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14.2.1.4.2 Periodic pension plan payments

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  7. 14.2.1.4.2 Periodic pension plan payments

14.2.1.4.2 Periodic pension plan payments

The CCPA is explicit that “periodic payments pursuant to a pension or retirement program” constitute “earnings” protected by its garnishment limits.43 The language “pursuant to” refers to payments from the pension plan to a retiree, rather than payments by the employer or employee into the pension plan.44 However, wage garnishment protections may not prevent a creditor from reaching the fund itself, as opposed to the periodic payments it makes, to the extent the retiree is entitled to cash out the retirement fund.45

Footnotes

  • 43 15 U.S.C. § 1672(a). See United States v. Lee, 659 F.3d 619 (7th Cir. 2011) (“earnings” within the meaning of CCPA include periodic payments from a pension or retirement program, here annual distributions; garnishment for criminal fine is limited to 25%); United States v. DeCay, 620 F.3d 534 (5th Cir. 2010); Sposato v. First Mariner Bank, 2013 WL 4049718 (D. Md. Aug. 8, 2013) (although payments from unfunded “top hat” retirement plan are not wages as defined by state garnishment law, they are earnings protected by CCPA); United States v. Cunningham, 866 F. Supp. 2d 1050 (S.D. Iowa 2012) (state employees’ disability retirement payments are earnings subject to CCPA garnishment limits); United States v. Otto, 2012 WL 2529406 (W.D.N.C. June 29, 2012) (applying 25% CCPA limit to garnishment of pension payments for criminal restitution); United States v. Beukle, 892 F. Supp. 2d 1176 (D.S.D. 2012) (CCPA limits apply to periodic payments from a 401(k); keeping 25% limit in place and finding it unnecessary to decide whether 18 U.S.C. § 3664(n)—which requires an incarcerated defendant who receives “substantial resources from any source, including inheritance, settlement, or other judgment” to apply the funds to unpaid fines or restitution—applies to periodic pension payments); Phillips v. Phillips, 2011 WL 487837 (N.J. Super. Ct. App. Div. Feb. 14, 2011) (unpublished) (state and federal garnishment limits apply to payments from pension; family court had no authority to issue a post-divorce QDRO requiring the payment of 100% of pension towards alimony arrears; note, however, that the pension would have been subject to equitable division at the time of the divorce); Ward v. Ward, 396 A.2d 365 (N.J. Super. Ct. Ch. Div. 1978) (protected earnings include pension benefits). See also AFLAC, Inc. v. Diaz-Verson, 2012 WL 1903904 (M.D. Ga. May 25, 2012) (applying state 25% garnishment limit to payments from “top hat” retirement plan); Farren v. Farren, 2011 WL 32311233 (Conn. Super. Ct. June 14, 2011) (Connecticut prejudgment remedy cannot reach “earnings,” broadly defined to include compensation for personal services, including a pension based on length of service and pay rate). But see United States v. Renfrow, 2017 WL 6389303 (W.D. Wash. Dec. 14, 2017) (CCPA does not exempt payments from 401(k) plan; earnings became non-exempt investments when deposited in plan). But cf. United States v. Yin, 2017 WL 4676834 (W.D. Wash. Oct. 16, 2017) (payments from IRA not exempt; earnings became non-exempt investment when deposited in IRA); United States v. Blondeau, 2011 WL 6000499 (E.D.N.C. Nov. 1, 2011) (disagreeing that CCPA applies to periodic payments from pension fund, but case appears to involve garnishment of corpus of fund rather than periodic payments), report and recommendation adopted by 2011 WL 6001281 (E.D.N.C. Nov. 30, 2011).

  • 44 United States v. DeCay, 620 F.3d 534 (5th Cir. 2010) (noting that lower court decisions to the contrary had misquoted the statutory language).

  • 45 Id. at 544–545. See United States v. Sayyed, 862 F.3d 615 (7th Cir. 2017) (CCPA protects only periodic payments; if debtor is permitted to take lump sum, entire amount may be taken for restitution); United States v. Grigsby, 2015 WL 471248 (D. Kan. Feb. 4, 2015); United States v. Fussell, 2013 WL 12080161 (S.D. Fla. Oct. 31, 2013), aff’d, 567 Fed. Appx. 869 (11th Cir. 2014); United States v. Edward D. Jones & Co., 2011 WL 7025905 (E.D. Tex. Dec. 21, 2011) (CCPA does not protect retirement fund that debtor could cash out at any time), report and recommendation adopted by 2012 WL 113605 (E.D. Tex. Jan. 13, 2012); United States v. Whitt, 2011 WL 4062459 (E.D. Mich. Sept. 13, 2011); United States v. Tischendorf, 2011 WL 2413346 (N.D. Tex. May 17, 2011), report and recommendation adopted by 2011 WL 2327312 (N.D. Tex. June 13, 2011). See also United States v. Renfrow, 2017 WL 6389303 (W.D. Wash. Dec. 14, 2017) (if judgment debtor has right to withdraw funds from 401(k) plan, it can be seized in full); United States v. Blondeau, 2011 WL 6000499 (E.D.N.C. Nov. 1, 2011) (earnings do not remain exempt after being passed into a retirement account or annuity in the hands of the employee, so government can reach corpus of retirement account regardless of CCPA; court does not indicate whether retiree had the right to cash out the fund), report and recommendation adopted by 2011 WL 6001281 (E.D.N.C. Nov. 30, 2011). See generally §§ 13.4.2.1–13.4.2.3, supra (garnishment of pension funds for debts to federal government); 14.4.1–14.4.4, infra (protection of pensions).