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How-To Child Support for Federal Agencies
The presentation consists of the following:
Slide 2: Introduction
- Course objectives
- Course agenda
- Course materials
- Audience profile
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Slides 3 - 4: Why do we have a child support enforcement program?
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Slide 5: Our changing society has increased...
- Divorce rates
- Out-of-wedlock births
- Single parent families
- Children living in poverty
- Public assistance costs
…until welfare reform in 1996.
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Slide 6: What am I doing here?
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Slide 7: Executive Order 12953
The Federal Government, through its civilian employees and Uniformed Services members, is the Nation's largest single employer and as such should set an example of leadership and encouragement in ensuring that all children are properly supported.
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Slide 8: Module 2 Objectives - Child Support Basics
- State origins and general description of the Child Support Enforcement Program
- Identify 4 primary child support services
- Identify 4 requirements for employers
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Slide 9: Child Support Basics
- Definition of "child support"
- Definition of "medical support"
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Slide 10: Magnitude of the Child Support Program
- Caseload
- 1976 - 2 million cases
- 2007 – 15.8 million cases
- Collections
- FY 1992 - $ 8 billion
- FY 2007 - $25 billion
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Slide 11: Child Support Enforcement Program
- Established 1975
- AFDC (now TANF) only; later, all applicants
- Federal, state and local levels
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Slide 12: Federal Level - OCSE
- Program standards, policy & regulations
- Program funding
- Audits state & local programs
- Technical assistance & training
- Federal Parent Locator Service (FPLS)
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Slide 13: FPLS
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Slide 14: State Level
- Central administration
- Operates statewide automated system
- Maintains registry of all cases in state
- Maintains database of new hires
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Slide 15: Local Level
- Regional and county agency offices
- Provides direct services
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Slide 16: 4 Basic Child Support Services
- Locate
- Establish paternity
- Establish child support orders
- Collect child support
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Slide 17: Employer's 4 Basic Steps in Child Support
- Report new hires & respond to verification requests
- Withhold income, premiums
- Disburse payments
- Report terminations
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Slide 18: Scenario 1
- TANF Recipient provides info used to locate NCP
- Paternity established
- Child support order established
- Order enforced with Order/Notice to Withhold Income to employer
$ to IV-D agency
$ to CP & kids
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Slide 19: Module 3 Objectives - New Hire Reporting
- Name the purpose and benefits of the New Hire Reporting program
- Identify 6 data elements required
- Identify the primary method of reporting for federal agencies
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Slides 20-21: New Hire Reporting
- What
- Why
- How
- When
- All Federal agencies report directly to NDNH
6 Required Data Elements:
- Employee name
- Employee SSN
- Employee address
- Employer name
- Employer FEIN
- Employer address
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Slide 22: FPLS
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Slide 23: Employment Verifications
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Slide 24: New Hire/Verifications SUMMARY
- New Hire Reporting requirements (W-4 data)
- Importance of the New Hire Reporting program
- Honor verification requests from child support agencies
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Slide 25: Module 4 Objectives - Income Withholding
- Calculate child support withholding
- Calculate allowable disposable income
- Prioritize withholdings
- Describe medical support requirements
- Determine when child support comes first
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Slides 26-29: Income Withholding
- What: garnishment for child support owed
- Why: single most effective collection tool
- Income: "any periodic form of payment due to an individual, regardless of source, including wages and salaries, commissions, bonuses, workers' compensation, disability, payments pursuant to a pension or retirement program, and interest."
- Federal benefits considered income:
- Periodic benefits
- Retirement benefits
- Retirement contribution refunds
- Worker compensation
- Compensation for death
- Other benefits
- How
- usually issued by child support agency
- standardized "Income Withholding for Support" form or IWO
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Slides 30 - 31: Order/Notice to Withhold
- Top – identifying information
- Order information – how much to withhold, type of support
- Remittance information:
- When to withhold
- When to remit
- How to allocate
- Administrative fee
- Maximum that can be withheld
(law of official duty station state)
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Slide 32: Income Withholding
- Where: from any state
- When: within 7 days OR LESS
- Why: over 70% of all collections
- How: may be sent to federal agency by regular or certified mail per state law or eIWO
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Slide 33: Federal Addresses for Withholding
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Slide 34: Complying with the Order
- Document date of receipt
- Copy to employee
- "Regular on its face?"
- Follow the terms
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Slide 35: Exercise
- Withholding order received 5/6/08
- Next payday is 5/16/08
- $100 weekly support due, $800 weekly gross pay
- Withhold $_______ on _______ and send in by __________?
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Slides 36 - 38: Calculating Disposable Income
- What
- Disposable income
- Allowable disposable income (CCPA)
- Why
- Child support can only be withheld from allowable disposable income
- How
- Take mandatory deductions
- Apply CCPA percentage
- Mandatory deductions for Federal employees
- Monies owed to US Government
- Fed employment taxes, fines, forfeitures ordered by court martial
- Fed, state, local income taxes (including FICA & Medicare)
- Retirement contributions (including OASDI)
- Health insurance premiums
- Life insurance premiums
- Federal Consumer Credit Protection Act limits:
- 50% - 2nd family, no arrears or < 12 wks
- 55% - 2nd family, 12+ wks in arrears
- 60% - single, no arrears or < 12 wks
- 65% - single, 12+ wks in arrears
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Slide 39: Exercise: Disposable Income
- Jacob's gross biweekly pay
- $1600.00
- Less mandatory deductions
- -350.00
- Jacob's disposable income
- $1,250.00
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Slide 40: Exercise: Allowable Disposable Income
- $1,250.00
- x 65%
- Allowable disposable income
- $ 812.50
| Current support |
$200 |
(2 weeks) |
| Arrears |
50 |
|
| Admin. fee |
5 |
|
| |
$255 |
|
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Slide 41: Imputed Income
- What: non-cash fringe benefits
- How:
- Deduct before calculating allowable disposable income
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Slide 42: Exercise: Imputed Income
- Gross pay
- $800
- Imputed income
- +200
- Taxable income:
- $1,000
- Deduct taxes
- - 220
- Net pay:
- $780
- Subtract imputed
- - 200
- Disposable income:
- $580
(for child support purposes)
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Slides 43 - 45: Withholding for Medical Support
- What
- CP provides coverage
- NCP provides coverage
- NCP provides coverage through private plan
- Child enrolled in plan solely for children
- Child enrolled in state CHIP
- Either or both parents provide cash
- When
- Your employee is eligible
- How
- NMSN (or QMCSO)
- Disregard "open enrollment" season
- You withhold child's premiums per plan administrator
- Qualified Medical Child Support Orders (QMCSO) have been replaced by National Medical Support Notice (NMSN) for child support agencies
- Private attorneys may use NMSN or QMCSO
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Slide 46: National Medical Support Notice
The NMSN is actually 4 different documents plus instructions to the employer and the plan administrator:
- Part A- Notice to Withhold for Health Care Coverage
- Employer Response (if cannot withhold)
- Part B- Medical Support Notice to Plan Administrator
- Plan Administrator Response to agency
Plan administrator tells employer how much to withhold
NMSN is considered a QMCSO
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Slide 47: How the NMSN works
Important note:
Withholdings for both cash child support and medical support are subject to CCPA limits set by the employee's principal place of employment state.
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Slide 48: When the Employee is Not Working
- When
- Receiving annual or sick leave, or worker's compensation
- On "leave without pay" status
- What
- Child support must be withheld from income
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Slide 49: Not Enough Money!
- What: amount due exceeds allowable disposable income
- When
- Multiple child support orders
- Other garnishments
- Other involuntary deductions
- How
- Percentage allocation OR
- Divided equally
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Slide 50: Percentage Method of Allocation
| Order A |
$90.00 |
÷ $227 = 39.65% |
|
| Order B |
$75.00 |
÷ $227 = 33.04% |
| Order C |
$62.00 |
÷ $227 = 27.31% |
| 227.00 |
100.00 % |
| Order A |
$180 |
x 39.65% = $71.37 |
| Order B |
$180 |
x 33.04% = $59.47 |
| Order C |
$180 |
x 27.31% = $49.16 |
| 180.00 |
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Slide 51: Equal Method of Allocation
- Order A
- $90.00
- Order B
- $75.00
- Order C
- $62.00
$227.00 but only have $180
$180 ÷ 3 = $60 to each order
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Slide 52: Multiple Child Support Orders
- By Federal law, some money must be paid to each order for current support
- Follow the state law of your employee's official duty station
- NOT "first come, first served"
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Slide 53: Child Support with Other Garnishments
- Pay child support first!
- Withhold for child support, then check to see if withheld amount is greater than the limits set for the garnishment (25% rule).
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Slide 54: Example: Child Support + Other Garnishments
Tony owes $90/week for child support.
Sears garnishment for $1000.
Biweekly disposable $700
60% of disposable $420
Withhold full (2 wks) $180
700 – 393 = 307
25% x 700 = 175 is lesser
BUT 175 – 180 = Nothing to withhold for Sears
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Slide 55: Example 2: Child Support + Other Garnishments
Tony owes $70/week for child support.
Sears garnishment for $1000.
Biweekly disposable $1,000
60% of disposable $ 600
Withhold full (2 wks) $ 140
1000 – 393 = 607
25% x 1000 = 250 is lesser
250 – 140 = 110 can be deducted for Sears.
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Slides 56-58 Child Support vs. Other Involuntary Deductions
- IRS tax levy served prior to underlying child support must be paid first
- What to do:
If levy came first, call child support agency
If withholding order came first, call IRS
- Child support still owed even if bankruptcy is declared
- Chapter 7 or 13 – continue to withhold unless instructed otherwise by the bankruptcy court trustee
- Follow bankruptcy court instructions
- Involuntary deductions that never take precedence over child support:
- Nontax federal debt
- State and local tax levies
- Creditor garnishment
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Slide 59: Common Concerns about Income Withholding
- Need to void paycheck/wrong amount withheld
- Employee protests
- Not sure when to stop withholding
- Multiple withholding orders
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Slides 60 - 62: Income Withholding SUMMARY
- Income withholding
- Calculating the amount to withhold
- Imputed income, or fringe benefits (deduct)
- Medical support (new NMSN)
- Accrual of arrears (State will determine)
- Special situations (not enough $, other garnishments)
- CHILD SUPPORT COMES FIRST!
- Exception: IRS tax levy served prior or bankruptcy, if so ordered by trustee
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Slide 63: Module 5 Objectives - Payment Disbursement
- List where, when and how withholding should be sent
- Define SDU and its purpose
- Name benefits of electronic payments
- List standard elements needed on Treasury checks for child support
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Slides 64 - 65: Payment Disbursements
- All payments withheld by employers should go to the State Disbursement Unit (SDU)
- Pre-1994 orders & Tribal orders may be payable to another party
- Redirecting payments
- EFT/EDI
- Remittance deadline
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Slide 66: Benefits of Electronic Payments
- Gets $ to children faster
- Reduced check processing costs
- Eliminates postage
- Fewer phone calls from CPs
- More accurate
- Safer
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Slide 67: Proper Identification of U.S. Treasury Checks
Always include:
- Name of NCP/employee
- SSN of NCP
- Remittance identifier
- Amount of payment
- Date of payment
- Name and address where check should be sent
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Slide 68: Payment Disbursements SUMMARY
- Send withheld payment to payee in IWO & include proper identifying information
- SDU is predominant payee
- E-payments are the preferred method
- Send payments within 7 business days or less
- Identifying elements on Treasury checks
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Slide 69: Module 6 Objectives - Reporting Terminations
- Name employer's responsibilities when NCP terminates
- Explain what to do for rehires and retirees
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Slides 70 - 71: Reporting Terminations
- What
- Notify agency/court if employee (NCP only) leaves
- Why
- When
- How
- IWO Form, final page; NMSN, per instructions
- Special Requirements
- Retain IWO in case of rehire
- Report termination to issuing agency with a copy of notice required for health insurance continuation
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Slide 72: When the Employee is Retired
- When
- Retired and receiving some type of benefits (CSRS, FERS, etc.)
- What
- Federal agency stops withholding; notifies state child support agency of termination
- State agency issues new withholding to OPM
- OPM begins withholding from retirement benefits
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Slide 73: Reporting Terminations
- Rehire after termination
- Submit another new hire report
- Reactivate IWO
- Reactivate medical support as appropriate
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Slide 74: Terminations SUMMARY
- Report terminated employees who owe child or medical support
- Reporting requirements vary from state to state
- Withhold child support for retired employees when a new IWO is received at OPM
- Reactivate child/medical support for rehires, too
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Slides 75 - 77: COURSE SUMMARY
- 4 basic responsibilities of employers
- New Hire reporting
- Calculating the correct amount to withhold
- Medical support
- Special situations
- Remitting the child support payments
- When child support withholding takes precedence
Importance of your cooperation with the Child Support Enforcement Program:
- Employers collect over 70%
- You save taxpayers' money
- You prevent and reduce fraud
- You lower UI premiums
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Slide 78: Where to Get More Information
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Slide 79: Thank you from the children of America!
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