Splitting Up Military Retirement Accounts

military retirement qdro

military retirement qdroToday you may not think twice about splitting military retirement benefits during a #divorce. But it wasn’t always that way. A 1981 U.S. Supreme Court decision, McCarty v. McCarty, actually precluded state courts from dividing military retired pay as an asset of the marriage. In response, Congress passed the Uniformed Services Former Spouses’ Protection Act (USFSPA in 1982. This legislation specifically gave a state court the authority to treat military retired pay as marital property and divide it between the spouses.

Of course, the actual process to divide these unique accounts is slightly different than standard retirement accounts. Rather than using a Qualified Domestic Relations Order (“QDRO”), military retirement accounts are divisible using a Military Retired Pay Division Order.

The Defense Finance and Accounting Service (“DFAS”) has very specific rules about how and when military retirement pay can be divided. For a division of retired pay as a property award to be enforceable under the USFSPA, the former spouse must have been married to the service member for at least 10 years, and during that time the service member must have performed at least 10 years of creditable service. This is referred to as the 10/10 requirement.

In addition, no more than 50% of retired pay can be awarded as marital property. Because the DFAS has very specific requirements relative to division of military retired pay, it is important that the parties understand these technical requirements early on. There are many ways that a former spouse can lose his or her right to division of retired military pay, so relying on an expert in this unique area is very important.

Source: Splitting Up Military Retirement Accounts | Robert Hetsler,J.D. CPA,CVA,CFF,FCPA,MAFF,CMAP,PFP | Pulse | LinkedIn

Dividing Military Retired Pay Benefits In Divorce

military retirement divorce

Dividing Military Retired Pay Benefits In Divorce

military retirement divorce

The Uniformed Services Former Spouses’ Protection Act (USFSPA) was passed by Congress in 1982, specifically to give a state court the authority to treat military retired pay as marital property and divide it between the spouses. This legislation was in direct response to the preceding year’s U.S. Supreme Court decision in McCarty v. McCarty, wherein the court precluded state courts from dividing military retired pay as an asset of the marriage.

While military retired pay is not divisible using a Qualified Domestic Relations Order  (“QDRO”), it is divisible using a Military Retired Pay Division Order.

The Defense Finance and Accounting Service (“DFAS”) has very specific rules about how and when military retirement pay can be divided.  For a division of retired pay as a property award to be enforceable under the USFSPA, the former spouse must have been married to the service member for at least 10 years, and during that time the service member must have performed at least 10 years of creditable service. This is referred to as the 10/10 requirement.

In addition, no more than 50% of retired pay can be awarded as marital property. Because the DFAS has very specific requirements relative to division of military retired pay, it is important that the parties understand these technical requirements early on. There are many ways that a former spouse can lose his or her right to division of retired military pay, so relying on an expert in this unique area is very important.

Military Retirement Divorce

Source: Dividing Military Retired Pay Benefits In Divorce | Robert Hetsler,J.D. CPA,CVA,CFF,FCPA,MAFF,CMAP,PFP | LinkedIn

Servicemember’s Civil Relief Act (SCRA)

military deployment


servicemember's civil relief actThe Servicemember’s Civil Relief Act (SCRA) expanded and improved the former Soldiers’ and Sailors’ Civil Relief Act (SSCRA). The SCRA provides a wide range of protections for individuals entering, called to active duty in the military, or deployed servicemembers. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. A few examples of such obligations you may be protected against are:

  • Outstanding credit card debt
  • Mortgage payments
  • Pending trials
  • Taxes
  • Terminations of lease.

In addition the law:

  • Expands current law that protects servicemembers and their families from eviction from housing while on active duty due to nonpayment of rents that are $3,451.20 per month or less for 2016, this amount changes every year. 
  • Provides a servicemember who receives permanent change of station orders or who is deployed to a new location for 90 days or more the right to terminate a housing lease.
  • Clarifies and restates existing law that limits to 6 percent interest on credit obligations incurred prior to military service or activation, including credit card debt, for active duty servicemembers. The SCRA unambiguously states that no interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty – instead that portion above 6 percent is permanently forgiven.  Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.Note: This law only covers debt incurred prior to military service.
  • Allows you to terminate a cell phone contract if you relocate for at least 90 days to a location that does not support your cell phone service.
  • Allows you to terminate a vehicle lease you signed prior to joining the armed forces if you enter military service under a call to duty on orders of 180 days or more. You may also terminate a vehicle lease if you receive PCS orders to an OCONUS location or deploy OCONUS for at least 180 days.

SCRA Eligibility

The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty. The protection begins on the date of entering active duty and generally terminates within 30 to 90 days after the date of discharge from active duty.