In military divorces, most people focus on the division of military pensions, BAH-related support issues, and time-sharing across deployments. But there’s another major financial asset often overlooked in these cases—the Thrift Savings Plan (TSP). The TSP is a retirement savings and investment plan for federal employees and members of the uniformed services, similar to a civilian 401(k). In divorce, this account is often one of the most valuable marital assets, especially when it includes years of government or military service contributions.
The treatment of a TSP in a Florida divorce requires precision. Dividing the account requires a special order and full compliance with both state family law and federal TSP regulations. Whether you are the service member or the civilian spouse, knowing what will happen to your TSP in divorce—and how to protect your share—is essential. A seasoned Tampa divorce lawyer can guide you through the legal and technical aspects to ensure fair distribution without delays or errors.
Understanding What the Thrift Savings Plan Is
The TSP is a defined contribution retirement plan administered by the Federal Retirement Thrift Investment Board. Service members and federal employees contribute pre-tax (or Roth after-tax) dollars into their TSP accounts, which are then invested in a mix of funds, including:
- Government Securities Investment (G) Fund
- Fixed Income Index Investment (F) Fund
- Common Stock Index Investment (C) Fund
- Small Cap Stock Index Investment (S) Fund
- International Stock Index Investment (I) Fund
- Lifecycle (L) Funds—target date-based portfolios
The TSP operates much like a 401(k), with:
- Employee and employer contributions,
- Tax-deferred or tax-exempt growth,
- The potential for employer matching (under the Blended Retirement System),
- Withdrawals allowed after separation from service or retirement.
During divorce, a TSP account’s value must be identified, classified as marital or non-marital, and then distributed in accordance with a properly drafted court order. A Tampa divorce lawyer will ensure that this is done correctly and that the spouse’s interests are protected throughout.
Is the TSP Marital Property?
Yes—any contributions made during the marriage are considered marital property under Florida law. This includes both the employee’s direct contributions and any agency or service matching contributions, including growth and interest on those contributions over time.
It does not matter:
- Whether the account is solely in the service member’s name,
- Where the account is held or invested,
- Whether the non-service member spouse knew about the account,
- Whether the contributions were made before or after moving to Tampa.
What matters is when the contributions were made. If they occurred during the marriage—between the date of marriage and the date the divorce is filed—they are subject to equitable distribution. A Tampa divorce lawyer will work with you to ensure that contributions are accurately traced and classified.
Valuing the TSP
Unlike defined benefit pensions, the TSP has a readily ascertainable value at any given point. The valuation process is straightforward:
- The current balance is easily accessible online or via statement,
- The value includes principal, earnings, and market growth,
- The account can be segregated by date of contributions using transaction histories.
For military divorces in Tampa, the key issue is determining what portion of the TSP is marital. This requires:
- Reviewing the dates of contributions,
- Identifying the account balance at the date of marriage (for pre-marital assets),
- Tracking post-filing contributions if any exist.
If pre-marital funds or post-filing contributions exist, they may be treated as non-marital, while the rest of the account is equitably divided. A Tampa divorce lawyer will work with financial professionals to ensure accurate valuation and classification.
How Is the TSP Divided?
TSP accounts are divided using a Retirement Benefits Court Order (RBCO). This is not the same as a standard marital settlement agreement or final judgment of divorce. The RBCO must:
- Meet federal regulatory requirements,
- Clearly identify the parties and the TSP account holder,
- Specify the amount or percentage to be awarded to the non-account holder,
- Use a permissible method of valuation (such as a percentage or fixed dollar amount),
- State the date on which the division is based (e.g., date of separation, date of divorce).
Common division approaches include:
- 50% of the marital portion of the account,
- A fixed dollar amount to the non-account holder,
- An amount calculated as of a specific valuation date (e.g., date of filing),
- Awarding the account entirely to the service member in exchange for another asset of equivalent value.
Once the RBCO is submitted and approved by the TSP, the non-account holder (known as the “payee”) receives a distribution or transfer to their own retirement account.
A Tampa divorce lawyer will ensure the RBCO is accepted by the TSP and avoid errors that could delay division or trigger tax consequences.
Tax Consequences of TSP Division
TSP division, when done through a properly worded RBCO, does not result in immediate taxes or penalties to the participant or the alternate payee. The TSP will transfer funds to the former spouse’s IRA or other qualified plan without tax impact if requested.
However, if the alternate payee chooses to receive a direct distribution instead of a rollover:
- The payment is taxable as ordinary income to the alternate payee,
- A 10% early withdrawal penalty may apply if the alternate payee is under age 59½ and does not qualify for an exception.
The participant is not taxed on the distribution to the alternate payee.
A Tampa divorce lawyer can work with tax professionals to coordinate a tax-efficient transfer strategy, minimizing unexpected tax burdens on the receiving spouse.
Timing the Division: Key Considerations
The valuation date and distribution date often differ. For example:
- A TSP balance may be valued as of the date of filing,
- The order may not be submitted or accepted by TSP until months later,
- Market gains or losses between the valuation and division may need to be addressed.
To minimize disputes:
- The RBCO should state the valuation date explicitly,
- It should indicate whether post-valuation market changes are shared or excluded,
- Interest adjustments should be included, if applicable.
This level of precision avoids confusion and preserves equity. A Tampa divorce lawyer will ensure your court order addresses timing and valuation thoroughly.
Common TSP Division Errors in Divorce
Several mistakes can result in failed division or unintended financial consequences:
- Improper order language – Orders that do not meet TSP criteria will be rejected.
- Failing to specify valuation date – This can result in delays or unfair divisions.
- Using percentage of future balance – This can create uncertainty and inequity.
- Ignoring loans against the TSP – Outstanding loans reduce the distributable amount.
- Failing to plan for taxes – Direct distributions may cause avoidable tax liability.
- No provision for lost value if participant retires early – This may affect expectations for retirement security.
A Tampa divorce lawyer with experience in military and federal retirement division will proactively avoid these errors.
What Happens to Loans in the TSP?
If a service member has a loan against their TSP at the time of divorce:
- The outstanding loan reduces the account balance available for division,
- The participant remains solely responsible for repaying the loan,
- The payee does not assume the loan as part of the RBCO,
- The court may consider the loan when dividing assets or assigning marital debt.
In some cases, the spouse’s share is calculated before deducting the loan balance; in others, the court may adjust the division to reflect the loan’s impact.
A Tampa divorce lawyer will ensure the marital portion is not artificially reduced by loans and that the payee receives a fair division based on actual contributions and market value.
Can the Court Award the Entire TSP to One Spouse?
Yes. As part of equitable distribution, the court may:
- Award the entire TSP to the account holder,
- Offset the award by giving other marital assets to the non-account holder,
- Determine that unequal distribution is justified based on statutory factors (e.g., contribution to the marriage, economic circumstances).
However, this approach requires accurate valuation of all assets and liabilities to ensure the final outcome is equitable.
A Tampa divorce lawyer will advocate for fair asset allocation and present evidence to support or contest a proposed offset.
TSP and the Blended Retirement System (BRS)
Under the BRS, service members receive:
- A reduced pension (2.0% × years of service × High-3 pay),
- Automatic TSP contributions of 1% of base pay,
- Matching contributions up to 5% after two years of service.
This makes the TSP even more important in military divorces, especially for newer service members who may have a smaller pension.
When the pension is less substantial, the TSP often represents the largest retirement asset. A Tampa divorce lawyerensures both components are addressed in the property division.
How to Protect Your TSP in Divorce
If you’re the service member or account holder:
- Disclose your TSP balance and transaction history honestly,
- Avoid withdrawals or loans during divorce proceedings,
- Work with your attorney to propose fair division or asset offset.
If you’re the non-account holder spouse:
- Request full account statements and contribution history,
- Verify classification of marital vs. non-marital funds,
- Ensure the court order includes interest, earnings, and market adjustments.
Either way, a Tampa divorce lawyer ensures that your interests are represented and that the TSP is handled efficiently, transparently, and lawfully.
TSP Division in Default or Uncontested Cases
Even if the divorce is uncontested or the other party defaults:
- The TSP cannot be divided unless the final judgment contains proper language,
- An RBCO must still be submitted to TSP for processing,
- The court may enter a default final judgment that includes division terms.
Failing to include the TSP in a default or uncontested judgment may result in waiver of rights to the account.
A Tampa divorce lawyer can ensure your paperwork protects your financial interests, even in uncontested or ex parte proceedings.
Enforcement and Modification
Once a TSP division order is approved and processed:
- The division is final and enforceable,
- Future changes to the order may require modification by the court and resubmission to TSP,
- If payments are not made as agreed, enforcement may be sought through civil contempt or money judgments.
However, once the account is divided and transferred, TSP will not intervene in post-division disputes. That’s why the initial order must be correct and comprehensive.
A Tampa divorce lawyer will ensure that enforcement rights are preserved and that remedies are available if problems arise.
FAQ: What Happens to the TSP in a Florida Divorce?
Q: Is the TSP marital property in Florida?
A: Yes. Any contributions made during the marriage are considered marital and subject to equitable division.
Q: How is the TSP divided in divorce?
A: Through a Retirement Benefits Court Order (RBCO) submitted to the TSP. The order must meet specific federal requirements.
Q: What if my spouse had a TSP before we got married?
A: The pre-marital portion is non-marital, but growth and contributions during the marriage are marital.
Q: Will I be taxed if I receive part of a TSP in divorce?
A: Not if the funds are rolled over into your own retirement account. If you take a direct distribution, taxes and penalties may apply.
Q: What happens if my spouse has a loan against their TSP?
A: The loan reduces the account balance. Your share may be calculated before or after deducting the loan, depending on the court’s decision.
Q: Can we agree to divide the TSP without a court order?
A: No. The TSP requires a valid RBCO before dividing the account. Private agreements are not sufficient.
Q: What if my spouse takes money out of the TSP during our divorce?
A: That may be considered dissipation of assets. The court can compensate you in the final division.
Q: Does the TSP increase in value during divorce?
A: It can. That’s why a clear valuation date and interest adjustments should be included in the order.
Q: Can the court award me the entire TSP?
A: Yes, if offset by other assets or if equitable under the circumstances. This must be supported by evidence.
Q: Who should draft the RBCO?
A: A Tampa divorce lawyer experienced in TSP division should prepare and file the order to ensure compliance and protect your rights.
The McKinney Law Group: Serving Tampa’s Military Community with Divorce Representation You Can Trust
When military service intersects with family law, you need more than a general divorce attorney. The McKinney Law Group brings a deep understanding of the unique issues military families face and offers trusted, practical legal solutions in Tampa.
We assist with:
✔ Determining how Florida courts handle military divorces
✔ Dividing military retirement, BAH, and VA benefits fairly
✔ Protecting parenting time across deployments and transitions
✔ Handling venue and jurisdiction in multistate and overseas cases
✔ Helping you move forward with confidence and legal security
Call 813-428-3400 or email [email protected] to speak with a military divorce lawyer today.