Schwarz v. Schwarz: Voluntary Contributions to Retirement And Child Support

In Schwarz v Schwarz, the Appellate Division reaffirmed that the New Jersey Child Support Guidelines define gross income as “all earned and unearned income that is recurring or will increase the income available to the recipient over an extended period of time” and that voluntary contributions to retirement plans are included as gross income for purposes of calculating child support.

The particular issue before the Court in Schwarz was in regard to the Plaintiff’s voluntary deferral of $65 per week through her employer in a tax deferred annuity.  Plaintiff unsuccessfully argued that her total gross income for purposes of child support should be reduced by this $65 voluntary weekly retirement contribution.

When establishing gross earned income for child support, the Court distinguished voluntary payments to retirement plans from mandatory contributions to retirement plans. The Court said that voluntary payments to deferred annuity plans or other similar types of deferred compensation plans (401k plans), unlike mandatory retirement contributions (pensions), are optional at the election of the participant.  As such, the elections to such plans are voluntary, the totality of the same should be included in determining a party’s adjusted gross taxable income for purposes of calculating child support.

The Schwarz case is important as it definitely identifies that any voluntary deferral of income through is included for purposes of gross taxable income when calculating child support.  

If you have mandatory deferral of income as part of your compensation structure, make sure to make the distinction  so the Court can establish an accurate child support obligation. 

If you have questions regarding the calculation of income for purposes of child support, the attorneys at Ulrichsen Rosen & Freed LLC can assist you. Our attorneys recognize that every child support case is unique and have significant experience advising clients how to best navigate issues surrounding such applications. Our firm is focused exclusively on the practice of family law and serves clients throughout New Jersey including clients residing in Mercer County, Somerset County, Hunterdon County, Burlington County and Middlesex County.