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