Military Order

QDRO Consultants Co., LLC specializes in the drafting of court orders to divide military pensions of reservists and active members of the military.

If your client (or client's spouse) is a current or former member of the military, we encourage you to read the following information which may prove useful to your case and your handling of the court order to divide the member's military retired pay.

Direct Payments to a Former Spouse

The Uniformed Services Former Spouse's Protection Act (Public Law 97-252) became effective on February 1, 1983. Former spouses of military members were now permitted to receive a portion of the military retired pay in accordance with the terms of the divorce decree.

The act recognizes the right of state divorce courts to require the appropriate administrative agency of the military to make direct payments to a former spouse of up to 50% of the member's disposable retired pay.

The division of retired pay may be somewhat more complex than the drafting of QDROs for ERISA-governed plans. There are some limitations and timing requirements of which you must be aware.

The "10/10 Rule" For Property Divisions

It is critical for you to understand the 10/10 Rule before asking us to draft an order to divide a member's military retired pay. If the 10/10 Rule is not satisfied, the military agency known as "DFAS" will not honor a court order to divide the member's retired pay. It is defined as follows:

"If the spouse or former spouse to whom payments are to be made under this section was not married to the member for a period of 10 years or more during which the member performed at least 10 years of service creditable in determining the member's eligibility for retired pay, payments may not be made under this section to the extent that they include an amount resulting from the treatment by the court under subsection (c) of disposable retired pay of the member as property of the member or property of the member and his spouse." (emphasis added)

Simply put, if your client's marriage lasted for less than ten years, forget about drafting an order that directs the military to provide your client with any direct payments of the member's retired pay. DFAS will not honor the court order. Further, if your client was married for more than ten years, but the member did not earn at least ten years of creditable service during the marriage, DFAS will also not honor your court order to divide the retired pay.

Please note that this 10/10 Rule only applies to a "property division". It is not applicable to a division of retired pay for alimony (spousal support) or child support purposes. You may still submit a court order to DFAS for the purposes of child support or alimony even if the 10/10 Rule was not satisfied. DFAS will honor such a court order to provide direct payments of alimony or child support.

Maximum Payments to Former Spouse

Unlike a QDRO that can provide an alternate payee with up to 100% of the participant's accrued pension benefits, there are limits on providing former spouse's with a portion of the member's disposable retired pay under the military's pension plan. The total amount of the disposable retired pay of a member payable under all court orders may not exceed 50% of such member's disposable retired pay.

However, in cases where there is both a division of disposable retired pay and a "garnishment" to enforce collection of child support and/or alimony, the total amount payable cannot exceed 65 percent of such retired pay.

Anti-Circumvention Language

Because of the possibility that a former spouse may lose her rights to a portion of the member's retired pay for reasons beyond her control, such as the member opting for "disability pay" in lieu of retired pay, I suggest that your court order include "anti-circumvention" language to help secure your client's share of the benefits against detrimental actions by their ex-spouse.

DFAS Form 2293

A government form known as DFAS FORM 2293 must be completed and submitted along with a certified copy of the court order. They will accept copies. An original form is not required. As part of our service, we will provide you with a Form 2293 to submit along with the court order.

Military Utilizes "Shared Payment Approach" Only

Another limitation on dividing military retired pay is the fact that the military will not "actuarially adjust" your client's share of the pension to his/her own life expectancy. They will not accept a "separate interest" type order which is a common QDRO approach under ERISA-governed defined benefit pension plans.

Therefore, your client's share of the disposable retired pay can only commence when the member retires and commences his benefits. Further, the former spouse can only continue to receive their assigned share of the members benefits until the earlier to occur of their death or the member's death, unless the order includes Survivor Benefit Plan ("SBP") protection for your client, as discussed below.

While not expressly stated in the statute, the military has also been accepting coverture-style language to define the former spouse's share of the retired pay. However, DFAS will not calculate the actual numerator of the coverture fraction.

Your order must contain the actual number of years and months of the member's creditable service earned during the marriage. If you simply include the duration of the marriage and request that DFAS calculate the numerator, they will reject your court order. DFAS will, however, calculate the denominator of the coverture fraction, which represents the member's total creditable service at retirement.

Survivor Benefit Plan (SBP) Coverage for Former Spouse

The only way to provide a former spouse with continued benefit payments after the death of the member is through the Survivor Benefit Plan ("SBP"). If your order does not include SBP protection, your share of the benefits will cease at the member's death. There are several restrictions on the SBP plan and you must pay special attention to this portion of the plan when preparing a court order to divide military retired pay.

The court order may require a member to elect (or enter into an agreement to elect) SBP coverage for the former spouse. That is, a member may elect to provide an SBP survivor annuity to a former spouse. Any such election to provide a former spouse with SBP coverage would prevent any payments of the survivor annuity to a current spouse or child.

There is a time limit on the election of former spouse SBP coverage by the member. Any such election must be written, signed by the member, and received by the Secretary (DFAS) within one year after the date of the decree of divorce, dissolution, or annulment.

When making the election for former spouse SBP coverage, the member must disclose whether such election of the former spouse coverage was required.

The disclosure statement must be in writing and signed by the member and it must set forth:

  • whether the election is being made pursuant to the requirements of a court order; or
  • whether the election is being made pursuant to a written agreement previously entered into voluntarily by such person as a part of, or incident to, a proceeding of divorce, dissolution, or annulment and (if so) whether such voluntary written agreement has been incorporated in, or ratified or approved by, a court order.
Soldiers' and Sailors' Civil Relief Act of 1940

If you are preparing a court order to divide military retired pay and the member is not yet retired and in pay status, your order must include express language which certifies that the member's rights under the Soldiers' and Sailors' Civil Relief Act of 1940 (50 U.S.C.App. 501 et seq.) were observed.

Essentially, this shows that the member was actually "in town" and aware of the division of retired pay and was represented by counsel or consented to the division of benefits during the divorce proceeding.

Termination of SBP "Surviving Spouse" Coverage Upon Remarriage of Former Spouse Before 55

It is important for you to understand that your client will lose their rights to a survivor annuity under the SBP portion of the plan if they get remarried to any individual before the age of 55.

However, if they are remarried before reaching age 55 and that marriage is subsequently terminated by death, annulment, or divorce, payment of the SBP survivor annuity shall be resumed effective as of the first day of the month in which the marriage is so terminated.

"Deemed" Election of Former Spouse Coverage

Even if the member is required to elect SBP coverage for the former spouse pursuant to the terms of a divorce decree, such coverage may be lost for the former spouse if the member fails to make the election on a timely basis. In order to help secure your client's rights to SBP coverage, they may effectuate a "deemed" election for such coverage in the event their ex-spouse fails or refuses to make such an election.

There is a separate time limit for the former spouse to make a "deemed" election on behalf of the member. Any deemed election may only be honored if DFAS receives it within "one year" of the date of the court order or filing involved.

You should never assume that your client's ex-spouse will make the required SBP election in a timely manner. To best secure your client's rights to a potential survivor annuity in the event of their ex-spouse's death, you should have your client sign-off on a Deemed Election Notice, and submit it to DFAS concurrently with the submission of the court order to divide the military retired pay.