The Thrift Savings Plan takes its own order

Two assets, two orders

Military retired pay is divided by a court order under the USFSPA and submitted to DFAS. The Thrift Savings Plan is a federal defined-contribution plan, closer to a 401(k), and is divided by a Retirement Benefits Court Order submitted to the TSP.

Using the retired-pay mechanism to try to divide the TSP does not work. A decree that addresses only the pension leaves the TSP undivided.

Under the Blended Retirement System, the TSP is the bigger half

Which system applies changes what is actually worth dividing.

Members who entered service on or after 1 January 2018 are in the Blended Retirement System. Those with fewer than twelve years of service at that date could elect into it. Those with twelve or more years stayed in the Legacy High-Three system.

The difference is substantial. Legacy uses a 2.5% multiplier per year of service, so a twenty-year retiree draws roughly half of high-three pay. BRS uses 2.0%, so the same retiree draws roughly forty percent, with the government instead contributing to the TSP: an automatic one percent of base pay plus matching up to five percent more, vesting at two years.

So under BRS the pension is smaller and the TSP is larger. Treating the pension as the whole prize is a Legacy-era habit that undervalues a BRS member’s marital estate.

Two BRS features that catch people out

Continuation pay is a bonus paid around the twelve-year mark, often several times monthly base pay, payable in cash or into the TSP. Whether it is marital depends on when it was received and on state law.

BRS also allows a member to take part of the retirement as a discounted lump sum at retirement, reducing monthly retired pay until age 67. That election can shrink the divisible base after the divorce, so it is worth addressing in the decree rather than discovering later.