Dividing Military Retirement Pay

Posted on March 25, 2012 in General News

The retirement benefits of members of the military are also not divided using a QDRO because these benefits are not subject to ERISA. Instead, military retirement pay is divided using a Court Order, which will meet all the requirements of the relevant federal laws and regulations. Central to the division of military retirement pay is the Defense Finance and Accounting Service (“DFAS”), which is akin to the Plan Administrator for private defined contribution and defined benefit plans and to the Office of Personal Management for federal civilian retirement.

A minimum of twenty years of service is required for any member of the military to receive retired pay, unless the service member is forced to retire because of disability. Military retirement benefits are computed under one of three formulas which is keyed to the year the service member entered active duty; partial credit is given for service in the Reserves or National Guard. Only Disposable Retired Pay, which is the service member’s total monthly retirement pay less deductions for previous overpayments of retired pay, forfeitures ordered by a court martial, certain disability retirement payments, and the amount deducted to provide a Survivor Benefit Plan annuity for a spouse or former spouse pursuant to a Court Order, can be divided by a Virginia Court in the context of a divorce.

As with the retirement benefits of federal civilian employees, a portion of the service member’s Disposable Retired Pay cannot be paid to the former spouse until the service member actually retires. Additionally, any survivor benefits awarded to a former spouse will stop if the former spouse remarries prior to the age of fifty-five. (Though, if the former spouse’s marriage terminates by death, divorce, or annulment, the payments can be reinstated.) However, survivor benefit coverage must be elected by the service member on or before his retirement, even if they are required by Court Order. As a result, a domestic attorney representing the estranged spouse of service member (or former service member) must be mindful of the service member’s date of retirement.