Division of a Thrift Savings Plan in Divorce
A Thrift Savings Plan (“TSP”) is capable of division in a divorce, annulment or legal separation. It can also be garnished to satisfy a participant’s past-due alimony or child support obligations.
A TSP is a retirement savings plan for federal civilian employees and some uniformed services. It is a defined contribution plan similar to a 401(k) plan. Whenever there is a TSP, there is usually another retirement system such as a FERS annuity or military retirement.
TSP will provide some basic information to a spouse or spouse’s attorney upon written request. The information that they can provide is limited to the account balance, any loan balances, and statements. TSP cannot provide personal identification information for the member such as date of birth or social security number.
A TSP can be divided by presenting TSP with a court order that complies with 5 U.S.C. §§ 8435(c), 8467 and 5 C.F.R. part 1653 subp. A. TSP can provide a “model order” to assist the preparer in complying with the necessary language. From a valid order, TSP will pay out the payee’s present designated entitlement, but will not honor an order for a future payment.
It is recommended that once a TSP is identified as part of community property, that a court order be issued to freeze the TSP account. That will prevent or limit post-separation loans or withdrawals.
In the event of a divorce, a member should take steps to file a new designation of beneficiary with TSP to ensure that the beneficiary they want to receive benefits is the person currently named. Otherwise, TSP has no option but to pay out to the beneficiary listed, even if that is a former spouse! That is true even if the former spouse waived any interest in the TSP account.
To garnish a TSP for unpaid support, TSP must be presented with a writ, order, or similar legal device that properly instructs them as to the amount to be paid and to whom. TSP can usually provide payment within 60 days of receiving a final order, but additional time will be needed to prepare for that final order.
If you are contemplating divorce, or have additional questions about a TSP Plan incidental to a divorce or legal separation, please contact Kring & Chung, LLP‘s Family Law Department. Kring & Chung has family law practitioners in its Irvine and Las Vegas offices.
You can reach our team by calling 949-345-1621 or by completing a short online contact form. Flexible appointments are available by request.