Background
Michelle Steele and Chad Schroeder divorced in 2017. Their marital settlement agreement required Schroeder to pay monthly child support and maintenance, plus 30% of additional gross annual income between $187,000 and $338,000 through an annual true-up. Schroeder also received a Morgan Stanley IRA as part of the property division.
In 2023, Steele sought to enforce the judgment, alleging that Schroeder had not properly calculated or paid support on all income and had failed to satisfy other obligations. The circuit court found Schroeder in indirect civil contempt for failing to timely provide tax returns and true-up calculations and to pay support on additional employment income. It also counted all of his 2019-22 IRA withdrawals as support income, declared the agreement’s income cap unenforceable for child-support purposes, and allowed Steele to seek fees. Steele cross-appealed the ruling that employer-paid health and life insurance premiums were not Schroeder’s income.
The Court’s Holding
The Illinois Appellate Court reversed the inclusion of the full IRA withdrawals as income and remanded. Because Schroeder earned and contributed the funds in his own IRA, withdrawing principal merely liquidated an asset he already owned and would impermissibly double count income previously attributable to him. Interest and appreciation earned in the IRA, however, are gains and must be included in support calculations; the circuit court must determine the principal-versus-earnings composition of the withdrawals.
The court affirmed the indirect civil contempt finding because Schroeder did not provide the transcript of the proceeding in which the circuit court explained its factual findings and reasoning, requiring the appellate court to presume the ruling was proper. It vacated the circuit court’s ruling invalidating the MSA’s support cap because no postdissolution petition sought to modify that agreement. The court also affirmed leave for Steele to seek fees and rejected Steele’s cross-appeal: under the law in effect when the 2017 judgment was entered, employer-paid health and life insurance premiums were not income for enforcing that judgment.
Key Takeaways
- Withdrawals of principal from a party’s self-funded IRA are not support income merely because they are withdrawn.
- IRA interest and appreciation are income for support purposes and must be separated from principal on remand.
- A court cannot sua sponte modify a marital settlement agreement’s support provision without a properly filed modification petition.
Why It Matters
The decision clarifies that Illinois support calculations must avoid double counting funds a parent previously earned and placed into a self-funded IRA. It distinguishes those withdrawals from distributions from inherited retirement accounts, where the recipient did not previously earn or contribute the assets.
The opinion also reinforces procedural limits in postdissolution enforcement: appellate review may fail without a complete record, and circuit courts cannot alter agreed support terms outside a pleaded modification proceeding.