Understanding Divorce in the Military

Divorce

This content is provided courtesy of USAA.

Legally, military personnel who are getting divorced are no different than anyone else, so the procedural process is the same. If you are in the military or a military spouse, there are some additional factors that can affect your divorce.

For instance, the process may take longer if one of you is on active duty in a remote area or have a permanent station overseas. There are some states that have relaxed the residency requirements for active duty service personnel who want to file for divorce in the state he or she is stationed.

Besides understanding the basic divorce process, military couples should be knowledgeable about the role of the Uniformed Services Former Spouses' Protection Act. The USFSPA provides a federal statute for the military, guiding them to accept state statutes on addressing issues, such as child support, spousal support and military retirement pay/pension. While states have always had the authority to treat retirement and pension plans just like any other marital asset, the USFSPA permits the states to classify military retired pay as property, as opposed to income.

Military Retirement Pay/Pension

Direct retirement payments are made through the Defense Finance and Accounting Service. In order for the military to provide direct retirement payments to an ex-spouse, the couple must have been married 10 years overlapping with 10 years of service.

For example, if you were married for 12 years, and one spouse was in the military for seven of those 12 years of marriage, the other spouse would not be entitled to a direct payment from DFAS. If you were married for 12 years, and one spouse was in the military for 10 of those 12 years, the other spouse would be entitled to a direct payment from DFAS.

Depending upon the state's date of division, the amount of time you have been married may be judged by different criteria. This means that Texas may view you as being married nine years, while California considers you having been married 10 years.

Not qualifying for the DFAS direct pay does not mean you are ineligible to a portion of the payment. In order to receive your portion, the criteria would need to be included as part of the divorce settlement agreement. Keep in mind that the award of military retired pay may be in addition to child support, and alimony or maintenance.

The maximum amount of pension income an ex-spouse can receive is 50% of the military retirement pay. Once the order is filed with DFAS, it will take three months (90 days) for the direct payments to begin if the ex-spouse is already receiving their pension. In the situation of active military members, the payments will begin 90 days after the newly retired member becomes entitled to receive their first payment. If child support is being taken from the pension, the maximum combined amount that can be deducted is 65% of the disposable retirement pay.

Military Divorce - Get more advice and information on military divorce from the Ask June military finance blog.

Calculating the Marital Share for Active Members

There are different methods of calculating what percentage of the pension to which ex-spouses are entitled. The document filed with the court will need to clearly state the formula used to derive the amount of payment. Again, the length of the marriage will come into play. One of the more common trends is to count the amount of points accumulated in the marriage rather than months. This is especially true for spouses serving in the Reserves.

The three methods used to determine amount of payment are:

  1. Net Present Value ? This is more common if someone wants a buyout up front.
  2. Deferred Distribution ? A share amount is calculated at divorce, but the receipt of the funds is deferred until the service member retires.
  3. Reserve Jurisdiction ? This is the most common method. The share the ex-spouse receives is calculated at retirement.

Thrift Savings Plan

The thrift savings plan is treated the same as a 401(k). There are specific requirements that must be met by the court order that differ from a civilian retirement plan division order. For a complete brochure on information on divorce orders and your TSP, refer to the TSP website.

Survivor Benefits Plan

Many spouses think that if they were the beneficiary of the Survivor Benefit Plan while married, they will remain so upon divorce. This is not true, and SBP is a mutually exclusive benefit that must be addressed in the divorce settlement.

Who is USAA?

Resources

Financial Advice Q&A: What do I do with my old retirement plan? Read More Read More
News Center: 2014 Top Communities for Military Familes. USAA's top picks for neighborhoods near military installations. Read More Read More
Plan for Your Future When You're Already Behind - Maybe you cared more about Woodstock than shares of stock. Or it could be that you kept a closer eye on your favorite MTV VJ than on your 401(k). Read More Read More
USAA Retirement Advice Center - Helpful investment tips for servicemembers who are saving for an early retirement. Read More Read More

Tools and Calculators

Is Your Retirement on Track? Calculate NowHow Long Will Your Savings Last? Calculate Now
© 2014 Military Advantage
A Monster Company.