Are my IRA Distributions considered income to be considered for calculating child support?

Courts have included individual retirement accounts (IRA) disbursements representing deferred employment earnings, receipt of company stock from employment stock options, workers’ compensation awards, and the proceeds from pensions as income under the Illinois Marriage and Dissolution of Marriage Act“(IMDMA”). See In re Marriage of Lindman, 356 Ill.App.3d 462, 824 N.E.2d 1219, 291 Ill.Dec. 969 (2d Dist. 2005); In re Marriage of Colangelo, 355Ill.App.3d 383, 822 N.E.2d 571, 290 Ill.Dec. 986 (2d Dist. 2005); Illinois Department of Public Aid ex rel. Jennings v. White, 286Ill.App.3d 213, 675 N.E.2d 985, 221 Ill.Dec. 561 (3d Dist. 1997); In re Marriage of Klomps, 286Ill.App.3d 710, 676 N.E.2d 686, 221 Ill.Dec. 883 (1997).

However, using the same statutory definition, other courts have determined that withdrawals from self-funded IRAs and proceeds from the sale of residential property do not constitute income under 750 ILCS 5/505(a)(3). See In re Marriage of O’Daniel, 382Ill.App.3d 845, 889 N.E.2d 254, 321 Ill.Dec. 350 (4th Dist. 2008); In re Marriage of Baumgartner, 384Ill.App.3d 39, 890 N.E.2d 1256, 322 Ill.Dec. 337 (1st Dist. 2008).

In O’Daniel, supra, the appellate court determined that the father’s IRA disbursements did not constitute income because IRA accounts are narrowly or self-funded by an individual account holder. The court noted that “when an individual withdraws money he placed into an IRA, he does not gain anything as the money was already his. Therefore, it is not a gain and not income.” 889 N.E.2d at 259.In reaching its conclusion, the court reasoned that the only gain of the IRA that would constitute a gain for the individual — and therefore income for purposes of child support — would be the interest or appreciation from earnings from the IRA. See also Baumgartner, supra, 890 N.E.2d at 1272–1273(when parent sold home and used proceeds to purchase new home, proceeds were not actually available as income). Cf. In re Marriage of Eberhardt, 387 Ill.App.3d 226, 900 N.E.2d 319, 326 Ill.Dec. 683 (1st Dist. 2008). The Eberhardt court concluded that in determining whether IRAs should be considered as net income, courts must examine the situation of each case to determine whether an inequity would result. Because the former husband’s testimony had been found not credible due to his evasiveness and nondisclosure of his finances, the trial court did not abuse its discretion by treating his withdrawals from IRAs as income in denying his motion to modify child support 900 N.E.2d at 326.


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