Federal Employees Retirement System (FERS) and Divorce: What You Need to Know

Navigating divorce is never easy especially when federal benefits like FERS are involved. The Federal Employees Retirement System (FERS) is a cornerstone of federal retirement, and divorce can complicate how those benefits are divided, accessed, and taxed.

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This blog breaks down everything federal employees and their spouses need to know about FERS during a divorce, including how the benefits are divided, what court orders are needed, and what happens to survivor benefits. Let’s dive in.

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What Is FERS and Why It Matters in Divorce

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FERS (Federal Employees Retirement System) is a three-part retirement program that includes:

• Basic Benefit Plan
• Social Security
• Thrift Savings Plan (TSP)

In a divorce, all three components may be subject to division depending on the court's ruling and the applicable state law.

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How Are FERS Benefits Divided During Divorce?  

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FERS benefits are considered marital property and may be divided during divorce proceedings. The exact amount depends on several factors, including the length of the marriage and the court’s decision.

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Real-Life Example:  

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If a federal employee worked for 30 years and was married for 15 of those years, the court may decide that the former spouse is entitled to 50% of the retirement earned during those 15 years.

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What Is a Court Order Acceptable for Processing (COAP)?

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To divide FERS benefits, a Court Order Acceptable for Processing (COAP) is required. This legal document, issued by a court, outlines how the federal retirement benefits should be split.

COAP must:

• Be specific about the percentage or formula used
• Include survivor benefit elections if applicable
• Be submitted to the Office of Personnel Management (OPM)

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Can a Former Spouse Get Survivor Benefits?

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Yes, but only if the COAP or divorce decree specifically grants survivor benefits. If not properly addressed, the former spouse may receive a share of the retirement while losing access to survivor benefits after the employee’s death.

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Tip:

A maximum of 50% of a FERS annuity can be allocated as a survivor benefit to a former spouse.

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Thrift Savings Plan (TSP) and Divorce

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The TSP functions like a 401(k) and is also considered marital property. It can be divided through a Retirement Benefits Court Order (RBCO), which must:

• Be clear and unambiguous
• State how the account is to be divided
• Be approved by the TSP agency

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Tax Implications of Dividing FERS Benefits

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While dividing retirement benefits, it’s essential to consider tax implications:

• Payments made directly to the former spouse are generally taxable to the recipient
• Early withdrawals from TSP may be subject to penalties unless properly rolled over

Always consult a tax professional before agreeing to any division of assets.

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FERS Supplement Calculator

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Why State Laws Matter

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Federal retirement systems like FERS follow federal rules, but the division of marital property is determined by state law. This means:

• One state may allow a 50/50 division
• Another may apply a different formula based on contribution years during marriage

Working with a divorce attorney familiar with both federal and your specific state’s laws is crucial.

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Final Thoughts

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Divorce can make navigating federal benefits complicated, but with the right planning and legal documentation, you can ensure a fair outcome. From survivor benefits to COAP filings, every detail matters.

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By understanding your rights and responsibilities under the Federal Employees Retirement System, you can protect your retirement and plan for a stable financial future.

For more clarity and support, always consult a federal benefits specialist or attorney experienced in divorce law.

Looking for more retirement planning advice? Explore our library of guides tailored for federal employees and their families.

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FAQs

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1. How does divorce affect federal retirement?

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Divorce can impact a federal employee’s pension, TSP, and survivor benefits. A court order can award a portion of these benefits to a former spouse, but it must be legally documented.

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2. What happens to a retirement plan in a divorce?

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Federal retirement plans like FERS and TSP may be divided in divorce. A court order determines what share, if any, a former spouse receives.

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3. How to divide FERS pension in divorce?

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You’ll need a Court Order Acceptable for Processing (COAP) that outlines how the FERS pension should be divided. It must meet OPM’s legal requirements.

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4. Does my ex-wife get half of my retirement?

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‍Not by default. Whether and how much your ex-spouse receives depends on the court order and the details of your divorce settlement.