Dfas Former Spouse Retirement Pay and the Frozen Rule Explained

If you're the former spouse of a military member, you may be eligible for a portion of their retirement pay. This is known as former spouse retirement pay, and it's administered by the Defense Finance and Accounting Service (DFAS).

To qualify, your marriage must have lasted at least 10 years, and you must not have remarried. If you remarried, you may still be eligible if your new marriage ended in divorce or annulment.

The amount of former spouse retirement pay you receive will depend on the length of your marriage and the military member's years of service. For example, if you were married for 10 years, you'll receive 10% of your former spouse's retirement pay, while a 20-year marriage earns you 20% of their retirement pay.

The "frozen rule" is a key concept to understand when it comes to former spouse retirement pay. It dictates that the amount of pay you're eligible for is determined by the date of your divorce or separation, not by any future changes in your former spouse's military status.

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The Frozen Benefit Rule is a significant change in how military retirements are divided in divorce cases. It was enacted on December 23, 2016, and applies to all cases where the decree of dissolution, legal separation, or annulment was issued after that date.

Under the Frozen Benefit Rule, the former spouse's share of a military retirement is "frozen" as of the date of dissolution. This means that the share awarded receives the benefit of Cost-of-Living Adjustments (COLAs), but excludes any post-decree promotions or longevity increases.

The term "disposable retired pay" is modified by a new subsection 10 U.S. Code § 1408(a)(4)(B), which specifies that the total monthly retired pay to which a member is entitled shall be the amount of basic pay payable to the member for the member's pay grade and years of service at the time of the court order, as increased by each cost-of-living adjustment that occurs under section 1401a(b) of this title between the time of the court order and the time of the member's retirement.

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The Frozen Benefit Rule applies to all cases where the decree of dissolution, legal separation, or annulment was issued after December 23, 2016. This means that if you're going back to calculate a former spouse's share of a retirement and the decree awarding the share was prior to that date, the traditional coverture formula would apply, not the NDAA.

To illustrate the impact of the Frozen Benefit Rule, let's consider a hypothetical example. Assume a soldier marries one year into his enlistment and five years later, the couple obtains a decree of dissolution. By that time, the soldier is an Army Sergeant (E-5) with 6 years of service, and there are 5 years of marriage overlapping the service.

Here's a breakdown of how the Frozen Benefit Rule works:

In this example, the spouse's share under the Frozen Benefit Rule would be $175/mo, plus COLAs. By contrast, under the traditional coverture formula, the former spouse's share would be almost 60% less, at $425/mo.

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Dividing military pay can be complex, but it's essential to understand the basics. The Uniformed Services Former Spouse Protection Act (USFSPA) governs the division of military retired pay, but it doesn't automatically give a former spouse any rights to the service member's retired pay.

To divide military retired pay, a state court must treat it as "marital property" and divide it in a divorce action. This means the court must have jurisdiction over the member, and the dissolution must have been finalized while the service member was still on active duty. The court order must also contain specific requirements, including an indication of the member's rights under the Servicemembers Civil Relief Act (SCRA).

The maximum portion of a retirement that DFAS will pay a former spouse as part of a property division is 50% of the member's disposable retired pay. However, if the service member is subject to garnishment for child support or maintenance, the maximum DFAS will pay the former spouse directly is 65% of the retiree's disposable earnings.

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Dividing Military Pay is a complex process that requires a deep understanding of the Uniformed Services Former Spouse Protection Act (USFSPA) and the Defense Finance and Accounting Service (DFAS) guidelines. The USFSPA does not automatically give a former spouse any rights to the service member's retired pay, but rather permits a state court to treat disposable military retired pay as "marital property" and divide it in a divorce action.

To qualify for direct payment, the former spouse must have been married to the member during at least 10 years of the member's service creditable for retired pay. This is known as the 10/10 rule.

The maximum portion of a retirement that DFAS will pay a former spouse as part of a property division is 50% of the member's disposable retired pay. However, in cases where military pay is both awarded to a former spouse as a property division and subject to garnishment for child support or maintenance, the maximum DFAS will pay the former spouse directly is 65% of the retiree's disposable earnings.

Disposable retired pay is defined as gross retired pay less authorized deductions, such as amounts owed to the government for previous overpayments, forfeitures adjudged by a court-martial, pay waived to receive VA disability, and SBP premiums for the benefit of the former spouse seeking a share of the retirement.

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The court order to divide military retirement must meet very specific requirements, including an indication that the member's rights under the Servicemembers Civil Relief Act (SCRA) were respected, an indication of the court's jurisdiction over the member, the percentage share or dollar amount awarded to the former spouse, and the date of marriage.

The calculation of military retirement if the member is already retired at the time of divorce is simple - Multiply the marital share against the disposable retired pay. The marital share is calculated using the equation: Months of Marriage Overlapping Military Service / Total Months of Military Service at time of retirement.

Here's a summary of the key requirements for direct payment:

Note that these requirements and definitions are subject to change, and it's always best to consult with a qualified attorney or the relevant government agencies for the most up-to-date information.

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A former spouse's share of military retirement benefits reverts back to the retiree if they pass away. This is because federal law states that a spouse or former spouse cannot sell, assign, transfer, or dispose of their share of retirement benefits by inheritance.

Military retirement payments to a former spouse cease upon the retiree's death.

The court may order the retiree to protect the income flow by electing the Survivor Benefit Plan (SBP) for the former spouse.

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To receive direct payment of retired pay as a former spouse, you must have been married to the member for at least 10 years of their service creditable for retired pay. This is known as the 10/10 Rule.

The USFSPA limits the amount of direct payment to no more than 50 percent of a member's disposable retired pay. However, if there are garnishments for alimony or child support, up to 65 percent may be sent as a direct payment.

Disposable retired pay is generally defined as retired pay to which a member is entitled, less amounts owed to the United States, forfeitures, and deductions. This includes amounts owed for previous overpayments, forfeitures adjudged by a court-martial, pay waived to receive VA disability, and SBP premiums.

For divorces entered after December 23, 2016, the definition of disposable pay is limited to the amount of retired pay to which the member would have been entitled using their retired pay base and years of service on the date of the decree of divorce.

Here's a breakdown of what's excluded from disposable retired pay:

In cases where multiple former spouses have been awarded a division of a member's retired pay, payment will be handled on a first-come, first-served basis. If conflicting court orders exist, DFAS-CL will send the amount specified in the lower of the two orders, not to exceed 50 percent of disposable pay.

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The Survivor Benefit Plan (SBP) plays a significant role in the calculation of DFAS former spouse retirement pay. A former spouse can receive SBP coverage if a service member voluntarily elects it, or if a court order requires it.

If a divorce occurs after retirement, SBP coverage for a former spouse will be no more than the amount of SBP coverage previously elected for the spouse. This means the former spouse's benefit will be capped at the level of coverage the service member had chosen for their spouse at the time of retirement.

A key factor in determining SBP eligibility is the length of the marriage. If the marriage lasted 20 years or more, the service member served 20 years or more of creditable service, and the marriage and service overlap 20 or more years, the former spouse may be eligible for restricted benefits. The exact overlap requirements are as follows:

It's worth noting that the 2017 NDAA only affects military retirement, so a spouse married to a DOD civilian with a FERS retirement would still receive the benefits of post-divorce promotions.

Payments will stop upon receipt of notice of the death of either party, unless the court order specifies otherwise. This means that if your spouse passes away, payments will automatically stop.

Unless the court order specifies otherwise, payments will not stop upon receipt of notice of the former spouse's remarriage. This is an important distinction, as many people assume that payments will automatically stop in this situation.

If DFAS is served with an order staying payments, they will stop the payments until served with an order indicating that the former spouse's payments are to resume. This is a crucial step to take if you need to temporarily stop payments.

A former spouse may stop payments by sending a letter with their notarized signature withdrawing their application for payments under the USFSPA. However, it's rare for this to happen, and it's usually only done in the case of a "buy-out" agreement between the parties.

If you're facing a situation where you need to stop payments, it's essential to consult with a qualified military divorce attorney to understand your options and ensure you're following the correct procedures.

If a service member has a former spouse, they must make an SBP election within one year of the date of divorce. This election can be made voluntarily or due to a court order.

To establish former spouse SBP coverage, a DD Form 2656-10 and supporting documentation must be submitted to DFAS-CL. A "deemed" SBP election can be established using this form, but only within one year of the date of divorce.

If neither the retired service member nor the former spouse requests former spouse SBP coverage within one year of the date of divorce, coverage will not be established. This is a crucial deadline, so make sure to act quickly.

Here are the key requirements for establishing former spouse SBP coverage:

Former spouse SBP coverage is generally irrevocable, but there are some exceptions. If a retired service member remarries, they may be able to change from former spouse to spouse coverage with the former spouse's written consent. This request must be submitted to DFAS-CL within one year of the date of remarriage.

The 2017 NDAA only affects military retirement, so if you're a spouse of a DOD civilian with a FERS retirement, you're still in the clear.

This means that post-divorce promotions will still benefit your former spouse, even if you're not in the military.

The law doesn't touch state defined benefit plans, like PERA in Colorado, so those are unaffected too.

Private company administered defined benefit plans are also off the hook, and the traditional coverture formula still applies.

Defined contribution retirement plans, such as the TSP, IRAs, and 401(k)s, are also not affected by the 2017 NDAA.

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The 10/10 Rule is a crucial aspect of determining eligibility for direct payment of retirement pay from DFAS. A former spouse must have been married to the service member for at least 10 years, with at least 10 years of creditable military service overlapping those 10 years.

Direct payment has several advantages, including no issues with late or missed payments, reduced contact between spouses, and accurate tax withholding. This is because DFAS will issue a 1099 to each party, reflecting their shares of the retirement and taxes withheld.

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The overlap between marriage and service is a critical factor in determining eligibility for direct payment. If a couple has been married for 12 years, but only 8 of those years were while the member was in the military, the 10/10 rule is not satisfied.

DFAS will only pay directly to the former spouse prospective retirement payments as they become due, not retirement arrears. If a court orders the payment of arrears, the judge must order an alternative way for the payments.

The maximum portion of a retirement that DFAS will pay a former spouse as part of a property division is 50% of the member's disposable retired pay. However, in cases where there are garnishments for alimony or child support, up to 65% may be sent as a direct payment.

Here's a summary of the rules and limits for direct payment of retirement pay from DFAS:

The Uniformed Services Former Spouses' Protection Act (USFSPA) was established in 1982 and has undergone several amendments since then. It allows state courts to treat military retired pay as community property if they choose to do so.

The USFSPA does not create a federal right to any portion of military retired pay on behalf of the former spouse. It only recognizes that states may divide it as marital property.

Unless court ordered, remarriage of a former spouse will not stop the direct payment of retired pay as property. This means that the former spouse will continue to receive their allocated share of the retired pay even if they get remarried.

For divorces finalized on or after November 14, 1986, state courts can order Survivor Benefit Plan (SBP) coverage. This allows the former spouse to continue receiving a portion of the military member's retired pay even after they pass away.

A court may not treat retired pay as property if the final decree of divorce was issued before June 25, 1981, and did not treat any amount of retired pay as property. This is a key deadline to keep in mind when dealing with military divorce and retirement pay.

To ensure that the former spouse receives their allocated share of the retired pay, they should send a copy of the divorce decree and property settlement agreement to the DFAS Garnishment Law Directorate. This should be done along with a completed DD Form 2293.