Double-Dipping with Child Support

In New York, child support is calculated pursuant to the Child Support Standards Act ("CSSA") which can be found in New York Domestic Relations Act Sec. 240 and also in Section 413(1-b) of the Family Court Act. For the most part, the child support can usually be calculated in a reasonably straight-forward manner, using the following applicable percentages:

• 17% for one child;
• 25% for two children;
• 29% for three children;
• 31% for four children; or
• No less than 35% for five or more children.

Once it's determined which percentage is applicable, each parent's income is reduced by FICA and medicare deductions (*additional deductions from gross income are also allowed, but for purposes of this discussion, we are going to utilize the more common scenario). Once each parent's adjusted income has been determined, they will be combined and then multiplied by the applicable percentage (above) to calculate the annual child support total. Then, the non-custodial parent's adjusted income is divided by the annual child support total in order to calculate the non-custodial's percentage of responsibility ("pro rata share") of the payment of the annual child support total.

Once the percentage is determined, you simply multiply the annual child support total by the non-custodial parent's pro rata percentage. This total reflects the non-custodial parent's annual child support obligation. Easy, right? Well, a recent issue has arisen in our office that has us family law attorneys debating, researching and debating some more.

What happens when the non-custodial parent has taken an early withdrawal from his/her 401(k) retirement? Need more information? Okay, in this case, the husband's 401(k) deductions are paid into a retirement plan and his child support obligation was based upon his gross wages (which already included the money that was paid into the retirement account). So, while the husband certainly had to claim the early withdrawal as income on his tax returns, I do not believe his child support obligation needs to be changed because of this artificial inflation of income. I think my argument in this regard is even stronger when you take into consideration the fact that his gross wages (which were used to compute his child support obligation) already included the money he has now taken as a withdrawal. So, why isn't this considered a double dip if the court now makes this non-custodial father include his early withdrawal as additional income to be used to recalculate the child support?

More to follow...