When military couples divorce in Florida, the division of assets often focuses heavily on the defined benefit military retirement pension – that promised monthly check after 20+ years of service. While undeniably crucial, another significant, and sometimes overlooked, retirement asset frequently exists: the Thrift Savings Plan (TSP).
Think of the TSP as the military and federal government’s version of a civilian 401(k). It is a defined contribution retirement savings and investment plan, and for many service members, particularly those enrolled in the Blended Retirement System (BRS), the TSP can represent a substantial portion of their retirement nest egg. Contributions made during the marriage, along with the investment gains (or losses) on those contributions, are generally considered marital property under Florida law.
However, dividing a TSP account is not as simple as writing a check or adding a line item to your divorce decree. It involves navigating a specific, technical legal process governed by federal regulations and administered by the Federal Retirement Thrift Investment Board (FRTIB). Failure to follow these precise procedures can result in your agreement being unenforceable, costly delays, and potentially the loss of your entitled share. Understanding how Florida law treats the TSP and the exact steps required for division is critical. This is a complex area where the detailed knowledge of an experienced Tampa military divorce lawyer is essential to protect your financial future.
What is the Thrift Savings Plan (TSP)?
Before discussing division, let’s clarify what the TSP is. Established by Congress, the TSP offers federal employees and members of the uniformed services the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
Key features include:
- Defined Contribution Plan: Unlike the military pension (a defined benefit plan promising a specific monthly payout), the TSP’s value is based on contributions made and the performance of the investments chosen within the plan. The final payout is not guaranteed.
- Contribution Sources: Funds can come from:
- Employee Contributions: The service member elects to contribute a percentage of their pay.
- Agency/Service Automatic Contributions: Under the Blended Retirement System (BRS), the service automatically contributes 1% of the member’s base pay after 60 days of service.
- Agency/Service Matching Contributions: Under BRS, the service matches member contributions up to an additional 4%, for a total potential contribution of 5% from the government. (Those under the legacy High-3 system typically do not receive matching contributions).
- Investment Options: Participants choose how their money is invested across various funds, ranging from conservative government securities (G Fund) to diversified stock index funds (C, S, I Funds) and lifecycle funds (L Funds).
- Traditional vs. Roth: Like 401(k)s, TSP offers both Traditional (pre tax contributions, taxed upon withdrawal) and Roth (after tax contributions, generally tax free upon withdrawal) options. This distinction can be relevant during division.
- Vesting: Service members are always 100% vested in their own contributions and earnings. Vesting schedules apply to the government’s automatic and matching contributions (under BRS, members are vested in matching contributions after two years of service).
Over a long military career, especially with matching contributions under BRS, a TSP account can grow to hundreds of thousands, or even millions, of dollars, making it a critical asset in a divorce.
Is the TSP Marital Property in Florida? Yes, If Earned During Marriage.
Florida Statute § 61.075 governs the equitable distribution of marital assets and debts. The law defines marital assets very broadly to include “assets acquired… during the marriage, individually by either spouse or jointly by them.” This definition explicitly includes “all vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profit sharing, annuity, deferred compensation, and insurance plans and programs.”
Therefore, under Florida law:
- The portion of the TSP account balance that accrued from the date of marriage up to the date of filing the Petition for Dissolution of Marriage (or another legally established cut off date) is generally considered marital property.
- This includes the service member’s contributions, the government’s matching/automatic contributions (if vested), and all investment earnings (gains or losses) on those marital contributions made during the relevant period.
- Any TSP balance existing before the marriage, or contributions and earnings accrued after the filing date, are generally considered the service member’s separate, non marital property, provided they have not been commingled with marital funds.
Just like any other marital asset, the marital portion of the TSP is subject to fair, or “equitable,” distribution by the Florida court. While this often starts at a 50/50 split, the court can order an unequal division based on various statutory factors, though a 50/50 split of the marital portion is common for retirement assets. A Tampa military divorce lawyer can advise on how equitable distribution applies to your specific circumstances.
Valuing the Marital Share: Precision is Key
Before you can divide the TSP, you must accurately determine the value of the marital portion. This requires obtaining historical TSP statements.
Steps for Valuation:
- Date of Marriage Statement: Obtain the TSP statement closest to, but preceding, the date of marriage. This establishes the pre marital (separate) balance, if any.
- Cut Off Date Statement: Obtain the TSP statement closest to the date of filing the divorce petition (or other relevant cut off date established by law or agreement). This establishes the total value at the end of the marital period.
- Calculate Marital Growth: The marital portion generally includes:
- All contributions (employee and vested employer) made between the date of marriage and the cut off date.
- All investment earnings (or losses) attributable to those marital contributions during that period.
- Plus any passive appreciation (or depreciation) on the pre marital balance that occurred during the marriage.
Calculating the earnings attributable only to the marital contributions can sometimes be complex, especially in long term marriages with fluctuating investment choices. In high value or contentious cases, a Tampa military divorce lawyermight recommend involving a financial expert, like a forensic accountant or a Certified Divorce Financial Analyst (CDFA), to perform a precise calculation. However, often a simpler approach is agreed upon, such as dividing the totalgrowth during the marriage proportionally based on the pre marital balance versus marital contributions.
Why Precision Matters: Unlike a defined benefit pension where the division is often based on a future stream of payments, the TSP division involves transferring a specific sum of money now. Getting the valuation wrong means one party receives too much or too little, an error that is difficult to correct later.
The Crucial Step: The Retirement Benefits Court Order (RBCO)
Here is the most critical procedural point: Your Florida Divorce Judgment or Marital Settlement Agreement alone is legally insufficient to divide a TSP account.
The TSP is administered by a federal agency, the Federal Retirement Thrift Investment Board (FRTIB). The FRTIB will only divide a TSP account pursuant to a specific type of court order that meets their stringent requirements. This order used to be commonly called a Court Order Acceptable for Processing (COAP), but the TSP now refers to it as a Retirement Benefits Court Order (RBCO).
Without a valid RBCO, the FRTIB cannot and will not process the division, regardless of what your Florida divorce decree says. Your agreement or judgment must authorize the preparation of this separate order and specify the terms of the division. Failing to secure a proper RBCO means the former spouse will never receive their share directly from the TSP. This requirement is absolute. A Tampa military divorce lawyer experienced in these cases knows that obtaining the RBCO is just as important as negotiating the share itself.
What Must Be in the RBCO? FRTIB’s Strict Requirements
The FRTIB provides detailed guidance on what constitutes a valid RBCO. Even minor errors or omissions will result in rejection, causing delays and requiring amended orders. Your Tampa military divorce lawyer (or a specialist they work with) must ensure the RBCO contains, at minimum:
- Clear Identification: Full names, Social Security numbers, and current addresses for both the TSP participant (the service member) and the payee (the former spouse).
- TSP Identification: An explicit statement that the order applies to the Thrift Savings Plan account.
- Entitlement Statement: Clear language stating the former spouse is entitled to a portion of the participant’s TSP account based on the divorce.
- Specific Division Method: This is where precision is paramount. The order must clearly state how the division is calculated. Options include:
- Fixed Dollar Amount: “The former spouse is awarded $75,000 from the participant’s TSP account.” (Simpler, but doesn’t share gains/losses).
- Percentage of Account Balance: “The former spouse is awarded 35% of the participant’s total TSP account balance determined as of [Specific Valuation Date].”
- Formula: Often used to divide only the marital portion. The formula must be clearly defined in the order itself (e.g., specifying dates, contribution types, etc.). Vague references like “50% of the marital share” without defining the share within the RBCO may be rejected.
- Valuation Date: The order must specify the exact date as of which the account balance or marital portion is to be determined (e.g., “valued as of December 31, 2024”). This cannot be left ambiguous.
- Earnings and Losses: The order must state whether the awarded dollar amount or percentage share is entitled to accrue investment gains or losses occurring between the valuation date and the date the payment is actually processed by the FRTIB. (Standard practice is to include accrual of gains/losses).
- Loan Treatment: If the participant has an outstanding TSP loan, the RBCO must specify whether the former spouse’s share is calculated based on the account balance before or after deducting the outstanding loan balance. Failure to address an existing loan is a common reason for rejection.
- Signature and Certification: The order must be signed by a judge and certified by the court clerk.
Drafting an RBCO that meets these technical requirements is often best handled by an attorney or firm specializing in QDROs/RBCOs, working in coordination with your primary Tampa military divorce lawyer.
Common Division Methods in the RBCO
How the share is defined in the RBCO impacts the final amount received:
- Fixed Dollar Amount: Predictable, but the former spouse doesn’t benefit from market gains (or suffer losses) while waiting for payment. Often used when buying out an interest.
- Percentage as of a Date: Shares market risk/reward. The most common method. Requires clear valuation date.
- Formula (Coverture): Often the most equitable way to isolate the marital share, especially in longer marriages or where pre marital funds exist. Requires careful formula drafting within the RBCO itself. Example: “50% times a fraction, the numerator of which is the number of months of marriage during TSP participation, and the denominator of which is the total number of months of TSP participation as of [Valuation Date], applied to the total account balance on [Valuation Date], plus gains/losses.” (Consult your Tampa military divorce lawyer for precise language).
Regardless of the method, explicitly addressing gains and losses between the valuation date and payment date is crucial to avoid disputes and ensure fairness, especially in volatile markets. Standard practice is to award gains/losses on the assigned share.
The TSP Loan Problem: A Frequent Pitfall
Many service members take loans against their TSP accounts. These loans are effectively liens against the account balance. The FRTIB requires the RBCO to be crystal clear about how an outstanding loan impacts the division.
- Option 1 (Most Common): Divide After Loan: The RBCO states the percentage or amount is calculated based on the account balance after deducting the outstanding loan balance as of the valuation date. This means the former spouse effectively shares in the “cost” of the loan taken during the marriage.
- Option 2: Divide Before Loan: The RBCO states the calculation is made based on the gross balance, ignoring the loan. This is less common and usually only occurs if the loan was taken after separation for non marital purposes (requiring proof).
Failure to Specify: If the RBCO is silent on loan treatment and a loan exists, the FRTIB will likely reject it, demanding clarification. This underscores the need for meticulous drafting by someone familiar with TSP rules, like a Tampa military divorce lawyer or a QDRO specialist.
The Process: From Agreement to Payment
Here is a typical timeline for dividing a TSP account in a Florida divorce:
- Negotiation/Litigation: During the divorce, the parties (through their attorneys) determine the former spouse’s entitlement (percentage or amount) and the valuation date. This is memorialized in the Marital Settlement Agreement or decided by the judge in the Final Judgment.
- Final Judgment Language: The Final Judgment must include specific language:
- Awarding the share (e.g., “Wife is awarded 50% of the marital portion…”).
- Stating the valuation date.
- Addressing gains/losses and loans.
- Explicitly authorizing and ordering the preparation of a separate RBCO consistent with these terms.
- Specifying who is responsible for the cost of preparing the RBCO.
- RBCO Drafting: An attorney or specialist drafts the RBCO, meticulously following FRTIB requirements and the terms of the Final Judgment.
- FRTIB Pre Approval (Recommended): The draft RBCO can be sent to the FRTIB for pre approval review. This is highly recommended as it catches potential errors before going to the judge, saving time and hassle. FRTIB will issue a letter stating if the draft is acceptable or requires changes.
- Judge’s Signature: Once pre approved (or if skipping pre approval), the RBCO is submitted to the Florida judge for signature.
- Certification: The signed RBCO must be certified by the Clerk of Court.
- Submission to FRTIB: The certified RBCO, along with any required FRTIB forms, is sent to the FRTIB for processing.
- FRTIB Processing: FRTIB reviews the order. If acceptable, they will “freeze” a portion of the participant’s account and notify both parties.
- Payment/Rollover: Once processed, the former spouse payee will receive instructions from FRTIB on how to receive their share. They typically can choose a direct cash payout (subject to taxes and penalties) or, more commonly, a direct rollover into their own IRA or eligible retirement plan, which avoids immediate taxation.
This entire process, from Final Judgment to actual payment, can take several months, depending on drafting time, court processing, and FRTIB review queues. Patience and persistence are required. Having a Tampa military divorce lawyershepherd the RBCO through the process is often essential.
Why Experience Matters: Avoid Costly Rejections
The FRTIB is known for being extremely literal and strict in its review of RBCOs. Even minor deviations from their required language or format can lead to rejection. Common reasons for rejection include:
- Ambiguous valuation date.
- Failure to address gains/losses.
- Failure to address an outstanding loan.
- Incorrect participant or payee information.
- Formula for division not clearly stated within the RBCO.
- Order not properly certified or signed.
Each rejection means delay. It means going back to the drafting attorney (more fees), potentially back to the judge for an amended order (more fees and court time), and restarting the FRTIB review process. This underscores the value of working with a Tampa military divorce lawyer and potentially a QDRO/RBCO specialist who knows precisely what the FRTIB requires, getting it right the first time.
TSP vs. Military Pension: Apples and Oranges
It is vital to remember that the TSP and the military defined benefit pension are entirely separate assets requiring separate legal treatment.
- TSP: Requires an RBCO sent to FRTIB. Deals with a current account balance.
- Pension: Requires specific language in the Final Judgment (or a separate Military Pension Division Order) sent to DFAS. Deals with a future stream of payments. May involve SBP elections.
Your divorce decree must address both assets accurately and authorize the distinct procedures needed for each. Relying on one order to cover both will fail.
Conclusion: Secure Your Slice of the TSP Pie
The Thrift Savings Plan is often a significant component of a military family’s retirement savings. Whether you served for five years or thirty, contributions made during your marriage represent a shared investment in your future. Ensuring the marital portion of the TSP is accurately valued and properly divided is a critical aspect of achieving a fair financial outcome in your Florida divorce.
This process, however, is governed by strict federal regulations and demands absolute precision in court orders. Vague agreements are unenforceable. Errors in the required Retirement Benefits Court Order (RBCO) lead to rejection, delays, and increased legal costs. This is not an area for guesswork or boilerplate language.
Protect your financial future by working with a legal professional who understands the specific requirements for dividing TSP accounts. An experienced Tampa military divorce lawyer knows how to navigate the complexities of valuation, RBCO drafting, and FRTIB procedures. They ensure the necessary orders are prepared correctly the first time, securing your entitled share efficiently and effectively. Do not leave this valuable asset vulnerable – ensure your Tampa military divorce lawyer has the expertise to handle it right. Finding the right Tampa military divorce lawyer is crucial. Trust your Tampa military divorce lawyer. Your Tampa military divorce lawyer will guide you.
Frequently Asked Questions (FAQ)
Is the TSP automatically divided 50/50 in a Florida divorce? Not automatically. Florida uses equitable distribution, aiming for fairness, which often means 50/50 for assets earned during the marriage, but a court can order an unequal split based on specific factors. Only the marital portion (earned during marriage) is divided.
What is an RBCO (formerly COAP)? A Retirement Benefits Court Order is a specific court order, separate from your divorce decree, that meets the strict requirements of the Thrift Savings Plan administrator (FRTIB). It provides the legal instructions needed to divide a TSP account pursuant to a divorce.
Do I need a special lawyer just to draft the RBCO? While your main Tampa military divorce lawyer handles the overall case, they often work with attorneys or firms specializing in drafting QDROs/RBCOs due to the technical requirements. Your primary lawyer ensures the RBCO accurately reflects the terms of your divorce settlement or judgment.
What happens if there is a loan against the TSP? The RBCO must explicitly state whether the former spouse’s share is calculated based on the account balance before or after deducting the loan. Failure to address the loan will likely cause the FRTIB to reject the order.
How long does it take for the TSP to be divided after the divorce? After a correctly drafted and certified RBCO is submitted to the FRTIB, processing typically takes several weeks to a few months before the funds are segregated and payment/rollover instructions are sent to the former spouse. Delays often occur if the initial RBCO is flawed and needs correction.
The McKinney Law Group: Protecting Tampa Service Members in Military Divorce
Whether you’re active duty, retired, or a military spouse, our Tampa team helps you navigate divorce with practical guidance on custody, relocation, and benefits division.
Call 813-428-3400 or email [email protected] to schedule your private consultation.