way of 'hiding' HER income prior to our court date next week....

The account itself cannot be attached. But the INCOME that's invested into it is used in the calculations. So, I could put ALL my money into retirement and just mooch off D'Man... but my INCOME isn't altered. Just the liquidity of it.

 

[LdiJ]

The account itself cannot be attached. But the INCOME that's invested into it is used in the calculations. So, I could put ALL my money into retirement and just mooch off D'Man... but my INCOME isn't altered. Just the liquidity of it.

That's a good point....but there is also a limit to how much someone can deposit into a retirement account annually. Therefore someone couldn't put the bulk of their income into the account anyway.

 

[CJane]

That's a good point....but there is also a limit to how much someone can deposit into a retirement account annually. Therefore someone couldn't put the bulk of their income into the account anyway.

I knew there was a limit to some, but I didn't know if that applied to all of 'em. It's been awhile since I was solvent enough to invest in an IRA or 401k.

 

[TinkerBelleLuvr]

Your 401(k) fund pre-tax contribution limits set by the IRS for 2007 are:

$15500 for those under 50 years of age
$15500 plus $5000 additional catch up contribution for those over 50 years of age

Be sure to check with your employer for any limits set by your company's 401(k) plan.
That can reference the percentage they are allowed to take per paycheck/bonus check.

IRA Contribution Limits
YEAR AGE 49 & BELOW AGE 50 & ABOVE
2002-2004 $3,000 $3,500
2005 $4,000 $4,500
2006-2007 $4,000 $5,000
2008 $5,000 $6,000

 

[CA help]

Since you are unemployed have you filed for a modification?

In the past (I have dealt with several counties) I have always gone to court and had my order modified by a judge. Can I have my support order modified without going to court? I may need to go to court to hold the county responsible for their incorrect accounting and correct what they are reporting as back payment along with other actions they have taken against me (my credit, passport, liens). I just found out that they have suspended my drivers license! I am very frustrated and I am working hard to do a complete accounting of my case through four counties, so that I can prove that LA County is incorrect. Like I said I have gone through this before, but I am starting at square one since I lost my old file due to a hard disk crash.

Should I first try to solve the arrears amount and get my current child support modified through the child support office, or should I just set up a court date and have my day in court?

I really appreciate all of your input and insight.