The Definitive Guide to Divorce and Military Benefits (Retirement Pay, Spousal Benefits, and More)

Military Benefits and Divorce

This is the definitive guide to military benefits and divorce.

There are about 1.3 million men and women who currently serve on active duty in the United States Armed Forces.  Another 800,000 also serve in the reserves.  Just like anyone else, members of the military can wind up in unhappy marriages that lead to divorce.

While many of the rules and processes for getting a divorce are the same as they are with civilian divorces, there are also some critical differences to understand, especially when it comes to benefits and how they impact each party.

I sat down with David Ruegg to get a better understanding of what those benefits are and how they are impacted when a servicemember goes through a divorce.

Military Benefits 101 

Before we talk about how benefits are impacted in a military divorce, so we have a good frame of reference, what are some of the key benefits that servicemembers are entitled to when they serve?

There are many different military benefits for servicemembers and their families.  In terms of retirement plans, military members are able to participate in both a pension plan (defined benefit plan) and a TSP plan (defined contribution plan).  The pension plan pays monthly checks for the rest of a servicemember’s life after retirement and the TSP account functions similar to a 401K Plan. “TSP” is short for Thrift Savings Plan.

Service members are provided health care through the Tricare system, are provided a “GI Bill” to help pay for higher education for either themselves or their family members after a certain number of years of service, are eligible to shop at a the ‘commissary’ where military families can buy groceries and other items at discounted and tax free rates, and depending on the military branch of service, service members and their families are eligible to fly on military transport planes for no cost, among other benefits.

In addition to direct ‘perks’ from the military, many service members are eligible for ‘enhanced’ pensions in the civil service sector after they leave the military and accept work in the private sector. Additionally, private companies may choose to offer added perks for service members that are not offered to others (discounts at theme parks, movie theaters, etc).

We chose to honor our service members in this country and that is a very good thing, because they deserve our respect and honor for their sacrifices.

Tell us a little bit about military retirement pay.

Military retirement pay generally refers to the monthly payments from the Armed Forces Retirement System after a service member has retired.  The “Armed Forces Retirement System” is the formal name for the ‘military pension plan’. Military members who have served a minimum of 20 years are eligible to receive military retired pay through this system.

How does that pension generally work?

If you entered service prior to January 1st of 2018 but after September 1980, you are probably grandfathered into the “High-3” system, where every year of service is worth 2.5 percent of your highest three-year average of your salary (highest 36 months). For example:

20 years service x 2.5% x $70,000 High-3 = $35,000/year for retirement pay

If you entered before September of 1980, you are in the ‘Final Pay’ system-which is the same formula, except instead of using the “High-3” to calculate the retired pay entitlement, the Military uses the Service Members’ ‘Final Pay’ in the formula (which is almost always higher than the ‘high 3’ because it does not factor in lower pay over a 3 year period, it just uses the most recent pay prior to retirement-which is almost always higher-due to the military’s promotion and cost of living policies).

What about for those service members who entered the military after January 1 of 2018?

If a service member entered service after January 1st of 2018, they would automatically be enrolled in the ‘new’ Blended Retirement System.  This formula is similar to the “high-3” formula, except instead of using 2.5% as the multiplier, a reduced percentage of 2% is used.  This means the pension system is ‘degraded’ in value when compared to the “high-3” or “final pay” system.  To help ‘soften’ those reductions, the military makes automatic contributions the TSP account under the Blended Retirement System-contributions that are not provided under the high-3 or final pay systems.

These contributions have a formula of ‘matching’. The military will contribute 1% as a ‘base’ contribution for all service members.  For those service members who chose to contribute to their TSP account (which is optional), the Military will match dollar for dollar up to 3% of base pay. If the service member contributions above 3%, the Military will contribute $0.50 towards every dollar the service member contributes above 3%, up to 5%.

Military Benefits and Divorce

Servicemembers should also know about the 10/10 rule and a 20/20/20 rule. What are those?

Regarding the 10/10 rule: When a Service Member divorces or enters into a legal separation judgment, the former spouse must have at least 10 years of marriage overlapping with 10 years of military service, in order to be eligible to receive direct payments from the military as a ‘property award’ from the family court.

It is important to note the 10 years runs not from date of marriage to date of separation, but from date of marriage to date of divorce. So if you are close to 10 years, the parties in a family law action might want to consider stretching out the final divorce date/legal separation date, in order to meet the 10/10 rule.

If the service member is ‘active duty’ (the military is their ‘full time’ job), the 10 years is 10 actual years of military service. If the service member is in the reserves (the military is their ‘part-time’ job where they serve one weekend a month and two weeks in the summer as a minimum), then the requirement is 10 good years of service. A “good year” of service is defined as a minimum of 50 drill points being earned for a reservist (“good year” is my term).

If the former spouse doesn’t meet the 10/10 rule, the military will not pay a former spouse directly for a property division award.  However, a workaround to this rule is to increase spousal support to the former spouse.  While the military won’t honor ‘property divisions’ the military will accept a spousal support garnishment order of military retired pay, no matter how many years of service overlap with the marriage. So if the Parties are cooperative, that might be a strategy to help facilitate ‘direct payments’ from the Military to the former spouse-if the 10/10 rule is not met.

It is important to note that even though the military might not make direct payments to a former spouse who does not meet the 10/10 rule-that does not mean the military spouse does not owe the money.  The ‘property right’ still exists, whether or not the Military will facilitate direct payments and the Military member may be required to make payments directly for the property rights of the former spouse.

Are there any pitfalls associated with using that workaround approach?

The pitfall of that workaround approach is that after January 1 of 2019, because of the Tax and Jobs Act, spousal support is no longer deductible.

This means if a spousal support order is used, the military member has to pay taxes on all the money paid to the former spouse through the garnishment order for support and those payments are not includable in the gross income of the former spouse and not deductible to the Military Spouse.

Contrast this with Parties who meet the 10/10 requirements-where payments to the former spouse are going to includable in the gross wages of that former spouse and excluded from the service member’s gross income.

If your divorce is entered after January 1 of 2019, it can be a challenge because now you have to take into considerations gross and net taxes.

And what is the 20/20/20 rule?

The 20/20/20 rule is generally referenced with respect to health benefits, specifically-eligibility for lifetime benefits through Tricare for a former spouse.

It works a little like the 10/10 rule, in that there must be an overlap of the marital time period with military service. For a former spouse to receive lifetime benefits through Tricare, the former spouse must have 20 years of marriage overlapping with 20 years of military service.

It is important to note the military recognizes legal separation differently than divorce. If the Parties obtain a legal separation, a legally separated spouse can still remain on Tricare even though they’re legally separated and even if the former spouse doesn’t meet the 20/20/20 rule.

It is important to note with the 20/20/20 rule-that Tricare benefits can be lost even if the 20/20/20 rule is met. For example, if a former spouse remarries and is under the age of 55, even if the former spouse meets the ‘base’ 20/20/20 requirements, former spouse will lose Tricare coverage. This is something to be mindful of if the former spouse is eligible for lifetime Tricare and is considering remarriage. Another common reason for loss of benefits is if the non-employee spouse purchases and is covered by an employer-sponsored health care plan.

If the end of the marriage was between 1985 – 1988, there are different rules that apply under the 20/20/15 rule.  The rule is-if former spouse is married 20 years but only 15 of those years overlap with creditable military service, the former spouse may be eligible as follows:

If the marriage ended before April 1, 1985, the former spouse is eligible for Tricare for as long as former spouse meets the other eligibility requirements.  (doesn’t remarry, ect).

If the marriage ended between April 1, 1985 and September 28, 1988 former spouse was eligible for care received from the date of the divorce/annulment until December 31, 1988, or two years from the date of the decree, whichever was later.

If the marriage ended on or after September 29, 1988, the former spouse was Tricare eligible for one year from the date of the divorce/annulment.

So if you are married for 25 years and a military member was in for 25 years of service but only 15 years were during marriage, that would not qualify under the 20/20/20 rule. Is that correct?  

That’s correct. The 20/20/20 rule is not met…however….the 20/20/15 rule is met.

Let’s talk about how military retirement pay is divided in divorce. Walk us through that. How does that work?

Let me give you a hypothetical set of numbers to convey a concept called the Time Rule Formula that I use in a lot of cases.

Let’s assume a military member serves for 30 years. At the end of 30 years, the military says “thank you for your 30 years of service, you are eligible for $3,000 a month.

But out of those 30 years that military member served, they were married to their ex-spouse for 20 out of those 30 years.

Here’s how that division of retirement pay would work.

If you take 20 years of married and serving and you divide it by 30 years of total service, that’s a ratio of two-thirds, 20 out of 30 years. Essentially, two-thirds of that pension was earned during the marriage. That means two-thirds of that pension belongs to the marriage.

So out of that $3,000 a month, $2,000 a month belongs to the marriage.  That is considered “marital money” that belongs to both parties. Martial money is split down the middle. The former spouse would receive $1,000 dollars a month, and the military member would receive $1,000 dollars a month for the marital money.  The remaining $1,000 that makes up the $3,000 total entitlement would also go to the military spouse, as that represents the 10 years of service that was earned outside of the marital time period.

That all being said, it is a bit more complicated than that because of the Frozen Benefits Rule that went into effect December 23rd of 2016. As a result of this new ‘complicating’ rule, it may no longer be practical to use the ‘time rule’ formula in your military division order, depending on the date of divorce and depending on if the military member is still serving or not.

What is the Frozen Benefit Rule?

The Frozen Benefit Rule changed the definition of ‘disposable pay’ after the December 23rd of 2016.

Under the ‘old’ definition of disposable pay, Parties/Attorneys could agree to a ‘time rule’ formula, whereby any ‘enhancements’ to the Plan due to pay raises/promotions would be shared proportionally with both parties.

Under the ‘new’ definition of disposable pay, for Military Members that divorce or legally separate prior to retirement, those ‘enhancements’ are not shared.

This means the military requires former spouse’s share in the plan benefits to be valued at the lower rank and pay grade of the military member at the date of divorce (as opposed to using the higher rank and pay grade at the time of retirement). This translates into less money being paid to the former spouse.

This ‘new law’ is counter to California law, which follows a “Marital Foundation Theory”-meaning retirement benefits are valued at the time of retirement with all ‘enhancements’ proportionally split.

The thought behind “Marital Foundation Theory” is that an employee spouse would not have been able to receive those ‘enhancements’ from pay raises and proportions later in their career, without first building the ‘foundation’ of their career early on-a foundation that was built partially during the marriage.  Therefore-the marriage should receive part of those enhancements.

The Frozen Benefits Rule causes complications because while the definition of disposable pay is changed, California law has not.  The result is a shortfall between what the military will pay a former spouse and what California law says a former spouse is eligible to receive.  Since the Frozen Benefits Rule does not change California law, the Military Spouse is still responsible for making up the difference-creating enforcement and arrears issues.

You mentioned California law, which is primarily where you have practiced. Do most other states also look at it from the same perspective in terms of that Marital Foundation Theory that you were referring to?

Yes, but not all states. There are a few states that followed this sort of Frozen Benefits Rule already-and this new law is not really ‘new’ for them. But most states follow California’s view and so, when this new law was enacted, it caught a lot of states off guard and attorneys from many states across the country are still struggling with the ramifications and the fallout of this Frozen Benefits Rule.

But is it fair to say that military rules override any of the state laws?

Yes, because the military rules follow Federal Regulations. And so, because of the Federal Preemption Doctrine, Federal Rules override state rules, when there is a conflict.

What are the methods for dividing retirement pay?

There are three ways the military will accept a military division order. You can write a percentage, you can write a dollar amount, or you can write a hypothetical award.

A percentage can be stated in traditional form (33% of total monthly benefits) or by use of a formula that converts to a percentage like the Time Rule Formula. For example:

Participant’s Accrued Benefit (as defined by the Plan) shall be allocated:

Formula for calculating division of military retirement pension in divorce

If we plug in data points it might look something like this: 20 years of service earned during marriage divided by 30 years of total service equals 66% states as a percentage, and if you multiply that by 50%, the resulting percentage would be 33% of total monthly benefits.

In addition to percentage (or formula that converts to a percentage), the Military accepts a dollar award to pay a former spouse on a monthly basis. However, for Military plans-be careful using a dollar amount because the military has regulations in place that state if a dollar amount is used, cost of living adjustments are excluded (this is true even if the Court Order directs the military to factor in cost of living, meaning the military won’t reject your order, they will just ignore parts of it).

For example, if you wrote into an order: “Former Spouse is awarded $500 a month, plus proportional cost of living increases”, the military would only pay $500 a month and ignore the rest regarding the cost of living.

This is a different procedure than many litigants are used to with private plans-where if you write something the Plan does not agree with, the Plan will reject the entire order and tell you to re-write it to fix the sections the Particular Plan does not agree with. The military will just process “parts” of the order.

And how does a hypothetical order work?

The hypothetical order is not based on a percentage or a dollar amount of the current pay. It is ‘made-up’ pay. For example, you could say 50 percent of a military member’s pay who has served 25 years with a pay scale of $4,000 dollars a month. Even if the number of years doesn’t match what the military member served or the pay scale, the military will use these “made up” numbers and apply them to the case.

How is Military Disability Compensation treated?

There are a couple different forms of disability compensation under different military regulations. Some forms of disability compensation impact the pension plan, and some do not.

Example 1: A service member may be eligible for disability pay but may not be eligible for a pension: Service Member was injured while service and only served 4 years-the Service Member is not eligible for a pension, but might be eligible for disability pay for life, depending on the type of injury.

Example 2: A service member may be eligible for disability pay and a pension and the disability pay may impact the pension: Service Member served 20 years and was injured and received a 20% disability rating from the VA. Under this scenario, the service member is required to ‘waive’ dollar for dollar part of his/her pension plan, in order to receive the tax-free disability payments.

It is important to note for VA waivers, the VA has a rating system between 10 and 100 percent, but waivers are only required for ratings between 10%-40%. Once a service member hits a 50% rating and above, the service member receives what is called “Concurrent Retirement and Disability Pay (CRDP)” which means the Service Member receives their full pension and full disability benefits-without a waiver being required.

Another form of disability pay is Combat-Related Special Compensation (CRSC). There are certain requirements for receipt of this form of disability pay, and in many cases-the injuries are severe injuries.  This type of disability compensation may or may not require a waiver of the pension payments.

And how are Military Disability benefits handled in divorce?

They are always treated as separate property.  Even if the pension plan is ‘waived’ to receive the disability benefits, pursuant to the Supreme Court Case of Howell vs Howell, the service member does not have to ‘reimburse’ his/her former spouse for any loss due to the ‘waiver’ because that-in effect-would mean the disability payments are being divided.  Therefore, disability waivers can often times cause a reduction in former spouse’s monthly payments-and the former spouse is just ‘out’ the money.

What type of Military Medical Benefits are Offered?

The Military offers health benefits through their Tricare Insurance, which all currently serving service members are eligible to participate.  Service members who serve a minimum of 20 years are eligible to receive lifetime Tricare medical benefits. Former Spouses who meet the 20/20/20 are also eligible to receive lifetime medical benefits under Tricare, as discussed earlier.

State Courts do not have the ability to confer or divest rights to medical benefits. The Federal right to receive these medical benefits either exist or do not exist for former spouses by virtue of their marriage to a military service member.

Let’s discuss the GI Bill.  What is it and how is it impacted in a divorce?  

The GI Bill is an education program that offers funding for the education the service member or their spouse or child.

It is important to note with the GI Bill, the service member can transfer those benefits to a spouse or child, but NOT a former spouse. So, if the GI Bill funds are ‘earmarked’ for spouse that will soon be divorced, that spouse needs to make sure those funds are distributed prior to the “formal divorce date.”

As far as classification of GI Benefits, it is absolutely clear these benefits are considered the separate property of the military spouse. Even if a State Court Order directs the Service Member to transfer those benefits to a spouse or child, there is no mechanism for enforcing this order directly with the military.  The only option is to “pressure” the service member to comply with the State Court orders.

In order to give the court orders ‘teeth’ regarding GI Bill benefits, the former spouse might consider putting monetary penalties into their settlement agreement, for failure to comply.  For example:

Service Member and Former Spouse agree that the GI Bill entitlement shall be used for their Child.  If Service Member chooses not to transfer the GI Bill benefits to his/her child, then Service Member shall pay $30,000 to Former Spouse from Service Member’s bank account.

What can you tell us about Military Survivor Benefits in divorce?

Upon the death of Service Member, the ‘pension benefits’ disappear for all parties.  The Survivor Benefit Plan, also referred to as “SBP”, provides a continuing lifetime benefit to a Spouse or Former Spouse after those ‘pension benefits’ terminate, in the event Service Member pre-deceases Spouse/Former Spouse.

SBP should not be confused with SGLI, which is a different life insurance program.

The SBP plan is connected directly to the pension.  Unless otherwise specified, it’s a 55% continuance of the military pension.

The Survivor Benefit Plan is available not only for divorcing couples but for couples who remain married as well. There is a cost associated with SBP coverage and it’s different for reservists and active members but generally speaking the cost is 6.5% of the retired pay base.  This can be costly and many Military families chose to purchase a private life insurance policy instead or just ‘take the gamble’ that service member will live a long life-making the cost of SBP not financially worth it (this is especially true for those Service Members who commence their pension payments in their 40s).

When discussing SBP in the context of divorce, there are lots of different rules, traps and timelines that must be strictly followed, or SBP coverage is lost.

For example, there are two timelines to keep in mind for the application to receive SBP coverage. Service Members must apply for SBP coverage of their spouse/former spouse within one year of the date of divorce.  Former Spouses must apply for SBP coverage of themselves within 1 year of the award of SBP coverage.

There are other complications to keep in mind when discussing SBP coverage-such as remarriage and the commencement of benefits date-so it may be best to consult with an experienced attorney to make sure you comply with all the requirements.

Is the divorced spouse entitled to VA benefits?

No, a divorced spouse is not entitled to VA benefits.

How would someone know if their ex-husband or ex-wife had a TSP, Thrift Savings Plan account?

You can send a letter to the Office of Personnel Management.  For identification and verification purposes, you should list the Social Security number of the Service Member and Spouse/Former Spouse, the date of birth of both the military spouse and former spouse and essentially say, “I need statements from the TSP account for this military member for purposes of my divorce. Here’s my divorce case number.”

The Office of Personnel Management will reply back and send a letter back with those statements that you’re requesting, or they will response back that no account exists.

Note: A subpoena is not required and in fact, if you send a subpoena, the Office of Personnel Management won’t reply back with the records. They’ll reply back with a letter that essentially states: “We do not respond to subpoenas because we are Federal Agency and do not have to respond to State Court Subpoenas.”

Here is some suggested language:


TSP Legal Processing Unit

P.O. Box 4390

Fairfax, VA 22038-4390


RE: Participant: {Participant} County Case#: {CaseNumber}

Participant SSN#: {ParticipantSSN} Participant DOB: {ParticipantSSN}

Alternate Payee: {AlternatePayee} Relationship: Former Spouse

Alternate Payee SSN#: {AlternatePayeeSSN} Alternate Payee DOB: {AlternatePayeeDOB}


Dear TSP Legal Processing Unit Administrator:

I represent {AlternatePayee} and pursuant to your policies and procedures, and incident to a dissolution of marriage action, I am requesting the following records:  TSP Account Statements (Any that exist): From {DateMarriage} through Present.

These records are necessary for calculating the Alternate Payee’s community interest in the Participant’s TSP Plan. The addresses of both parties are as follows:







You can send the records here:

{FirstName} {LastName}

{AddressLine 1}

{AddressLine 2}

Call me with Questions.



{FirstName} {LastName}


Office of Personal Management


Office of Personnel Management

Main Address:

1900 E St., NW
Washington, DC 20415

Phone Number:




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