What is a lump sum?
A lump sum payment is a onetime payment to an employee. Lump sum payments are considered employee income and are subject to withholding to collect past-due child support.
The following are examples of lump sum payments:
- Pay in lieu of vacation or other leave
- Bonus
- Commissions
- Sign-on bonus
- Retroactive pay increases
- Cash service award
The following are not lump sum payments:
- Severance pay and advances
- Periodic payments made on regular paydays as compensation for services or reimbursement for expenses incurred by the employee on behalf of the employer
When to report a lump sum:
Employers that have received an income withholding order:
- Must notify Child Support before making any lump sum payment of $1,000 or more.
- May notify Child Support of lump sum payments of less than $1,000 or of an amount yet to be determined.
How to report a lump sum:
To report a lump sum payment to the Child Support Employer Relations unit, please include the following:
- Employer's Federal ID
- Employer name
- Contact Name and phone number
- Employer address
- Employees last 4 of SSN
- Employees year of birth
- Employees first and last name
- Employee's remittance identifier (found on the Income Withholding Order/Notice for Support); and
- Payment Type (ex: bonus, vacation cash out, commission etc..)
- The anticipated amount of the lump sum payment
- Expected payout date
Before reporting a lump sum amount, the employer must send child support any missed income withholding payments from that lump sum amount and then report the remaining amount.
An employer may initially release one-half of the payment to the employee. Do not release the second half of the payment to the employee until:
- Thirty days have passed since the employer notified Child Support about the lump sum or;
- Child Support gives the employer written authorization to pay the employee the second one-half of the payment.
However, the employer must retain the entire lump sum payment upon notification from Child Support of an execution, garnishment, attachment, or other process.