Divorce can shake up your Thrift Savings Plan (TSP), the retirement savings vehicle for federal employees. If you’re splitting up, your TSP account might be divided through a court-issued divorce decree, annulment, or legal separation—or a related court order or property settlement tied to one of these. The TSP calls this a “retirement benefits court order” (RBCO), and we’ll use that term moving forward.
Don’t expect the TSP to automatically accept a “qualified domestic relations order” (QDRO) like private-sector plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The TSP dances to a different tune, falling under Title V of the U.S. Code alongside federal plans like FERS and CSRS. A QDRO might come into play, but the TSP will run it through its own rulebook and toss it out if it doesn’t fit the bill.
For an RBCO to get the green light, it has to check four boxes:
- It must come from a U.S. court—any state, the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands, or the U.S. Virgin Islands qualifies.
- It needs to call out the “Thrift Savings Plan” by name. Vague terms like “federal retirement benefits” or even “Thrift Savings Account” won’t fly. If you’ve got multiple TSP accounts (say, civilian, military, or beneficiary), each one needs to be spelled out.
- The payout has to be locked in as a fixed dollar amount or a percentage of the account, pegged to a specific date in the past or present—no forecasting future values here.
- Only a current or former spouse, or dependents, can claim the funds.
When the TSP coughs up the money, it pulls from all your investments proportionally, starting with the core funds (C, S, I, F, G) before dipping into the Mutual Fund Window. An RBCO can also lock down your account, halting withdrawals while the divorce plays out.
If child support or alimony is on the table, the TSP can be tapped through what’s dubbed a “legal process”—think court-issued writs or summons—provided it lines up with 5 U.S.C. 8437(e)(3) and 5 C.F.R. Part 1653, Subpart B.
One critical heads-up: your TSP death benefits hinge on your TSP-3 form, not your marital status. If your ex is still listed post-divorce, they’ll pocket the proceeds—waiver or not—unless you’ve updated it. No TSP-3 on file? The payout follows the federal default pecking order. Also, any outstanding TSP loans factor into the account balance for court awards, unless the RBCO explicitly rules them out.
Want more details? Dig into the TSP’s Court Orders and Powers of Attorney booklet, available in the forms section of their website.
