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Prior to December 2019, there was a list of exceptions to the 10% early withdrawal penalty. Although no 10% early withdrawal penalty applies, this option may not be recommended for all eligible parents.īackground Regarding Early Withdrawal Penalties: Prior to the Act, if you were under the age of 59½ and withdrew pre-tax money from an IRA or 401(k) plan, the withdrawal was subject to a 10% early withdrawal penalty (in addition to the assessment of ordinary income tax). Joint refund: State may hold the tax refund offset from a joint tax return for up to six months before disbursing (on rare occasions, a state may need to hold a joint refund offset for more than six months).Overview of the Law: In December 2019, Congress passed the SECURE Act (“Act”), allowing parents to withdraw up to $5,000 out of their IRAs or 401(k) plans following the birth or adoption of a child, without paying the 10% early withdrawal penalty.Non-joint refund: Federal law requires a state to disburse a non-joint refund offset no later than 30 calendar days after receipt unless there is a special circumstance (for example, a pending appeal).It is important to stay informed with your local child support caseworker. Typically, the state child support office that submitted the noncustodial parent’s case for tax refund offset receives the funds within two to three weeks. Timeframes for receiving and sending funds Note: The state updates the debt amount regularly but may not issue a new Notice each time the debt amount changes. For that reason, the actual amount that is deducted from the noncustodial parent’s tax refund may differ from the amount on the Notice. The Notice also provides direction on contacting the child support agency for further information. At the time of the tax refund offset, Treasury’s Bureau of the Fiscal Service mails a Notice of Offset to the noncustodial parent stating that all or part of their federal tax refund has been intercepted. Working through OCSE, the offset payment is then sent to the state child support agency to pay toward the past-due support. When Treasury’s Bureau of the Fiscal Service processes a tax refund, it matches the noncustodial parent’s debt and intercepts part or all of the tax refund, depending on how much is owed.
SPECIAL PRE TAX MONIES HOW TO
The Pre-Offset Notice includes information about federal tax refund offset, administrative offset, passport denial, and other actions the child support agency may take to enforce or collect a past-due amount, and also how to challenge the debt and request an administrative review.
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It shows the past-due support amount owed at the time of notice. If the child support debt meets the federal requirements for a federal tax refund offset, the noncustodial parent will receive a Pre-Offset Notice that explains why their case was submitted to the offset program. This information is sent to the Department of the Treasury and includes the name, Social Security number, and past-due child support amounts. State child support agencies work through OCSE to submit information about people who are behind in child support payments.