In Dividing Military Pensions and Benefits Part 1 we covered what Uniform Services Former Spouses’ Protection Act (USFSPA)[1] is and how it applies to you if you or your spouse is a service member. This month we are covering some of the proposed formulas that may apply to you, if you are the spouse of a military service member.
Remember that there is no federal law for dividing military retirement. Individual state divorce courts determine how retirement pay is divided. Still, for the Defense Finance and Accounting Service (“DFAS”) to disburse any court awarded retirement, the awards must meet federal guidelines and follow either of the following two formats: 1) Fixed Dollar Amount Award (no cost of living adjustment), or 2) Percentage Award (as a percentage of the service member’s retirement pay).[2]
The following are some recommended formulas for dividing military retirement:[3]
1) Awards for when Members are Active Duty:
The total length (in months) of overlap divided by total time in the service multiplied by 50 will equal retirement percentage.
For example, if Joe and Jen were married for 10 years and Jen was in the military for 20 years:
(120 months/240 months) × 50 = 25%
2) Awards for when Members are in Active Reserve:
Use the active duty formula, but instead of using length of marriage during service/total time in active duty, the formula would use: points accrued during marriage/total points earned during reserves multiplied by 50 to get percentage of retirement pay.
For example, if Joe earned 10 points as a reserve member during his marriage with Jen and accrued a total of 20 points while serving in the reserves:
(10 points during marriage/20 points accrued over career) × 50 = 25%
3) Hypothetical Awards Based on Member’s Pay at Time of Divorce
In some situations the court may require a calculation that assumes, for the purpose of calculation, that the service member is retired at the date of divorce. This is calculated using 36 months of the service member’s highest military base pay prior to the “retirement date.” The advantage of using this system for the service member is that the spouse of the service member will not be entitled to any financial benefit from future advancement in the member’s service career.
4) Hypothetical Awards based on Pay Table
Sometimes the courts will direct the DFAS to calculate a table based on the hypothetical retirement pay after the service member becomes eligible for retirement pay. This table provides a percentage award to the spouse based on a number of factors, including: service member’s rank, years of credible service, and base pay.[4]
For more information about hypothetical pay tables and awards, please visit www.dfas.mil, or contact one of our knowledgeable attorneys.
Note: standards are always changing, and we cannot stay on top of everything, so don’t rely on this blog post alone; make sure you consult an attorney and that you know what the current state of the law and regulations are before you prepare any military pension and benefits division orders.
You can download a PDF version of the USFSPA manual by clicking here
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[1] 10 U.S.C. 1408: The Uniformed Services Former Spouses’ Protection Act (https://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA452505)
[2] Please contact your attorney for more information about your options regarding fixed dollar award or a percentage award.
[3] These are recommendations only. Your state will make the final determination of whether to follow these formulas.
[4] An example of the application of hypothetical awards based on a pay table can be found in Kelly v. Kelly, 78 P.3d 220 (Wyoming 2003)
