Federal Pensions & Divorce

By Heather Frances J.D.

Retirement accounts and pension benefits can be some of the most valuable marital assets when a couple divorces, and special rules apply to these assets. Federal employees, including postal workers, employees of federal agencies and military members, earn federal retirement benefits that can be valuable assets over time. Like other retirement plans, federal retirement plans can be divided in a divorce, but the split must be properly documented and must comply with federal laws.

Federal Retirement Options

Federal employees earn retirement benefits in several government systems. The Civil Service Retirement System, Civil Service Offset plan and Federal Employees Retirement System are the main retirement systems available to federal employees. But some employees are eligible for special retirement systems, including a judicial retirement system and a state department system. Each retirement system has its own rules, so the divorcing couple must learn and understand the rules that apply to their specific circumstances.

Court Order Acceptable for Processing

Federal pensions are divided in divorce by a court's order, called a Court Order Acceptable for Processing, similar to the Qualified Domestic Relations Order, or QDRO, that splits private pensions. Though divorcing spouses can agree on how to split their federal pension assets, the court must adopt that agreement and issue a court order before the pension can be formally divided. The order must meet specific guidelines before the plan administrator can use it to divide the pension. Slight changes in the order's wording can make a big difference in how much each spouse gets, so it is important to comply with every legal requirement for the specific plan that is being split.

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Survivor Benefit Plans

Federal employees have the option to cover their spouses with a supplemental retirement plan, called a Survivor Benefit Plan, which provides benefits to the spouse if the federal employee dies before his spouse. The retired employee must elect this plan at the time of his retirement and must pay for this plan each month. These benefits can be addressed in a couple's divorce, either forcing the retired employee to continue the benefits after divorce or allowing him to terminate some, or all, of the benefit. The Survivor Benefit Plan has limits based on federal law, so the spouses can reach agreement on what to do with it, but their flexibility is not unlimited.

Dividing Military Pay

Military pensions are unique among federal plans because they do not require the employee to contribute any money to the plan and the military member only gets benefits if he performs at least 20 years of retirement-eligible service. The Uniformed Services Former Spouses' Protection Act, a federal law, allows state courts to split the value of the military member's pension as marital property, but the non-military spouse may never see any of the money from that pension if the military member does not eventually meet the 20-year requirement. The law also allows the non-military spouse to receive direct payments of her share of the military pension, but only if the couple was married for at least 10 years during which the military member performed at least 10 years of service.

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Federal Retirement Benefits for Divorced Spouses


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Divorced Spouses Benefits of Retired Veterans

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