In re Marriage of Steele

Overview

The Second District held that withdrawals of principal from a self-funded IRA received as marital property are not "income" for support purposes—only the interest/appreciation component is—expressly disavowing its earlier contrary decision in In re Marriage of Lindman . The court affirmed the indirect civil contempt finding (due to an incomplete record), vacated the portion of the order declaring the MSA's income cap unenforceable (no petition to modify was pending), and affirmed on cross-appeal that employer-paid health and life insurance premiums were not income under the pre-2017 version of section 505.

Key Facts

Marriage dissolved May 26, 2017; MSA incorporated into judgment; one child (born 2012).

Chad owed $2,200/month child support (20% of $187,000 base gross income), $2,800/month maintenance, and unallocated support of 30% of additional gross income over $187,000 and under $338,000 , calculated via an annual "true-up."

Chad received a Morgan Stanley IRA in the property division, valued at $234,425 as of March 2017.

Chad withdrew $205,000 from the IRA between 2019 and 2022. There was no evidence the IRA was inherited; Chad earned the deposited funds.

Parties stipulated Chad owed $16,563.38 in unallocated support based on employment income exceeding his reported W-2/wage income.

Chad's employer paid his medical and life insurance premiums.

Total judgment: $49,576.08 with interest; purge amount $16,162.60; payment schedule set; Michelle granted leave to seek fees.

Procedural History

Circuit Court of Kane County, No. 16-D-527 (Hon. Kimberly M. DiGiovanni). Michelle filed a five-count verified motion to enforce judgment and petition for rule in February 2023. A rule to show cause issued, ultimately limited to count I. After testimony, the court entered a July 12, 2024, written order. Chad appealed; Michelle cross-appealed to the Appellate Court, Second District.

Holdings

IRA withdrawals (de novo review) : Reversed and remanded. An IRA is, by definition, a tax-advantaged savings account funded only by earned income. Under McGrath , withdrawing one's own previously earned funds is not a "gain" and counting it would be impermissible double counting. Only interest/appreciation, not principal, is income. The court expressly disavowed Lindman to the extent of conflict.

Indirect civil contempt (manifest weight/abuse of discretion) : Affirmed. Chad failed to supply the report of proceedings in which the court stated its reasons; under Foutch and Gulla , the court presumed conformity with law and a sufficient factual basis.

MSA income cap : Vacated. Under section 511, a court may not sua sponte modify a dissolution judgment absent a pending petition; the court itself acknowledged no modification request was on file ( Petrik ).

Section 508(b) fees : No error in granting leave, given the unreversed express finding of willful conduct "without compelling cause or justification."

Cross-appeal—employer-paid premiums (de novo) : Affirmed. Under section 505(a)(3)(f) (West 2016), in effect when the judgment was entered, such premiums are deductible/not income; the 2017 amendments do not apply retroactively to an enforcement action.

Legal Principles

750 ILCS 5/505(a)(3)(A) (West 2024): "gross income" = "the total of all income from all sources"; Dahm-Schell , 2021 IL 126802, ¶¶ 39-42 (broad definition; rebuttable presumption; Internal Revenue Code not controlling).

McGrath , 2012 IL 112792, ¶ 14: savings account withdrawals are not income; ¶ 10 (de novo review of "income").

Dahm-Schell , ¶¶ 50-53: double counting is improper; inherited IRA distributions are income because never previously imputed.

O'Daniel , 382 Ill. App. 3d 845, 850, and Budorick , 2020 IL App (1st) 190994, ¶ 79: only interest, not principal, is income.

Court clarified that Eberhardt 's abuse-of-discretion standard applies to modification findings, not to whether funds meet the statutory definition of income.

750 ILCS 5/511, 510(a); Connelly , 2020 IL App (3d) 180193, ¶ 16 (pre-July 1, 2017 orders require substantial change in circumstances to apply Pub. Act 99-764).

Practical Implications

In support litigation involving IRA distributions, demand discovery on the principal versus interest/appreciation composition of each withdrawal; the payee bears the practical burden of isolating the gain.

Distinguish inherited IRAs (income under Dahm-Schell ) from self-funded IRAs (principal excluded). Also consider whether the IRA was awarded in the property division and whether contributions were previously imputed as income.

Second District practitioners should no longer rely on Lindman ; note a potential appellate split with other districts.

Always order the transcript of the court's oral findings— Foutch will defeat discretionary challenges like contempt.

Do not rely on a court to reform an MSA provision (e.g., an income cap) absent a properly filed and noticed petition under section 511; conversely, if you want a cap voided on public policy grounds, file the petition.

For pre-July 1, 2017 judgments being enforced , argue the old net-income statute controls, including insurance premium deductions. The court expressly reserved opinion on the current Act.

Limitations/Caveats

This is a published opinion (2026 IL App (2d) 240507), fully precedential. The dictionary/IRS/Investopedia definitions are supporting reasoning, not holdings. The court's statement that it "express[es] no opinion related to the current Act" limits the premium holding to pre-2017 judgments. The contempt affirmance rests on record deficiency rather than a merits determination, so it has limited substantive value. The disavowal of Lindman is binding only in the Second District.