State Lump Sum Payment Rules for Child Support Withholding

State-by-State Guidance

A good tool for employers dealing with garnishments and child support orders is the new chart on the Office of Child Support Enforcement (OCSE) web site that summarizes state child support withholding rules with respect to lump-sum payments at https://ocsp.acf.hhs.gov/irg/irgpdf.pdf?geoType=OGP&groupCode=EMP&addrType=SLS&addrClassType=EMP

Training payroll departments on complex issues such as the effect lump-sum payments have on garnishments and child support is important for all employers. Lump-sum payments include severance pay, sick pay, vacation pay, bonuses, insurance settlements, commissions, and stock options. State rules vary with respect to whether withholding is required from an employee receiving a lump-sum payment who owes child support. Many states treat lump-sum payments separately from regular wages. The OCSE chart addresses the following issues for all 50 states, Guam, Puerto Rico, and the Virgin Islands:

• Is there a state definition of a lump-sum payment?

• Are employers required to report lump-sum payments?

• What is the threshold amount for reporting lump-sum payments?

• How long must the employer hold the lump-sum payment?

• Is the income withholding order (IWO) used for lump-sum payments?

• Are other processes or documents used to attach lump-sum payments?

• Is the Consumer Credit Protection Act (CCPA) being applied to lump-sum payments?

Notice:  Alliance Training and Consulting, Inc. provides finance and accounting training. The contents of this page are for general purposes only. You should not substitute this information for individual consultation with a qualified professional in the field.  Alliance Training and Consulting, Inc. is not engaged in rendering legal services.

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