When a federal employee gets a divorce, the question of how their federal benefits will be divided is a complicated one. Learn more about how FERS retirement is impacted by divorce.
What Are FERS Retirement Benefits?
FERS is a three-tiered retirement program for U.S. federal civilian employees. A federal worker’s eligibility is determined based on their age and their years of service, and they are enrolled in the program automatically.
The retirement benefits that comprise the FERS come from three sources. The first is the Basic Benefits Plan, which is similar to a traditional pension. The second is Social Security, and the third is a Thrift Savings Plan, which works in a similar manner to a 401K retirement account. These benefits will be paid to the employee on a monthly basis after they leave government service.
How Is FERS Divided?
Monthly FERS payments can be either partially or fully marital, which means they are subject to division during a divorce. The amount of time during which the employee’s federal service overlapped with their marriage is the main determining factor.
The marital share of the federal pension is the number of months between the federal employee’s date of marriage and date of separation from their spouse during which they were employed and earning service toward their pension divided by the total number of months of service for the federal government. In a divorce, a spouse may be awarded as much as 50 percent of the marital share.
If the employee is still employed by the federal government at the time of their divorce, a Court Order Acceptable for Processing, or COAP, will be entered and kept on file until the employee retires. Once the total number of the employee’s months of service are tallied, the marital share can be calculated, and the spouse’s payment will begin at the same time that the retiree starts receiving their payments.
A spouse may also be designated as the beneficiary of some or all of the employee’s survivor benefit plan, which protects the spouse should the retiree pass away while these payments are being made.
How Is A Thrift Savings Plan Divided?
Many federal government employees participate in a Thrift Savings Plan, into which they contribute payroll deductions that go toward the investments they choose.
The amount of money that the federal employee contributed to the TSP during the marriage is considered marital property and is divided by a Retirement Benefits Court Order, or RCBO.
The former spouse can receive their share of the TSP by obtaining a distribution, a direct transfer to a different retirement account, or a combination of these approaches. The spouse will not need to wait until the employee retires to receive their share of the TSP. Instead, the transfer will take place once the divorce has been finalized.
How Does A Divorce Affect Federal Employee Health Benefits?
It is important to note that a federal employee’s former spouse is not allowed to remain on the employee’s medical, vision or dental insurance after the divorce has been finalized. If the former spouse is not a federal employee, they will be given a 31-day extension of FEHB coverage when they lose coverage as a family member.
During this extension, they may opt to convert to an individual contract or continue their FEHB coverage using the Temporary Continuation of Coverage (TCC) provisions outlined by FEHB law. TCC coverage is only provided for 36 months.
In cases where the former spouse is entitled to a portion of the federal employee’s annuity or a survivor annuity, they have 60 days from the date of divorce to send a written request to the federal employee’s agency for FEHB coverage under the Spouse Equity Law.
However, the former spouse’s coverage under the federal employee dental and vision insurance program will end on the date of divorce, and there are no provisions that allow them to extend it.
It may be possible to avoid the need for dividing FERS retirement benefits in a divorce by offering the non-federal employee spouse who is entitled to a portion of the retirement account something else of equal value, such as a vehicle or a property.
Schedule A Consultation With The Maryland Divorce Attorneys At Milstein Siegel
Navigating a divorce as a federal employee or a retiree can be complicated making it essential to have a reputable legal team on your side. The Maryland divorce attorneys at Milstein Siegel are experienced in cases that involve the fair division of federal benefits and can find solutions to even the most challenging family law situations. To speak with a divorce attorney, or find out more about how your federal benefits will be handled in a divorce, call Milstein Siegel today to schedule a consultation.