Most think of wage garnishments as attachments to weekly earnings. In some cases, it’s that the court orders income withholding for child support. Additionally, past due payments, also referred to as child support arrearages come in the form of wage garnishments. Does the same concept apply to pension funds?
In a legal opinion approved for publication, the New Jersey Appellate Division considered the issue. Are individual annuity funds subject to attachment in some circumstances involving family law cases? The legal analysis might prove relevant to your individual situation. Additionally, the case acts as legal precedent.
Pension Funds Aren’t Necessarily Exempt from Garnishment
The Appellate Division’s decision in Orlowski v. Orlowski was approved for publication on May 7, 2019. The appeal stems from a post-judgment matter, meaning it deals with issues after the couple divorced.
According to what the court referred to as a “complex procedural history,” it appears the parties engaged in considerable litigation after their divorce. Meanwhile, the proceedings didn’t just involve Joanna’s attempts concerning enforcement of the divorce decree.
The Appellate Division characterized Robert’s actions as relating to “bad faith, unclean hands, frivolous litigation in both state and federal court, and willful, sustained failure to comply with court orders.”
Joanna and Robert married in 1993 and had two sons together. In 2014, Joanna filed for divorce, which was subsequently finalized in 2016.
Robert’s membership in the International Union of Operating Engineers enabled him to maintain substantial ERISA protected funds in an individual annuity account.
Family Court Orders
The courts execute qualified domestic relations orders “QDROs” when it comes to splitting retirement funds as marital assets. In the Orlowski matter, the trial court awarded Joanna “one-half of the marital assets dissipated by defendant to be paid from the defendant’s annuity.”
The Property Settlement Agreement (“PSA”) directed Robert to make other payments. However, he refused to comply, and the parties had to make numerous court appearances after the original order ending their divorce.
In the meantime, the trial judge entered more court orders, which the defendant treated with “obstinance.” Notably, the court found it remarkable when Robert advised that he “transferred all of his assets, including the marital residence and annuity funds, to a self-executed trust.”
The admission came during enforcement proceedings in 2016. The defendant’s non-compliance prompted Joanna to further pursue payment of payments due to her. Specifically. she sought previously awarded counsel fees from Robert’s annuity funds through a QDRO.
Defendant Filed a Series of Lawsuits
Meanwhile, Robert attempted to move the case to federal court. The United District Court for the District of New Jersey returned the matter to Superior Court in New Jersey.
That said. there was no stopping the defendant as he also filed a federal civil rights case naming sixteen defendants. Among the parties was Robert’s former attorney, his ex-wife and her lawyer, as well as the forensic accountant, the mediator, Governor Christie, and three Superior Court judges.
The District Court Judge dismissed the action with prejudice. Nonetheless, the application for sanctions was denied. Robert filed another case in federal court. Next, the court instructed him that he needed to request permission before filing any additional pleadings at that level.
One of the issues included payment of college tuition reimbursement, which the trial court classified as child support. In determining whether a wage garnishment was appropriate from the defendant’s annuity funds, the court found it appropriate and said:
Enforcement of child support arrears by QDRO is allowable under ERISA’s anti-alienation exception. Second, both plaintiff and the child fall within ERISA’s definition of permissible alternate payee because plaintiff is a former spouse and the child is defendant’s son. Third, the payment of the college tuition arrears does not violate the Annuity plan and the form of the proposed QDRO was approved by the Annuity.
Although it wasn’t to the defendant’s liking, in the end the Appellate Division decided that it was appropriate to garnish retirement accounts to enforce an “unpaid counsel fee, forensic accountant fee, and tuition reimbursement awards.” As a result, the enhanced wage garnishment also relates to arrearages for child and spousal support.