Income and Wage Withholding
Income withholding laws also apply to financial institutions, such as banks and credit unions. The Division of Child Support has the authority to issue a withholding order to employers and officers of financial institutions, requiring them to withhold money from the accounts of those noncustodial parents who are not meeting their child support obligation. Additionally, income withholding laws apply to other forms or sources of payments to noncustodial parents.
Withholding is required by law for every parent who has a child support obligation. Therefore, employers should know when an order to withhold income is issued against an employee, it does not necessarily mean the employee is delinquent in child support payments.
Income and Wage Withholding Questions
- When should I begin withholding? You should deduct the first payment from any income that is payable to the employee after the order is served. (SDCL 25-7A-34)
- Are cash advances subject to withholding? Yes. Cash advances are considered part of the employee’s pay and are subject to withholding provisions. (SDCL 25-7A-1(8))
- May I assess a fee for wage withholding? Yes. South Dakota allows the employer or payor of income to deduct an amount not to exceed $3 per month from the employee's/ noncustodial parent's income to cover the expenses involved in transmitting the amount withheld. The $3 fee should not reduce the amount of child support withheld and transmitted to the Division of Child Support and is deducted from the employee's remaining net income. (SDCL 25-7A-34) The $3 fee is not used in determining the 50 percent limitation of withholding.
- Is there a limit to the amount being withheld? The total amount withheld for cash support and health insurance premiums cannot exceed 50 percent of an employee’s income after deducting the following:
- State, federal and local tax;
- Social Security tax;
- statutory pension contributions; Medicare taxes; and
- Any other deductions which are required to be withheld, either by law or as a condition of employment.
The $3 fee which may be assessed by the employer is not used in determining the 50 percent limitation of withholding. The law also requires you to withhold child support without regard to any prior claims to creditors. This means the order to withhold child support has priority over any other creditor claims or voluntary deductions made by the employee. (SDCL 25-7A-32; SDCL 25-7A-37)
- When do I send the payments? You must transmit the amount withheld within 7 business days of when the employee is paid or his property withheld. Do not hold partial payments until the end of the month. (SDCL 25-7A-34)
- Where do I send the payment? Payments must be sent to the Division of Child Support at the address stated in the withholding order. Payments for income withholding orders issued by the Division of Child Support are to be sent to:
- South Dakota Department of Social Services
Division of Child Support
Child Support Payment Center
700 Governors Drive, Suite 84
Pierre, SD 57501