How is a military pension in divorce divided, and what does the 10/10 rule do?

Step 1: When does DFAS pay a military pension in divorce?

DFAS pays a former spouse directly only when the marriage overlapped at least 10 years of creditable service. Under the Uniformed Services Former Spouses' Protection Act, a state court can still award a share after any length of marriage. Below 10/10, you pay the former spouse each month under the decree instead.

Most people assume a short marriage means no claim. It doesn't. The rule controls who writes the monthly check, not whether a share is owed.

Gather 3 dates: the marriage date, your pay entry base date and your expected decree date. Reservists should use the retirement points statement, because overlap counts creditable years (good years), not calendar time.

Know the caps too. DFAS pays at most 50% of disposable retired pay as a property share, and at most 65% once child support or alimony garnishments are added.

The slip here is stalling or rushing the decree by a few weeks around the 10-year mark. That changes who writes the monthly check. It doesn't change whether a share is owed.

Step 2: Freeze the High-3 and years on the decree

For divorces final after December 23, 2016, the divisible amount is frozen at your High-3 and your years of service (or reserve points) on the decree date. Retiree COLAs from the decree to retirement are added to it. Promotions and extra years served after the divorce stay with you.

Gather the last 36 months of LES base pay, so the High-3 in the order is a real dollar figure and not an estimate.

A hypothetical household shows what the freeze does. Maureen, 52, married at year 2 of a 22-year Air Force career and divorced after she retired as a lieutenant colonel. Her retired pay is $5,500 each month (55% of a $10,000 High-3). Marital share: 20 ÷ 22 × $5,500 = $5,000. Half, $2,500 each month, goes to her former spouse.

Her twin has one difference: the decree came at year 14, when he was a major with an $8,000 High-3. Frozen benefit: 35% × $8,000 = $2,800. Share: 12 ÷ 14 × $2,800 = $2,400, so half is $1,200 each month, before COLAs.

Without the freeze, the share would be divided at retirement: 12 ÷ 22 × $5,500 = $3,000, and half is $1,500. The freeze saves the twin $300 each month, or $3,600 each year. For Maureen, it changes nothing, because she was already retired on the decree date. (Formulas vary by state; all numbers are for illustration.)

Signing an order that awards "a percentage of retired pay" but leaves out the High-3 and years at the decree is the slip careful people make here. DFAS can't process a post-freeze order that lacks them, and fixing it means going back to court.

Quick test: if your divorce becomes final before you retire, don't sign an order that leaves out your High-3 dollar amount and your years of service (or reserve points) as of the decree date.

Step 3: Ask DFAS, the TSP and your 401(k) plan first

Ask DFAS whether the draft order is processable. Three answers should worry you: the order doesn't state the High-3 or years of service, the award exceeds 50%, or the order divides gross pay or VA pay.

The TSP splits an account only under a retirement benefits court order that clearly names the TSP account and states a fixed amount or a percentage as of a specific date. If the TSP says the account or the amount is unclear, the order goes back to the attorney.

Your second-career 401(k) is an ERISA plan and needs a QDRO. Get the plan administrator's written QDRO procedures, any model order and the processing fee before the attorney drafts anything.

VA disability compensation can't be divided, and retired pay you waive to receive it is excluded from disposable retired pay. Maureen's example ignores her 60% rating, so ask DFAS how your VA waiver and CRDP enter your own calculation.

• DFAS: is the draft order processable?
• TSP: does it name the account and a fixed amount?
• 401(k) administrator: written QDRO procedures and fee

Step 4: What happens if you trade the pension share for TSP?

Trading the pension share for TSP dollars keeps your whole lifetime, COLA-adjusted income with no DFAS split, but you hand over TSP money or home equity now. Both sides must also put a present value on a future pension, and that value rests on a discount rate someone simply chose.

Pre-tax dollars aren't pension dollars. A $100,000 traditional TSP transfer at an assumed 25% combined tax rate, for illustration, is worth about $75,000 after tax. Before Savant Wealth Management compares an offset with a DFAS split, it converts each asset to after-tax dollars and lists every due date in order.

Two households should choose differently. The twin's frozen $1,200 each month won't start for about 8 years, so a former spouse who needs housing money now may prefer a TSP transfer, and the twin keeps the full pension. Maureen's former spouse already receives $2,500 each month, which is $30,000 each year, or $900,000 over 30 years before COLAs. Buying that out would drain most of her $610,000 pre-tax TSP, so a DFAS split fits her better.

Taxes follow the payee. When DFAS pays directly, the former spouse gets their own 1099-R. Maureen's shows $36,000 a year ($3,000 x 12) instead of $66,000 ($5,500 x 12), and only her share counts in the MAGI that later sets IRMAA (on a 2-year lookback). If the overlap is under 10/10 and you pay the share yourself, the full amount sits on your 1099-R, so ask a tax professional how to report what you pass along.

When the TSP sends money to a former spouse under a court order, the former spouse owes the tax on it. Any TSP balance you keep, or trade away in an offset, is invested and can fall in value, principal included.

Step 5: File the survivor and beneficiary forms within 12 months

The forms that decide what a new spouse, your children or other heirs receive run on separate clocks. The SBP former spouse election is due within 1 year (DD Form 2656-1 from the member, or DD Form 2656-10 as a deemed election by the former spouse). Once former spouse coverage is in place, a later spouse can't be covered too. The SBP decision itself is covered on its own page.

DD Form 2293 has no due date, but DFAS payments are never retroactive. The TSP pays whoever the current TSP-3 names. File a replacement TSP-3 in the first 30 days, along with DD Form 93 and SGLV 8286 if you're still serving.

Careful people update the will and get the decree to say the former spouse waives any claim to the TSP, then leave the old TSP-3 in place. The TSP ignores both documents and pays the beneficiary named on the form. A $300,000 balance can end up with the former spouse while the children get nothing.

Look at which rows carry a legal due date and which only cost money when left late.

Step 6: Bring the draft order to Savant Wealth Management

You can confirm the 10/10 overlap, pull 36 months of LES figures and file the TSP-3 yourself today. Two questions are worth an intro call with Savant Wealth Management before the decree is signed: whether a pension share or a TSP offset leaves you ahead after tax, and in what order the remaining forms are due. An attorney licensed in your state still drafts the order. How your state's courts set the marital fraction, alimony or child support is outside what this page addresses.