Family Law Case Review: Nikolayev v. Nikolayev – Contributions to 401(k)

by Mike Kohlhaas, Bingham Greenebaum Doll 

HELD: In calculating Father’s income for child support purposes, the trial court correctly included in Father’s income the discretionary contributions Father made to his 401(k) plan.

FACTS AND PROCEDURAL HISTORY:
Father and Mother married in 2001, and had one child together. In the course of computing child support during their divorce proceedings, there was disagreement about what income figure should be used for Father. Father was working as a scientist at Lilly, and between his base pay and bonuses, his gross income had reached over $100,000 per year. However, Father was also making relatively substantial voluntary 401(k) deferrals of over $20,000 per year. The trial court record appeared to substantiate Father’s claim that he had consistently lived a frugal lifestyle, and that the 401(k) deferrals were not deliberately ramped up to reduce his income for child support purposes. Nevertheless, the trial court included the voluntarily 401(k) deferrals in Father’s income when it calculated child support, from which Father appealed.

Father’s primary argument on appeal relied on the stated purpose of the Guidelines to maintain the same standard of living the child would have enjoyed had the marriage remained in tact. In effect, Father argued that the parties lived very modestly – and saved substantially – throughout the marriage, and that a child support calculation that excluded his voluntarily 401(k) deferrals would nevertheless provide sufficient resources to maintain that same standard of living.

The Court of Appeals rejected Father’s argument. While acknowledging that maintaining the same standard of living is a stated objective of the Guidelines, the “income shares model” and the Guidelines’ broad definition of “income” requires that voluntary 401(k) deferrals be included as income in the support calculation.

The trial court’s child support order was affirmed.

To view the text of this opinion in its entirety, click here: Alexander Nikolayev v. Natalia Nikolayev

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The Indiana Family Law Update is a free service provided by Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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