FSPA does not automatically grant a former spouse any of the service member’s retired pay. State law determines whether military retired pay will be treated as marital property, and how the service member’s military retired pay will be divided between the parties. State courts have supremacy in family law cases. The formula for dividing reserve retired pay is based upon the same principle as active duty retirements, with one change – it utilizes retirement points, rather than months. A division can range from nothing to a maximum of 50% of disposable retired pay, a decision made at the discretion of the court. Disposable retired pay is generally defined as the retired or retainer pay minus:
- Obligations of the member to the United States, including court-martial ordered fines or overpayment of retirement pay;
- Amounts deducted to pay for a court ordered Survivor Benefit Plan for the former spouse; and
- Amounts received as veteran’s disability or military disability pay.
Retired pay awarded as property is not affected by remarriage.
FSPA allows a former spouse to receive a direct payment of retired pay from the Defense Finance and Accounting Service (DFAS) center upon presentation of a valid court order, for alimony, child support, or property division.
The following restrictions apply:
- Direct payment of retired pay as property, made by DFAS, is only authorized if the marriage lasted at least 10 years during 10 years of the member’s creditable service. The 10 year requirement cannot be waived by either the service member or the former spouse. (If the marriage lasted less than 10 years, the former spouse can still receive retired pay as property, but needs to receive this as a payment from the service member rather than through DFAS.)
- Direct payments cannot exceed 50% of disposable retired pay divided as property; an additional 15% can be paid on a garnishment order (such as child support or alimony).
- A valid court order must certify that the service member’s rights were observed under the Servicemembers’ Civil Relief Act (SCRA).
Survivor Benefit Plan (SBP)
Military pension stops when the service member dies. SBP is a survivor annuity that pays a specified beneficiary 55% of the selected base amount (up to age 62) when the service member dies.
State courts have the option to order the service member to participate in SBP with the former spouse designated as the beneficiary. When the former spouse is designated as the SBP beneficiary and the agreement is incorporated in or ratified by a court order, the service member may NOT change beneficiaries without written concurrence from the former spouse.
The Reserve Component Survivor Benefit Plan is similar to the active duty SBP. Choices include: making an election upon the reservist’s retirement; deferring election until age 60, when the retirement benefits start; opting for a deferred SBP annuity; or starting SBP annuity immediately.
A former spouse who remarries before age 55 loses SBP eligibility; however, if remarriage is terminated then eligibility is reinstated. Remarriage after age 55 does not terminate SBP eligibility.
To assure coverage under SBP, the former spouse should submit a written request and a court-certified copy of the court order to the Defense Finance Accounting Service (DFAS). (Our Association recommends such a transmission be followed up with “return receipt requested” mail.) The request and copy of the court order must be filed with DFAS within one year of the date of the court order.