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Termination Notices for Federal Agencies

Published: April 10, 2012
Information About:
Employers
Topics:
Employer Responsibilities, Income/Wage Withholding
Types:
Guides/Publications/Reports

When to Report Terminations

A termination occurs if the employee quits, retires, is fired or laid off. All terminated employees who have child support income withholding orders need to be reported as terminations to the state child support enforcement agency that issued the withholding order. Reporting terminations should be done as soon as possible following the termination date.

Reporting terminations lets the state child support enforcement (CSE) agency know why the federal agency is no longer withholding child support deductions. The state CSE agency is thus alerted to issue a new income-withholding order as appropriate. Even if the employee left during the first pay period, a termination report must be made because:

  • An employer-employee relationship existed,
  • The employee filled out a W-4 form,
  • A new hire report was submitted for that employee, and
  • A withholding order was received for this employee.

How to Report Terminations

Complete page 3 of the Income Withholding for Support form (OMB 0970-0154) and mail or fax it to the issuing agency or some states will accept this information over the telephone or online:

  • Employee's name,
  • Employee's case identifier,
  • Employee's last known home address,
  • New employer's name and address (if known), and
  • Date of separation.

When an employee retires, the Federal agency should notify the state CSE agency of termination and the name and address of the Federal payroll agency/processing center responsible for paying the retirement benefit. To avoid interruptions in payment to the employee's child and accrual of arrears, the employee may choose to make his own payments directly to the state CSE agency until the retirement processing center receives a new income withholding order.

States using the National Medical Support Notice (NMSN) may require that additional information on medical support or insurance be reported, primarily to avoid interruption of medical coverage for the employee's child.

Reactivation of Child Support Withholding Upon Rehire

If the employee is temporarily laid off or works on "intermittent status" (i.e., due to seasonal work), retain the income withholding order that was being honored prior to the termination. The amount of time that an income withholding order is kept on file following a termination varies from state to state (see Income Withholding State Information matrix). For example, some states require that an income withholding order be reactivated if the employee is rehired within 90 days.

Upon rehire, submit another new hire report if the employee completes a new W-4 form and reactivate the income withholding order. If possible, reactivate the medical support order as well. This will depend on the requirements of the health insurance plan.

When to Stop Withholding for Child Support

Do not stop withholding for child support until one of the following occurs:

  • Official notification to stop withholding is received from the issuing state agency,
  • The employee is terminated, for whatever reason (including retirement or death), or
  • Bankruptcy proceedings are underway and a bankruptcy trustee takes over the withholding.