The retirement benefits of federal civil servants are not divided using a Qualified Domestic Relations Order (“QDRO”) because these benefits are not subject to the Employee Retirement Income Security Act (“ERISA”). Instead, the retirement benefits of federal civil servants are divided using a Court Order referred to as a “Court Order Acceptable for Processing” (“COAP”), which will meet all the requirements of the relevant federal laws and regulations. Central to the division of federal civil service retirement benefits is the Office of Personnel Management (“OPM”), which is akin to the Plan Administrator for private defined contribution and defined benefit plans.
An employee of the Federal government (other than those who are military personnel, who are treated differently) will be covered either by the Civil Service Retirement System (“CSRS”) or the Federal Employees Retirement System (“FERS”) depending upon when he or she began working for the federal government. (Though, under certain circumstances, CSRS participants were able to switch to the FERS once it became available.) CSRS participants are enrolled in a defined benefit plan similar to the pension of a private company. However, they are not covered by Social Security and, before their retirement, they do not pay Social Security tax on their earnings. FERS participants, on the other hand, are covered by Social Security and do pay Social Security taxes on their earnings. In comparison to their CSRS counterparts, though, they receive a much smaller defined benefit upon retirement. But, FERS participants are enrolled in a 401(k)-like system called the Thrift Savings Plan (“TSP”).
When dividing the pension component of federal civil service retirement benefits in the context of a divorce, it is important to remember that there are three separate types of CSRS or FERS benefits subject to division: employee annuities, refunds of employee contributions, and former spouse survivor annuities. The participant’s TSP is also subject to division in a divorce. A well-versed domestic attorney will assist the client in negotiating a settlement that maximizes his or her potential eligibility for these components.