How are military retirement plans divided?

Question:

I am in the military though am approaching retirement. My wife and I are in the process of getting divorced and she wants to take some of my retirement.

How are military retirement plans divided when we get divorced? Are my retirement benefits marital property subject to distribution?

Answer:

Here is some general information on the division of Military Retirement Plans upon divorce.

Under the Uniformed Services Former Spouses’ Protection Act (USFSPA), state courts can treat disposable retired military pay as community property. 10 U.S.C. § 1408(c). In a community property state, such as Texas, all property, including income, acquired or earned during the marriage is presumed to be community property.

Under Texas law, contributions to a military retirement plan are a form of indirect compensation from the federal government and thus fall under the rule that the income earned by either spouse during the marriage belongs to the community.

Generally, members of the armed services are entitled to a retirement annuity after twenty years of service. The military retirement plan functions as a defined-benefit plan.

In a defined benefit plan, upon retirement the employer promises to pay the employee a set amount each month based upon a predetermined formula. Since you would most likely be entitled to benefits from the plan after twenty years in the military, the plan vests at that time under the law. Any retirement accrued during the marriage is community property and as such your spouse is entitled to one half.

Thus, even if a retirement plan has not vested at the time of divorce, meaning you are not yet eligible to receive income from the plan, it is still community property.

However, any money placed into the plan prior to marriage or after the divorce is final would be considered your separate property and would not be subject to division by the court.

As such, when the participation in a retirement plan begins during the marriage, the entire plan, valued at the date of divorce, is community property and as such is subject to a “just and right” division. Therefore, upon divorce the nonemployee spouse has a right to one half of all retirement benefits acquired during the duration of the marriage.

There are two categories of retirement plans, Defined Contribution Plans and Defined Benefit Plans. The military retirement annuity functions as a defined benefit plan.

Under a defined benefit plan, retirement benefits are paid in the form of an annuity, generally a set monthly sum each month. Thus, in a divorce proceeding, in order to value the community interest in a plan which has not yet vested as of the date of divorce, the valuation is based on the benefit the employee would receive if he or she were to be eligible to retire at that time.

It is important to note that the value of the community interest in the plan is frozen at the time of divorce. Therefore, any post-divorce increases in the spouse’s retirement benefit will be his or her separate property.

With that being said and given the facts that you have presented to me, your spouse would be entitled to one half of your military retirement benefits at the time of your divorce. In most cases your spouse would not be entitled to any amount accrued in your retirement fund after the date of divorce, since such would be characterized as your separate property.

Since your spouse is entitled to one half of all community property acquired during marriage it is unlikely that you can amend the situation if your spouse was awarded such. However, I do not know the specifics of your situation.

Please be advised that my answering of this question does not constitute an attorney-client relationship. You should contact an attorney in your area for more information.

Cordell & Cordell has men’s divorce lawyers located nationwide.

 

Jennifer Hankinson is a Staff Attorney in the Dallas, Texas office of Cordell & Cordell, where she practices domestic relations exclusively. Ms. Hankinson is licensed in the state of Texas. Ms. Hankinson received her bachelors’ degrees in both Finance and Political Science from Santa Clara University in Santa Clara, California. She later received her Juris Doctor from Gonzaga University School of Law in Spokane, Washington, where she graduated Cum Laude.