A member of the military who accumulates retirement benefits can divide those benefits, upon divorce, with his or her spouse but certain requirements must be met. Just as a qualified domestic relations order (QDRO) provides the method by which the courts distribute ERISA governed retirement benefits to an ex-spouse or some other enumerated beneficiary at a designated point in time, a Military Pension Division Order (similar in format to the Qualified Domestic Relations Order) can be issued dividing a service member’s military retirement.
But the Defense Finance and Accounting Service (DFAS) will not make payment directly to the non-military spouse unless the “Ten Year Rule” has been met. The Ten Year Rule states that parties must have been married for 10 or more years, and 10 years of the marriage must have overlapped the 10 years of creditable service. As the overlap portion must be at least 10 years, it is very likely that the length of the marriage will most likely have exceeded 10 years by a considerable mark unless the serviceperson married his or her spouse immediately before joining the service.
Like a QDRO, the Military Pension Order must be reviewed and approved by the Court in the divorce or other domestic relations action. Then a certified copy must be sent to the appropriate Uniformed Services designated agent with a DD Form 2293, entitled “Application for Former Spouse Payments from Retired Pay.” The DD Form 2293 serves also as the form used for requesting direct payments of alimony or child support from retired pay. Once processed, payments will be made directly to the non-military spouse and each party will be issued an IRS Form 1099-R for the retirement benefits received during each tax year.
Language should be included by the parties’ attorneys about the intended tax consequences of the distributions. Such language should include relevant citations to IRS statutes or regulations to eliminate ambiguity about the parties’ agreed intent.
If the parties do not qualify under the Ten Year Rule, that does not mean the ex-spouse does not have rights to the retirement payments. Those rights are determined by state law, and the ex-spouse can gain those rights with as little as 1 day of marriage during the military service. But if the Ten Year Rule is not met, then the recipient of the retirement benefits will have to make regular payments to his or her ex-spouse on his or her own. The DFAS will not not make the payments.
The Wilson Law Firm, a Professional Corporation, at 1120 Iron Point Rd Suite 100, Folsom, CA 95630 represents parties involved in domestic relations disputes. Call The Wilson Law Firm, a Professional Corporation at the firm’s office at: 916-608-8891 to set up an appointment to speak with Attorney Dennis Wilson or visit its website at http://wilsonlawfirmca.com /.