When divorce strikes, it affects every facet of one’s life, including benefits flowing from federal employment. Moreover, these benefits are often massive since it involves crucial matters such as lifelong annuity payouts and health insurance coverage.

However, there are times when federal laws governing these benefits conflict with state laws. In that case, federal law always prevails. Therefore, the biggest takeaway you should get when looking at the impact of divorce is that everything is negotiable.

For instance, the Survivor Benefits to Healthcare Coverage, the Federal Worker’s pension percentage, and TSP amounts given to the ex-spouse are all open to negotiation. An essential item for negotiation is the TSP and CSRS or FERS pension. Typically, the court allows a percentage from 0 to 100% 

During a divorce, it is vital to understand the unique requirements of federal benefit policies and ensure you follow them. Although divorce is a hard nut to crack on its own, getting the consideration right the first time makes it no more complicated than it has to be.

Impact of Divorce on a federal annuity

The court will play a vital role in dividing an annuity following a divorce. Take note that the order much be directed to the Office of Personnel Management to pay a portion of your monthly benefit.

Your spouse’s share must be explicitly stated as a fixed amount, or percentage, or perhaps by a formula with a clear value. However, it must not exceed the money payable after deductions for taxes and insurance.

After divorce and retirement, any survivor benefit you elected at retirement is no longer payable. On the other hand, a monthly survivor benefit is payable to your ex-spouse after your demise if one is provided by court order or your new election.

Sometimes, you may voluntarily elect a fully or partially reduced annuity to provide your former spouse survivor annuity. However, if you’ve remarried, your current spouse must consent for it to take effect.

The role of QDRO in divorce

For your ex-spouse to get some shares of your retirement plans, they must first draft a specific document known as Qualified Domestic Relations Order. This order considers a particular retirement account prone to division after the annulment of your marriage.

However, the order must be approved by the court and plan administrator.

Over the year, we’ve been helping numerous clients of ours protect their interests during or after divorce through our sound guidance and experience. Your retirement plans are crucial and deserve to be protected. Feel free to contact us by calling or filling out our contact form to book an appointment.