Skip to main content

In Illinois, Is a defered 401k conversion to a Roth 401k included in taxable income when determining child support payments?

Skokie, IL |

This convesion is taxable for federal and state purposes, but would I also have to pay 40% ( I have 4 kids) to my ex-wife?

+ Read More

Attorney answers 3

Posted

Okay, so you had a 401(k) and converted it into a Roth and, when you did so, you paid tax on the amount converted, right? At that point, as long as the money stays in the Roth, you shouldn't have to pay a portion of it for child support. If, however, you take any money out of the Roth, THEN you MAY have to pay support on such withdrawals.

Certainly the portion of the IRA withdrawal that is from interest or capital gains IS income and you must pay support on THAT. The circuits differs, however, on whether you have to pay on the withdrawal of the principal.

Asker

Posted

I rolled these funds to a 401k Roth account. As long as I don't remove any of these funds from the Roth 401k plan my ex-wife would have no claim to any part of this conversion under Illinois law... Right?

Wes Cowell

Wes Cowell

Posted

Can't say for sure. You should pay a lawyer for legal advice and not rely on online posting services to make such important financial decisions.

Gary L. Schlesinger

Gary L. Schlesinger

Posted

wes, good answers.

Posted

Probably not. You are not taking a distribution from the plan, as such. You are merely transferring funds.

Posted

As long as you do not take a distribution out of your 401(k), it should not be considered income for purposes of child support.

Nothing in this post creates an attorney-client relationship. This post is not meant to serve as legal advice.