Kline Legal Group P.L.C.

Divorce and Thrift Savings Plans

Federal employees in Michigan who expect to go through a divorce may benefit from learning how their Thrift Savings Plan, or TSP, may be allocated. There are no existing federal statutes that require a former spouse to automatically receive the funds in a TSP account. In order for a former spouse to receive any part of those funds, the couple will have to agree to the division of the funds, or the judge will determine how much is awarded.

A Retirement Benefits Court Order has to be issued for a TSP. It can be a court decree of a legal separation, divorce or annulment. A property settlement that was approved by the court and that is related to the court decree is also sufficient, as is a Qualified Domestic Relations Order in most cases.

There is an informational publication federal employees can review for help regarding the treatment of a TSP. The Court Orders and Powers of Attorney is a 31-page booklet that is located on the TSP website. It includes a checklist as well as sample language that can be used when drafting legal documents. Also included in the booklet are the requirements for an RBCO.

Loans and withdrawals from the TSP account will be placed on hold by a court order until the divorce is resolved. If the court order does not explicitly exclude the amounts of any outstanding loans, they are in the included in the total account balance when determining how much the former spouse should receive. These types of retirement accounts are often a point of contention in a high asset divorce, and it might be advisable for the owner to have legal counsel when attempting to negotiate a property division settlement agreement.

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Kline Legal Group P.L.C.
483 Little Lake Drive, Suite 200
Ann Arbor, MI 48103

Phone: 734-249-6100
Fax: 734-302-7222
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