Dividing Your Military Retirement in Divorce

Before we discuss how to divide military retirement for a divorce specifically, you should be aware of the Thrift Savings Plan (TSP) that allows for pre-tax contributions to a service member’s retirement plan. Just as a civilian’s 401k would be divided as marital property in a divorce, so is the military member’s TSP.

Historical Perspective of the Uniformed Services Former Spouses’ Protection Act (USFSPA)

Thirty years ago, the U.S. Supreme Court held that military pensions could not be divided by court order as marital property without congressional legislation authorizing such a division. Congress responded in 1982 by passing the Uniformed Services Former Spouses’ Protection Act (USFSPA), which served two essential functions. One, the federal USFSPA allows state courts to define military pensions as marital property for purposes of division in divorce. Two, payments to former spouses of military members could receive their marital share directly from the Defense Finance and Accounting Service (DFAS). For former spouses married for 10 years or longer during the service period, enforcement would no longer be an issue — the service member would not control the actual payments. Under the USFSPA, only the former spouse (or former spouse’s attorney) may apply for direct pay. The service member cannot apply for the direct pay on behalf of the former spouse.

Establishing Jurisdiction Over a Military Pension

Before military retirement benefits may be divided, the state court has to establish jurisdiction over the pension. Jurisdiction over the retirement is established consensually when the service member is the petitioner in the divorce, the one who initiates the court action. If the member didn’t file the petition, but consents to jurisdiction by responding to the petition, then jurisdiction is established over the pension. Putting consent aside, however, the nonmilitary spouse who files will have to establish jurisdiction over the pension by filing in the service member’s home state (home state being the one listed on the Leave and Earnings Statement (LES).

10-Year Rule under the USFSPA

If the marriage lasted 10 years or longer while the member was in the service (a 10-year overlap), then the DFAS will pay the former spouse his or her share directly from the retirement fund. If the marriage was less than 10 years in duration, or the marriage coincided with less than 10 years of military service, then the DFAS will not enforce the order to divide the pension. Instead, the former spouse will be paid his or her share directly from the service member. As you might expect, this is where enforcement issues arise.

To avoid the 10-year rule, some former spouses will accept increased spousal maintenance instead of a share of the military pension. The reason being that spousal support does not have the same DFAS 10-year overlap restriction on direct payments.

The DFAS is further restricted. Direct payments to the former spouse are limited to 50% of the retired service member’s disposable retired pay. (If the pension is under a garnishment order for child support, then up to 65% of the retiree’s disposable retired pay may be paid directly to the former spouse.)

If the marriage was 20 years or longer in duration, and 20 years of marriage overlapped 20 years of military service, then the former spouse is also eligible for additional benefits: medical, commissary, and exchange privileges. These additional benefits terminate when the former spouse remarries, but the benefits are revived if the subsequent marriage is terminated, too.

Survivor Benefit Plan (SBP)

The Survivor Benefit Plan (SBP) is an annuity for the beneficiary who survives the death of the military member. The beneficiary will receive a percentage of the service member’s base pay amount.

In a divorce, the court may order a service member to participate in the SBP. Members in active duty and retirees may be ordered to provide their former spouses with SBP coverage. In the case of a military retiree, however, he or she cannot be ordered to participate in the SBP unless that service member made a previous election for that spouse.

Any changes in the marital status of the former spouse must be reported to the DFAS. If the former spouse should remarry before the age of 55, then SBP participation stops with no payments due during the suspension. If that subsequent marriage should end, however, then the SBP is restored to that former spouse and payments are reinstated.

Service Member’s SBP Election Is Permanent

The service member’s SBP election is permanent and cannot be changed. There are a few exceptions:

When the former spouse agrees and consents in writing, a military retiree may disenroll from the SBP. The window for disenrollment is between the 25th and 36th month after retirement pay begins.

When the retired member remarries, then the new spouse may be added to the SBP and the former spouse removed, assuming certain conditions are met:

  • The original election was court-ordered and the member gets complete modified orders regarding the election
  • The election was by written agreement and not by court order. The former spouse may provide written concurrence to the member’s change in election
  • When the retiree’s election was unilateral (not court-ordered, not by mutual agreement with the former spouse), notice to the former spouse of the change of election may be sufficient

How to Deem the SBP Election

The former spouse may “deem the election” within one year from the court’s order of SBP participation by the military member. Deeming the election in a written request to the DFAS avoids waiting for the service member to do so timely. By doing it himself or herself, the former spouse is assured that the SBP election has been made. The election must be in writing and submitted to the DFAS. Take care! No election is deemed by merely sending the DFAS a copy of the divorce decree with the SBP order. The former spouse must send a letter of request to the DFAS.

We recommend that such a request be sent to the DFAS when a divorce coincides with active service duty, and after the service member’s retirement. For service members, file a written request that the former spouse’s SBP coverage begin as ordered to avoid contempt of court for failing to make the election as ordered.