Impact on Retirement Benefits

Chapter 7: Section 2

General Considerations

In the event of a divorce, separation, or annulment, the most common ways that the courts divide a federal worker’s retirement benefits are awards to the former spouse of payments from a retiree’s monthly annuity, a portion of an employee’s refund of retirement contributions, and rights to a survivor annuity. Awards of “insurable interest” annuities also sometimes are made. 

The Office of Personnel Management has detailed requirements for the types of court orders it considers acceptable for processing. OPM will not honor court awards that don’t comply with those rules or with underlying federal law (which generally takes precedence over state law). For example, state courts lack the authority to prevent OPM from paying a retired employee an annuity that is required by law—or to delay the payment of such annuities. On the other hand, OPM will honor court orders that direct it to pay the annuity to the court, an officer of the court acting as a fiduciary, or a state or local government agency pending the outcome of a divorce or legal separation proceeding.

The address for delivery of court orders affecting retirement benefits is Office of Personnel Management, Court Ordered Benefits Branch, P.O. Box 17, Washington, DC 20044-0017, phone (888) 767-6738 and ask for that branch.

OPM must comply with a properly filed court order for processing, even if the retiree and the former spouse agree that they want OPM to pay an amount different from the amount specified in the court order. Thus, OPM will not honor a request from a former spouse, a retiree, or both jointly that an amount either greater or less than the amount provided in the court order be withheld from an employee annuity or a refund of employee contributions to the retirement fund. Any change requires that an amended court order be filed with OPM.

Payment of Portion of Retiree’s Annuity

A court order can apportion or divide a CSRS or FERS retirement benefit as a result of a divorce, legal separation, or annulment of marriage. The court order must expressly direct OPM to pay a portion of the retiree’s monthly CSRS or FERS benefits to the former spouse. The spouse’s share must be stated as a fixed amount, a percentage or fraction of the annuity, or in terms of some other formula whose value is readily apparent from the face of the order and information in the government’s files. The spousal share cannot exceed the amount payable to the retiree after deductions for taxes and insurance.

Only payments made after OPM receives the court order will be divided between the employee and his or her former spouse. OPM will not execute a court order dividing a federal employee's retirement annuity until the employee has separated from federal service, is eligible for an annuity, and has applied for an annuity. 

A former spouse’s right to apportionment payments from a retiree’s annuity ends with the retiree’s death. For the former spouse to continue receiving payments after the retiree’s death, the retiree must elect, or the court order must provide for, a survivor annuity.

The federal government generally makes payments from an annuity only when all conditions necessary for payment of the annuity are met, including a worker’s separation from a covered position with immediate eligibility for an annuity and the employee’s submission of an annuity application. Money that is held by an employing agency or OPM and that may be payable at some future date is not available for payment under court orders directed at annuities. 

A former spouse, personally or through a representative, must apply to OPM in writing to be eligible to begin receiving a court-awarded portion of an employee annuity. No special form is required, but the application must include a certified copy of the court order, the individual’s certification that the order is currently in force, information sufficient for OPM to identify the employee or retiree, and current mailing addresses of the former spouse and the annuitant. When the court order requires termination of the payments if the former spouse remarries, OPM also needs a statement certifying that a remarriage has not occurred, that the former spouse will notify OPM within 15 days of any remarriage, and that the former spouse will be personally liable for any overpayment resulting from a remarriage.

To be acceptable to OPM, a court-ordered award of spousal benefits must expressly divide the employee annuity, provide for payment of the apportioned share to the former spouse, and provide OPM with sufficient information to compute the amount of the former spouse’s monthly benefit. The amount must be expressed as a fixed amount, a percentage or fraction of the annuity, or in some other readily understandable formula. OPM prefers that such orders specify that it make the payments directly to the former spouse, although a court order directing the employee or separated employee to arrange for OPM to pay the former spouse also is acceptable. 

If the order awards a former spouse a lump-sum amount from the annuity and does not state a monthly rate at which the lump sum should be calculated, OPM will pay the former spouse equal monthly installments of 50 percent of the gross annuity until the lump-sum amount is paid in full.

The former spouse’s share will be increased by the same cost-of-living adjustment applying to the retiree’s annuity. See Chapter 4, Section 3.

Payments to the former spouse will be discontinued if the retiree’s annuity payments are suspended or ended. If the individual’s annuity payments are later restored, payments to the former spouse also will resume under the terms of a court order that is in effect at that time. However, a retiree may not deprive a former spouse of payment by causing suspension of payment of the annuity.

 A former spouse’s portion of an annuity typically ends on:

• a date on which the court order requires termination;

• the issuance of a court order invalidating the original order or amending it to stop payment; or

• the death of the retiree or (in most cases) the former spouse. 

OPM will honor a court order that directs it to continue paying a former spouse’s share after such individual’s death in the form of payments made to the court, an officer of the court, the former spouse’s estate, or one or more of the retiree’s children. However, it will not honor an order directing it to continue annuity payments to the former spouse after the death of the retiree, absent express language granting the former spouse survivor annuity rights.

Special Retirement Supplement—A court order dividing a Federal Employees Retirement System benefit applies to both the basic annuity portion and to the “special retirement supplement” (see Special Retirement Supplement in Chapter 3, Section 4) if the retiree is eligible for that benefit, unless the order specifically excludes the supplement from the computation of the former spouse’s share. 

That policy was set by Retirement and Insurance Letter 2016-12 of June 28, 2016, which made the supplement automatically subject to such a division unless excluded from the court order. Previously, the supplement was considered not subject to division unless specifically included. The Office of Personnel Management applied the revised policy to retiree annuity and former spouse payments starting in August 2016 and also applied the policy retroactively, resulting in further reductions to reimburse former spouses for past underpayments to them. 

Any portion of the supplement due to a former spouse is not adjusted for inflation, because the supplement itself is not so adjusted. The former spouse’s share is subject to being reduced along with the retiree’s share if the retiree exceeds certain earnings limits.

Refunds of Retirement Contributions

A court order may provide for payment of all or part of a refund of an employee’s retirement plan contributions to the worker’s former spouse. A court order also may block payment of a refund to the employee, but only if the order also grants a survivor annuity or a portion of a retiree annuity to a legally separated or former spouse.

Refunds of employee contributions are payable only if all of the conditions necessary for payment of the contributions to the separated employee have been met. Generally, these include the individual worker’s separation from a covered position, application for payment of the refund, and immediate entitlement to a refund. 

A former spouse, personally or through a representative, must apply in writing to be eligible for a court-awarded portion of a refund of an employee’s retirement contribution. No special form is required, but the application letter must be accompanied by a certified copy of the court order, a certification that the court order is currently in force, information sufficient to identify the employee or separated employee, and current addresses of both the separated employee and former spouse.

Generally, OPM must receive the documentation no later than the last day of the second month before payment of the refund. If the documentation is incomplete, OPM will notify the former spouse and require full documentation within 15 days. 

A court order dividing a refund of employee contributions must expressly award a former spouse a portion of any refund, identify the retirement system affected, and provide OPM with sufficient information to compute the former spouse’s share. The specified portion can be expressed as a fixed amount, a percentage or fraction of the refund, or in another readily understandable formula. OPM will not accept an order that requires it to examine or interpret a state statute or a court decision on a different case to compute the former spouse’s share. OPM prefers that orders specify that it make the payments directly to the former spouse, although an order directing the employee or separated employee to arrange for OPM to pay the former spouse is acceptable. A court order barring payment of a refund will be honored only if it expressly directs OPM not to pay a refund of employee contributions it awards, or a prior court order has awarded the former spouse a survivor annuity or a portion of the employee’s annuity; and payment of the refund to the employee would prevent a required payment to the former spouse under an order for a survivor annuity or a portion of the employee’s annuity.

Survivor Annuity to Former Spouse

A monthly survivor annuity may be payable to a former spouse after the death of the employee or annuitant if provided by court order. An employee or retiree is required to provide such an annuity if such payments are stipulated in a divorce agreement or annulment. The provision of a former spouse survivor annuity results in a reduction to the retiree’s monthly benefit amount.

A retiring employee may voluntarily elect to provide a survivor annuity to a former spouse. However, if the employee has remarried, this voluntary election may only be made if the worker’s current spouse consents to it. 

Court orders must expressly award a former spouse a survivor annuity or expressly direct an employee or retiree to elect to provide a former spouse with a survivor annuity. As with the other types of spousal benefits, the court’s award must provide sufficient information so that OPM can determine the amount of the former spouse’s monthly benefit, using only the express language of the court order. Orders that would require OPM to examine or interpret a state statute or a court decision on a different case to compute the former spouse’s share are unacceptable.

In cases where an actively employed individual dies, a court-ordered survivor benefit is payable to a former spouse if the deceased employee has completed at least 18 months of creditable civilian service, and dies while enrolled under CSRS or FERS coverage. Under CSRS, a survivor annuity is payable to the former spouse. Under FERS, a lump-sum death benefit is payable, and a survivor annuity also is payable if the employee had at least 10 years of creditable service.

OPM will not honor court awards awarding lump-sum payments (other than the FERS basic employee death benefit, which may be paid to a former spouse or divided between a current and former spouse, pursuant to a state court order) to a former spouse upon the death of an employee or retiree. Nor will it honor awards allowing the retiree or former spouse to pay for the reduction in a retiree’s annuity by any means other than withholding from the annuity.

A court order awarding a survivor annuity to a former spouse of an employee will not be honored by OPM if the former spouse previously waived his or her right to a survivor annuity.

The maximum possible combined totals of all current and former spouse survivor annuities are 55 percent of the self-only annuity amount payable under CSRS or 50 percent of the amount payable under FERS. Thus, a court order awarding a survivor annuity to a former spouse invariably reduces the amount that can be paid to a current spouse of the employee or retiree at the time of death. This means that if the maximum percentage of an annuity (55 percent under CSRS and 50 percent under FERS) has been awarded to a former spouse (or former spouses, if the worker had more than one), the employee’s current spouse will not receive any survivor benefit unless the former spouse loses entitlement to benefits due to death, remarriage before age 55, or under the terms of a court order. If less than the maximum percentage has been awarded, a current spouse will be entitled to a survivor benefit of up to the difference between the maximum survivor annuity permitted and the amount allocated to a former spouse. The current spouse’s entitlement would increase if the former spouse loses entitlement. Survivor annuities to former spouses are increased according to the same cost-of-living adjustment formulas applied to the CSRS or FERS annuity.

A former spouse’s survivor annuity continues for life unless entitlement is lost due to the individual’s remarriage before age 55 or under terms of the court order. An annuity to a former spouse that ends due to an individual’s remarriage cannot be restored, even if that marriage ends in divorce (unless the qualifying marriage lasted for at least 30 years) or annulment (unless the annulment is based on a determination that the marriage was not legal).

Insurable Interest Annuity

As described above, the maximum possible combined total of all current and former spouse survivor annuities equals 55 percent of the rate of a self-only annuity under CSRS and 50 percent under FERS. A court order awarding a survivor annuity to a former spouse thus reduces the maximum that can be paid to a spouse married to the annuitant at the time of the annuitant’s death. 

An insurable interest annuity (see General Types of Survivor Annuities in Chapter 3, Section 4) can be elected at retirement to provide a current or former spouse with additional survivor benefits if the retiree is in good health and no court order prohibits it. Choosing this option causes an additional reduction in the retiree’s annuity that is based on the difference in ages between the retiree and the named beneficiary. If an insurable interest survivor annuity stops because the beneficiary dies, it has no effect on any other survivor annuity. An insurable interest annuity to a former spouse continues for life regardless of remarriage.

Garnishment of Benefits

Garnishment is a legal process under state law for enforcing existing legal obligations. Benefits under CSRS or FERS can be garnisheed only for alimony, child support, or in cases of child abuse. The garnishment must conform to all state law requirements for garnishment actions involving private employers, and is subject to the limitations in 5 CFR 581. For further information, see Section 6 in this chapter.

Restrictions

It is very important that provisions intended to award a survivor annuity both reflect the intent of the parties and conform to law and regulations. While orders can be changed before the employee retires or dies, in general they cannot be modified to affect survivor benefits after the employee retires or dies.

State court orders cannot affect several types of benefits payable under CSRS and FERS. OPM must pay any accrued annuity that is not paid before a retiree’s death and any unexpended balance of an employee’s retirement contributions that are paid as a death benefit in accordance with the order of precedence established by federal law. Similarly, eligibility for children’s survivor benefits is governed by federal law and cannot be affected by state court orders.

Orders Affecting Military Retired Pay

Receipt of military retired pay often bars credit for the military service for CSRS or FERS unless the retiring employee elects to waive the military retired pay and have the military service added to civilian service in computing the civilian annuity. If the employee’s military retired pay is subject to a court order awarding a former spouse a portion of the military retired pay, the retiring employee cannot receive credit for the military service for CSRS or FERS without first consenting for OPM to continue payment to the former spouse. OPM must pay the amount the military pay center would pay the former spouse if military retired pay continued.

OPM’s General Process

OPM authorizes retirement benefit payments to former or separated spouses according to provisions of court orders it considers acceptable for processing under applicable law and regulations. If OPM views the order as not acceptable, the parties must return to state court to seek modifications.

Former spouses (or their legal representatives) are responsible for:

• filing a certified copy of the court order and all other required supporting information with OPM;

• keeping OPM advised of current mailing addresses of both the former spouse who is claiming benefits and the federal employee/retiree whose benefits are being affected;

• notifying OPM of any changes in circumstances that could affect the individual’s entitlement to benefits; and

• submitting all disputes with the employee/retiree to the appropriate state court for resolution.

Once OPM determines that a court order is acceptable, it will:

• inform the former spouse that the court order is acceptable, when spousal benefits will begin to accrue (if known), how much the monthly benefit will be and how it was computed, and that if the individual disagrees, a clarifying court order must be obtained; and 

• inform the employee, retiree, or other interested party that the former spouse has applied for benefits, that the court order is acceptable for processing, when payment will commence (if appropriate), and in what amount and computed under which formula. Individuals who want to contest the validity or amount must submit a court order that either invalidates or amends the one submitted by the former spouse.

A former spouse must apply in writing to be eligible for a court-awarded portion of an employee’s annuity. No special form is required. Unless a court order is already on file at OPM, the application letter must be accompanied by a court-certified copy of the court order directing payment from the employee’s or retiree’s retirement benefit, along with any other documents issued as part of the court action. Included with this must be a certification from the former spouse or his/her representative that the order is currently in force and has not been amended, superseded, or set aside. There must be sufficient information to identify the employee or retiree, including full name, retirement claim number (if known), date of birth, and Social Security number. OPM also needs the applicant’s current address and that of the employee if he/she has not retired or died. When a court order is subject to termination upon remarriage no payment can be made without a further statement that remarriage has not occurred. 

These materials should be sent to the Office of Personnel Management Court Ordered Benefits Branch, P.O. Box 17, Washington, DC 20044-0017, www.opm.gov/retirement-services,  (888) 767-6738.

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