Dividing the Thrift Savings Plan in a Virginia Divorce

The Thrift Savings Plan (TSP) is a retirement savings and investment plan created by Congress in 1986 for federal employees and members of the military. It is one of three components that make up the Federal Employees’ Retirement System (FERS), along with the Basic Benefit Plan (pension) and Social Security. You can learn more about the FERS Basic Benefit plan here.

Similar to a 401(k) plan in the private sector, the TSP allows federal workers to contribute a portion of their pre-tax or after-tax income through automatic payroll deductions. These contributions go into investment funds within the TSP account with the goal of growing the savings over time until retirement.

In a Virginia divorce case involving federal employees, the division of the TSP retirement account is a major consideration. These accounts can accumulate significant value, so it’s crucial to understand how they are split during a divorce proceeding.

Only the portion of the TSP balance that was accumulated during the marriage is typically viewed as marital property subject to division between the spouses. This is known as the marital share. The marital share covers the contributions made into the TSP from the date of marriage until the date of separation, plus any investment gains or losses on those contributions during that period.

Any funds contributed to the TSP before the marriage or after the date of separation are usually treated as separate property belonging solely to the employee spouse. The separate property portion also includes any gains or losses on investments from those time periods.

Calculating the precise marital share can be quite complex, especially if the marriage lasted many years. It requires carefully tracking not just the contribution amounts but also the investment earnings and losses tied to the marital period contributions over a span of years or decades. An experienced divorce attorney can provide expert guidance to ensure the marital and non-marital portions are properly identified and divided equitably.

By federal regulation, the TSP can only be divided pursuant to a Retirement Benefits Court Order (RBCO) that meets specific requirements set by the managing Federal Retirement Thrift Investment Board. Similar to a QDRO used for private retirement plans, the RBCO must contain exact legal calculations and language detailing how the TSP balance will be split between the parties.

Once approved, the former spouse has options like a lump sum payment, monthly payments, transfer to an IRA, or a combination of these options – but tax implications must be weighed. Consulting a Virginia divorce lawyer well-versed in federal benefits is highly advisable to ensure the RBCO is properly drafted, negotiate a fair division, and understand tax consequences.

More information regarding FERS benefits can be found on the Thrift Savings Plan website: https://www.tsp.gov

Navigating the complex division of valuable marital assets like the TSP during a divorce involving federal employees requires skilled legal counsel to protect your rights and financial interests. If you are going through a divorce in Virginia that involves dividing a TSP account, it is crucial to seek guidance from an experienced divorce attorney. The attorneys at Bourdon & Tortolero, serving clients throughout Virginia, are committed to vigorously advocating for your financial rights and the equitable distribution of marital assets. They take a personalized approach to every case, as each divorce situation is unique. To learn more about how their knowledgeable legal team can assist you, please contact or call 703-215-1867 today.

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