A Thrift Savings Plan (TSP) is a retirement system and plan for federal employees, military personnel and reservists. Congress established the plan in 1986. The federal TSP is a defined contribution plan. This means the amount of money a plan participant receives from the plan depends on how much he/she contributed throughout his/her working years. The amount also includes any employer match provided by some agencies. The plan is based on tax-deferred contributions. Any contributions made into the plan are tax-deferred. Money is taxed when taken out upon retirement. Thrift Savings Plan Retirement division in divorce can be complicated. Read on to learn more about how A People’s Choice can help.
During marriage, the accumulated financial benefits of a Thrift Savings Plan is considered a form of employment compensation. The community earns an interest in retirement benefits. When dealing with Thrift Savings Plan retirement division in divorce, the law will award each spouse part of the TSP benefits earned during marriage. Each spouse will receive half of the community property portion of the TSP. This amount should show the amount contributed into the plan during marriage (divided in half for both spouses).
Divorce and Thrift Savings Plan Retirement Division
To complete a Thrift Savings Plan retirement division in divorce, a spouse must ask for a Retirement Benefit Court Order (RBCO). This type of order will be honored by the Federal Retirement Thrift Investment Board (Board). The Board will acknowledge a preliminary Retirement Benefits Court Order (RBCO) which is issued in connection with a divorce or legal separation. Such an order will freeze the spouse-participant’s TSP account.
A Retirement Benefits Court Order can be obtained at any time during the divorce. Most TSP accounts are split 50/50. However, the divorcing spouses can reach an alternative agreement in which a percentage of the plan is paid to a spouse in exchange for another community asset.
If you have filed for divorce, legal separation or annulment, you can ask for information from the TSP administrator. Upon written request, the plan administrator can give you information about the account balance, loan balances, and recent statements.
In addition to dividing retirement benefits, a TSP can also be garnished to satisfy a participant’s outstanding past-due alimony or child support obligations. A member should take steps to set up a revised plan of beneficiaries in the event of divorce as well.
If you are contemplating divorce, or have questions about a TSP plan division incidental to a divorce or legal separation, contact A People’s Choice. We can help you prepare and file the forms you need to complete a Thrift Savings Plan retirement division in divorce. Contact us at 800-747-2780 or submit your inquiry through our website.
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