How does divorce affect your Thrift Savings Plan?

North Carolina is home to many different bases that military members find themselves stationed at. Due to the high number of armed forces personnel living in this state, the rate of military divorce tends to be higher than in other states. If you’re currently a member of the service and are considering undergoing a divorce, it’s favorable to take the time to understand how your military benefits will be divided.

A look at your Thrift Savings Plan

One common area of military property division during a divorce is a Thrift Savings Plan. All members of the military are entitled to a Thrift Savings Plan, which is a type of retirement and investment savings plan. Just like civilian couples end up dividing their retirement benefits from IRAs and 401(k)s, military service members may also find themselves dividing their Thrift Savings Plan during a divorce.

Retirement Benefits Court Order

A retired benefits court order or RBCO is a formal order that awards a portion of your Thrift Savings Plan to your former spouse. This is equivalent to what is called a Qualified Domestic Relations Order that civilians need for certain plans. When a valid RBCO is ordered by the divorce judge, your Thrift Savings Plan will be frozen. The account will remain frozen until the benefits are paid out to your former spouse. During this time where the account is frozen, you can still make contributions to your plan or change the number of contributions that you want to make.

Military divorces are mainly similar to civil divorces. However, there are different forms required for things like retirement accounts as military service members have different accounts than civilians. If you’re undergoing a military divorce, it’s a good idea to contact an attorney to assist you along the way to ensure that your best interests are looked after.

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