Opinion ID: 1186299
Heading Depth: 4
Heading Rank: 2

Heading: Including IRA dividends in Larry's income

Text: Larry argues that the superior court erred in treating dividends earned in Larry's IRA as income when it calculated child support. This contention raises a question of law which we review applying our independent judgment. Wright v. Wright, 904 P.2d 403, 408 n. 7 (Alaska 1995). We adopt the rule of law that is most persuasive in light of precedent, reason, and policy. Id. Larry asserts that earnings in an IRA are not mentioned in the commentary to Rule 90.3 and that such earnings can be considered a withdrawal from a pension or profit-sharing plan, which is exempted under certain circumstances. See Alaska R. Civ. P. 90.3 cmt. III.A. Larry also argues that IRA earnings would not be available to support a child in an intact family because a large tax penalty would be incurred if the funds were withdrawn early. He theorizes that including earnings in an IRA would unreasonably burden courts calculating child support. Angela claims that Rule 90.3 and its commentary do not prevent a court from including IRA earnings in a child support calculation. She denies that the tax consequences upon withdrawal would matter. We have not considered whether earnings in an IRA should be considered income to a noncustodial parent for child support purposes. Other jurisdictions, however, have ruled on the issue, finding that interest earned in an IRA can be considered as income when calculating child support. See, e.g., In re Marriage of Tessmer, 903 P.2d 1194, 1196 (Colo. App. 1995) (holding that gross income can include interest or dividends accruing to father's IRA); In re Pedersen, 261 Mont. 284, 862 P.2d 411, 414 (1993) (holding that court can attribute income to assets, including those in an IRA); Rapp v. Rapp, 89 Ohio App.3d 85, 623 N.E.2d 624, 626 (1993) (stating that annual interest from an obligor's IRA or employee savings plan could be considered as gross income when determining child support). The commentary to Rule 90.3 lists numerous benefits that courts should treat as income when calculating child support. Alaska R. Civ. P. 90.3 cmt. III.A. The commentary does not list earnings in an IRA, but the list is non-exclusive. Id. Dividends in an IRA are very similar to several of the benefits on the list, such as interest and dividends, income from trusts, income from life insurance or endowment contracts, or income from interest in an estate. Id. Larry's IRA earnings for the first months of 1995 were mostly in the form of dividends. The tax treatment of each of these benefits varies, but an obligor can account for these differences when listing deductions on the child support guidelines affidavit. We are unable to determine whether Larry's child support guidelines affidavit incorporated any tax consequences of IRA withdrawals. Larry's trial counsel submitted the affidavit, and the superior court relied on it. Because Larry has not objected to these final calculations, he has waived any argument that the court failed to deduct IRA withdrawal penalties. Larry also claims that the purpose of the IRA  retirement savings  distinguishes it from other types of investments. This argument is unconvincing, because many investments have a savings purpose, and may be made at least in part in anticipation of retirement. Larry argues that IRA earnings should be considered to be pension or profit-sharing benefits. He quotes the commentary to Rule 90.3, which states that withdrawals from pension or profit-sharing plans will not be counted as income to the extent that the proceeds have already been counted as income for the purposes of calculating child support. Alaska R. Civ. P. 90.3 cmt. III.A. Dividends accruing in an IRA, however, have not been counted as income to the noncustodial parent. Additionally, proof of the dividends is not usually difficult, and does not unduly burden the superior court. The superior court calculated the dividends accruing in Larry's IRA from his IRA financial statement and the figures his attorney supplied. The superior court did not err in including dividends earned in Larry's IRA as income for purposes of calculating child support.