New military retirement system brings potential Texas divorce headaches

Beginning in 2018, military retirement changed in three significant ways.

An important legal issue in a military divorce is the division of future military retirement benefits between the service member and the ex-spouse. Federal law gives Texas courts the authority to divide future military benefits as part of the property division in military divorce cases. A new military retirement system that took effect in 2018 could raise thorny legal issues in past, current and future military divorces in the Lone Star State.

Who gets what?

Anyone who starts his or her active duty on or after January 1, 2018, will automatically be enrolled in the new system. Anyone who began active duty before 2006 will stay in the legacy system. Those whose service began between those dates will have until the end of 2018 to decide whether to opt into the new system, but otherwise will remain in the old one.

Historical military retirement

The military retirement system has historically been a "defined benefit" plan under which retirees receive monthly retirement payments based on a formula that considers years of service and pay levels, and uses a multiplier of 2.5 percent. (Reserve retirement is calculated using a point system.)

Traditionally, divorcing military spouses would agree to (or a judge would order) a division of future monthly retirement payments. For example, they might split the payment in half between them each month.

Blended Retirement System

The new Blended Retirement System or BRS keeps the existing defined benefit (reducing the pay multiplier to 2 percent) plus a new "defined contribution" portion. The defined contribution is a military version of a civilian 401(k) account and is called a Thrift Savings Plan or TSP. Service member deposits are matched by the Department of Defense or DoD contributions.

Two other new components are:

  • Continuation pay: An optional bonus midcareer in exchange for three more years of service
  • Lump sum option: At the start of defined benefit payments, the service member may opt for a lump sum payment in exchange for lower monthly payments, until full payment would resume at the age of Social Security retirement eligibility

Divorce issues

For people who entered into military divorce in the past and whose agreement or divorce decree divides monthly payments, if the service member is one with the option to opt into the BRS and does so, the monthly amount of pay will decrease, including the nonmilitary ex-spouse's portion. It is also unclear what rights the nonmilitary spouse may have in continuation pay or a lump sum and how he or she would even know of the opt-in. Anyone in this situation, which could not have been foreseen at the time of the divorce, should speak immediately with a divorce lawyer to explore what legal options may be available, if any.

Similar issues of notice of future choices under the BRS will exist for people currently in divorce proceedings or who divorce in the future. Those service members may automatically or by opt-in be enrolled in the BRS and have these future decisions to make that could affect both them and ex-spouses.

Get legal guidance

It cannot be overemphasized how important it is for service members and their spouses or ex-spouses to talk to a lawyer as soon as possible to understand potential legal issues and take steps to address them.

The Law Offices of Jon R. Disrud in San Antonio serves military service members and military spouses in divorce matters across south central Texas, including those affiliated with Randolph Air Force Base, Lackland Air Force Base and Fort Sam Houston. Attorney Disrud is a Lt. Colonel for the U.S. Air Force Reserve or USAFR and has previous experience as a military lawyer.