Senate File 54 - Introduced



                                       SENATE FILE       
                                       BY  DOTZLER


    Passed Senate, Date               Passed House,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to the diversion of a portion of a noncustodial
  2    parent's child support obligation to a college savings plan.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 2062SS 81
  5 mg/cf/24

PAG LIN



  1  1    Section 1.  Section 598.21, Code 2005, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  5B.  If the conditions of paragraph "a"
  1  4 are met, a percentage of the child support payments of the
  1  5 noncustodial parent shall be diverted as provided in paragraph
  1  6 "b" into a qualified tuition program.
  1  7    a.  All of the following parental conditions shall be met:
  1  8    (1)  The custodial parent is remarried or cohabiting with
  1  9 another person.
  1 10    (2)  The custodial parent has obtained a degree from an
  1 11 accredited postsecondary college or university or accredited
  1 12 community college prior to the date of the divorce decree.
  1 13    (3)  The net monthly household income of the custodial
  1 14 parent equals at least one hundred ten percent of the monthly
  1 15 allowable living expenses for the area in which the custodial
  1 16 parent resides.
  1 17    (4)  The noncustodial parent has regular, overnight
  1 18 visitation with the child for whom child support is provided
  1 19 of at least ninety overnights per calendar year.
  1 20    (5)  All of the joint children of the custodial and
  1 21 noncustodial parents are five years of age or older.
  1 22    b.  If the conditions in paragraph "a" are met, the
  1 23 noncustodial parent shall divert a percent of the child
  1 24 support payment to a qualified tuition program in the name of
  1 25 that child based upon the percent that the custodial parent's
  1 26 net monthly household income is of the monthly allowable
  1 27 living expenses in the area in which the custodial parent
  1 28 resides according to the following schedule:
  1 29 Percentage of monthly
  1 30 allowable living expenses:           Percentage diverted:
  1 31 110 = 119.99 ............................  5
  1 32 120 = 129.99 ............................ 10
  1 33 130 = 139.99 ............................ 15
  1 34 140 = 144.99 ............................ 20
  1 35 145 = 149.99 ............................ 25
  2  1 150 = 154.99 ............................ 30
  2  2 155 = 159.99 ............................ 35
  2  3 160 = 164.99 ............................ 40
  2  4 165 = 169.99 ............................ 45
  2  5 170 = 174.99 ............................ 50
  2  6 175 = 179.99 ............................ 55
  2  7 180 = 184.99 ............................ 60
  2  8 185 = 189.99 ............................ 65
  2  9 190 = 194.99 ............................ 70
  2 10 195 = 199.99 ............................ 75
  2 11 200 = 204.99 ............................ 80
  2 12 205 = 209.99 ............................ 85
  2 13 210 = 214.99 ............................ 90
  2 14 215 = 219.99 ............................ 95
  2 15 220 = 224.99 ........................... 100
  2 16 225 = 249.99 ........................... 100 plus 5 percent from
  2 17                                              custodial parent
  2 18 250 = 274.99 ........................... 100 plus 10 percent from
  2 19                                              custodial parent
  2 20 275 = 299.99 ........................... 100 plus 15 percent from
  2 21                                              custodial parent
  2 22 300 or more ............................ 100 plus 20 percent from
  2 23                                              custodial parent
  2 24    c.  For purposes of this subsection:
  2 25    (1)  "Monthly allowable living expenses" means the sum of
  2 26 the appropriate amounts from the food, clothing, and other
  2 27 items chart, the housing and utilities chart, and the
  2 28 transportation chart as listed in the United States internal
  2 29 revenue service's collection financial standards for allowable
  2 30 living expenses.
  2 31    (2)  "Net monthly household income" means the gross monthly
  2 32 income of the custodial parent and the custodial parent's
  2 33 spouse or person cohabiting with the custodial parent minus
  2 34 federal and state taxes withheld, federal old=age, survivors,
  2 35 and disability insurance, and federal hospital insurance.
  3  1    (3)  "Noncustodial parent" means a parent to whom anything
  3  2 less than joint physical care of a child has been awarded.
  3  3    (4)  "Qualified tuition program" means the same as defined
  3  4 in section 529(b) of the Internal Revenue Code.
  3  5    d.  Notwithstanding the amount of the diversion required in
  3  6 paragraph "b", the amount of the diversion shall be reduced if
  3  7 the diversion will result in excess contributions being made
  3  8 on behalf of the child as prohibited under section 529(b)(6)
  3  9 of the Internal Revenue Code.
  3 10    e.  To invoke the diverted child support provisions, the
  3 11 noncustodial parent shall file an original affidavit with the
  3 12 court in the county where the divorce decree was entered, and
  3 13 shall serve a copy of the affidavit by certified mail or
  3 14 personal service to the custodial parent, and shall mail a
  3 15 copy of the affidavit by ordinary mail to the attorney who
  3 16 represented the custodial parent in the divorce proceedings,
  3 17 or to the current attorney of the custodial parent, and a copy
  3 18 to the clerk of court's staff person responsible for receiving
  3 19 child support payments and entering the receipt of payments
  3 20 into the clerk's accounting system.  The clerk shall ensure
  3 21 that the diverted child support obligation is noted in the
  3 22 clerk's accounting system.  The contents of the affidavit
  3 23 shall include all of the following:
  3 24    (1)  The names of each child who is to be a designated
  3 25 beneficiary in a qualified tuition program.
  3 26    (2)  The dates of birth of each child.
  3 27    (3)  A statement that the custodial parent is married or
  3 28 cohabiting with another partner.  The affidavit shall include
  3 29 the name of the spouse or partner, and the address at which
  3 30 the couple resides.
  3 31    (4)  The amount of the custodial parent's net monthly
  3 32 household income.
  3 33    (5)  The amount the noncustodial parent believes represents
  3 34 the custodial parent's monthly allowable living expenses.
  3 35    (6)  A statement as to the custodial parent's education
  4  1 level.
  4  2    (7)  A statement as to the current monthly or weekly child
  4  3 support obligation of the noncustodial parent and a
  4  4 calculation of the amount of child support the noncustodial
  4  5 parent believes should be diverted, and the amount that
  4  6 remains payable directly to the custodial parent.
  4  7    (8)  The name, mailing address, street address, telephone
  4  8 number, fax number, and e=mail address of the broker or plan
  4  9 administrator that will be receiving the payments for the
  4 10 designated beneficiary of the qualified tuition program, and
  4 11 the name of the investment or investments into which the
  4 12 broker or plan administrator will be placing the child
  4 13 support.
  4 14    (9)  The addresses where the broker shall send monthly
  4 15 statements, including the current mailing addresses of the
  4 16 custodial and noncustodial parents.
  4 17    (10)  A statement that all of the children common to the
  4 18 custodial and noncustodial parent are at least five years of
  4 19 age.
  4 20    (11)  A statement that the parties have joint custody and
  4 21 that the noncustodial parent exercises periodic overnight
  4 22 visitation with the children a minimum of ninety overnights
  4 23 per year on average.
  4 24    Upon filing this affidavit and serving it upon all parties,
  4 25 the noncustodial parent may begin making payments directly to
  4 26 the qualified tuition program in the amount determined by the
  4 27 percent diversion schedule in paragraph "b".  The noncustodial
  4 28 parent must continue to pay the nondiverted amount to the
  4 29 clerk of court.  If a wage withholding is in effect, the
  4 30 affidavit must be served on the employer, who shall
  4 31 immediately adjust the wage withholding accordingly.
  4 32    If the custodial parent objects to the accuracy of the
  4 33 affidavit filed by the noncustodial parent, or to the
  4 34 calculation utilized by the noncustodial parent, the custodial
  4 35 parent may request a hearing on the accuracy of the affidavit.
  5  1 Prior to the hearing the custodial parent must provide a
  5  2 financial affidavit, the prior year's tax return, the most
  5  3 recent tax return from a year in which the custodial parent
  5  4 worked full time, the most recent tax return from a year in
  5  5 which the custodial parent's spouse or cohabiting partner
  5  6 worked full time, and the four most recent pay stubs of the
  5  7 custodial parent and the custodial parent's spouse or
  5  8 cohabiting partner.  If the noncustodial parent has requested
  5  9 these items from the custodial parent prior to filing the
  5 10 affidavit, and the custodial parent failed to deliver them
  5 11 within twenty days of receiving the request, the custodial
  5 12 parent, prior to being granted a hearing on the accuracy of
  5 13 the affidavit, must advance seven hundred fifty dollars to the
  5 14 clerk of court, who in turn shall forward it to the
  5 15 noncustodial parent for payment of attorney fees.  The
  5 16 noncustodial parent shall continue to make payments to the
  5 17 qualified tuition program during the pendency of the hearing.
  5 18 If it is determined that the noncustodial parent overstated
  5 19 the amount of the diversion, no payments will be made to the
  5 20 qualified tuition program in the months immediately following
  5 21 the court order setting the new reduced amount of the diverted
  5 22 payments following such a hearing.  Payments to the qualified
  5 23 tuition program will resume in the amount ordered by the court
  5 24 after all overpayments to the qualified tuition program have
  5 25 been made up in the form of direct payments to the custodial
  5 26 parent.
  5 27    f.  Any child support payments diverted to a qualified
  5 28 tuition program pursuant to this subsection shall be an
  5 29 alternative to and in lieu of a postsecondary education
  5 30 subsidy order made pursuant to subsection 5A.
  5 31                           EXPLANATION
  5 32    This bill provides for the diversion of a portion of a
  5 33 noncustodial parent's child support obligation to a college
  5 34 savings plan set up by the state of Iowa or one or two
  5 35 educational institutions in situations where the custodial
  6  1 parent, who has benefited from higher education, has
  6  2 sufficient income to adequately support the daily needs of the
  6  3 child.  The higher the income of the custodial parent, the
  6  4 greater the percentage of support payments are diverted to the
  6  5 college savings plan.  The bill does not increase nor decrease
  6  6 the noncustodial parent's monthly child support obligation.
  6  7 The diverted portion is paid directly to the college savings
  6  8 plan, which grows tax=free, and cannot be used until the child
  6  9 enrolls in a postsecondary institution of higher learning.
  6 10 The income scale is based on the internal revenue service's
  6 11 collection financial standard for allowable living expenses
  6 12 published for each county in Iowa or region in which Iowa is
  6 13 situated, according to family size.
  6 14 LSB 2062SS 81
  6 15 mg:rj/cf/24