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Changes to military pensions impact divorce

Tuesday, July 17, 2018

Many federal and state laws and policies may have a financial impact on spouses undergoing a military divorce. The New Blended Retirement System, taking effect on Jan. 1, will have major consequences for military retirement and families undergoing a military divorce.

When it takes effect, BRS will provide automatic and matching contributions from thrift savings plans for eligible military personnel. It will provide mid-career continuation incentive bonuses and a reduced military pension for those service members who served at least 20 years.

Active duty personnel with less than 12 years of service and members of the reserve with less than 4,320 may elect to enter BRS under the current legacy retirement system. Service members must make this election by the end of 2018.

After enrollment in the BRS, current-serving personnel will receive automatic contributions of one to four percent to their TSP. Personnel who join the military in 2018 may be receive one percent automatic contributions from the Department of Defense following 60 days of service. Service members may keep all their pension contributions, known as being vested, at the beginning of their third year of military service. Automatic and matching contributions end after 26 years of credible service.

These changes pose problems and confusion for military spouses who divorced in 2017 and were awarded a marital portion of a service member's future pension. The standard of receiving half of high-3 base pay for retirement after 20 years will no longer govern.

Military lawyers also believe that former spouses who divorce before 2018 may not have a legal claim to any part of TSP defined contributions including automatic and matching Defense Department contributions. The BRS has a new benefit, a defined benefit TSP, that was never addressed as marital property because it will not take effect until Jan. 1. Additionally, spouses will not receive notification about their former military spouses electing the BRS or that the multiplier was reduced.

This new program has other repercussions. The BRS mid-career continuation bonus could have repercussions on spousal and child support.

The BRS may have different impact on service members based upon where they live. A qualified attorney can help spouses deal with this situation under Texas law.

SOURCE: Ameri Force Media, "BRS and military divorce," By Andrea Downing, Oct. 11, 2017


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