Silent Partner

Getting Military Pension Orders Honored by the Retired Pay Center

Introduction: Silent Partner is a lawyer-to-lawyer resource for military legal assistance attorneys and civilian lawyers, published by the Military Committee of the American Bar Association’s Family Law Section. Please send any comments, corrections and suggestions to the address at the end of this Silent Partner. There are many Silent Partner infoletters on military pension division, the Survivor Benefit Plan and other aspects of military divorce. Just go to www.americanbar.org > Family Law Section > Military Committee (the website of the above committee) or www.nclamp.gov > For Lawyers (the website of the military committee, N.C. State Bar).

Getting a military pension division order honored by the retired pay center isn’t easy. What does the uniformed services pension division order need to say? Is there “magic language” which must be included? Where do you send the order? Who does the processing? This info-letter contains ten tips for the practitioner on how to get the job done seamlessly.

Tip #1 – Where Do I Start?

Retired pay orders for the Army, Navy, Air Force, Marine Corps, as well as the National Guard and Reserves (known as the RC, or Reserve Component), are processed by the Defense Finance and Accounting Service (DFAS), located in Cleveland, Ohio. Pension orders for members of the U.S. Coast Guard and Coast Guard Reserve are sent to the USCG Pay and Personnel Center (http://www.uscg.mil/ppc/), located in Topeka, Kansas. Orders for the commissioned corps of the Public Health Service and the National Oceanic and Atmospheric Administration are also serviced by the Coast Guard PPC.

The three basic issues in the division of retirement benefits are “pension share,” Survivor Benefit Plan (SBP) and indemnification. These tips tell how to write and get approved an order for division of military retired pay as property, how to obtain SBP coverage under the Survivor Benefit Plan, and more. The title “retired pay center” will be used to refer to the above two offices which process applications for a division of uniformed services retired pay under USFSPA, the Uniformed Services Former Spouses’ Protection Act.[1] Note that USFSPA refers to the retired pay center as the designated agent. [2]

Tip #2 – Know Your Resources.

Read closely the provisions of 10 U.S.C. §1408 to understand what the law requires for military pension division. There is a survivor annuity available to spouses and former spouses; the statutes regarding SBP (Survivor Benefit Plan) coverage are found at 10 U.S.C. §1447-1455.

The rules promulgated by DFAS to implement the USFSPA are in the DoDFMR (Department of Defense Financial Management Regulation).[3] The Coast Guard follows DFAS guidance and there is a useful USCG pamphlet, “FSPA and SBP, 8^th Edition,” at: http://www.dcms.uscg.mil/Portals/10/CG-1/PPC/RAS/PPCPUB5825.pdf?ver=2017-03-02-093836-327. The DFAS website is www.dfas.mil, and the fact sheets and application forms needed are at the “Retired Military and Annuitants” tab.

At the end of Chapter 29 of Vol. 7B, DoDFMR, you will find two sample military pension division orders. Use a large measure of caution in deciding whether to use them; although by and large they provide helpful language that will be accepted by the retired pay centers, they are full of mistakes:

• Figure 1 is titled “Military Retired Pay Order (on or before December 23, 2016),” and the text contains the note, “(For Decree of Divorce, Dissolution, Annulment, or Legal Separation that occurs on or before December 23, 2016),” implying that it should not be used today for division of the military pension. In fact, it may also be used for today’s divorce case also, when the case involves a military retiree.
• Figure 2 is titled “Military Retired Pay Order (after December 23, 2016)” and the text contains the note, “(For Decree of Divorce, Dissolution, Annulment, or Legal Separation that occurs after December 23, 2016).” In fact, it only needs to be used when a) the divorce, dissolution, annulment or legal separation is after 12/23/16 and b) the servicemember is not receiving retired pay at the date of divorce, etc.
• The sample orders refer to the “Service Members’ Civil Relief Act, 50 U.S.C. App. 501-548 and 560-591.” The correct title is the Servicemembers Civil Relief Act.[4] The section numbering is incorrect, since the Act was codified (i.e., removed from the Appendix of Title 50 and designated Chapter 50 of Title 50) in December 2015. The correct title and section numbering should be “Servicemembers Civil Relief Act, 50 U.S.C. §3901 et seq.”
• The two sample orders are silent as to SBP.[5] This could be a costly malpractice trap for the former spouse’s attorney who drafts or reviews and approves the final military pension division order. When the settlement or trial ruling requires the member or retiree to elect SBP, that statement must be in the court order.
• The second omission is indemnification in the event of an election of disability pay that reduces disposable retired pay.[6] When there is a clause in the settlement or trial ruling regarding reimbursement for any reduction due to receipt of VA disability compensation, that requirement needs to be in the court order. But, since DFAS is not responsible for reimbursements due to disability pay reductions, no such clause appears in the sample orders, since indemnification is up to the retiree. Thus it is not something that a DFAS model order needs to contain, but it is something which the attorney for the FS (former spouse) certainly needs to consider.

A better order, addressing both all these mistakes and issues, is referenced at Tip #10 below.

The Silent Partner series of info-letters contains “Military Pension Division: Guidance for Lawyers,” and “Guidance for Lawyers: The Survivor Benefit Plan,” which provide detailed information on how to understand and implement the rules and statutes mentioned above.

Tip #3 – Use the Right Document.

A separation agreement or property settlement, standing alone, is not the way to accomplish military pension division when the nonmilitary spouse wants to receive direct pension payments from the retired pay center. USFSPA only allows direct pension payments pursuant to a “final decree of divorce, dissolution, annulment, or legal separation issued by a court” or a property settlement that is ratified or approved by the court and issued incident to such a final decree.[7] You can either:

• Prepare a separate military pension division order, judgment, or decree to submit to the court at the appropriate time, entered incident to the divorce, such as when the divorce occurs, or when the hearing on property division takes place.
• In the alternative, prepare a separation agreement or property settlement which can then be incorporated or merged into the decree of dissolution or divorce.

Tip #4 – Can You Get Direct Payments from the Retired Pay Center?

There are several requirements which must be met to get pension payments from the retired pay center. First of all, a pension division order must meet a unique jurisdictional test, over and above the usual requirements for personal and subject matter jurisdiction. Military pension division is allowed only when the retiree/military member:

• is domiciled in the state in which the suit for the divorce or property division occurs; or
• resides in the state in which the lawsuit occurs (other than because of military assignment); or
• consents to the jurisdiction of the court in which the lawsuit is pending.^[8]

The order must state the jurisdictional basis for dividing military retired pay.^[9] For more detailed information on these jurisdictional tests, see the Silent Partner info-letter, Military Pension Division: Scouting the Terrain; this is found at either of the two websites mentioned in the first paragraph of this infoletter.

Second, in property division cases involving the retired pay center’s division of military retired pay incident to a divorce or separation, the parties must be married for at least 10 years during which time the military member performed at least 10 years of creditable military service.[10] Without this, the retired pay center cannot honor an application for the direct payment of any court-ordered division of retired military pay as property. The pension is still divisible, but the former spouse must look to the retiree for payments, not the retired pay center.

Third, there must be evidence that the member’s rights under the Servicemembers Civil Relief Act (SCRA)[11] have been honored. The SCRA offers protection for military members who are on active duty at the time of the divorce. USFSPA requires a statement in the pension division order for military pension division that the military member’s rights pursuant to the SCRA have been observed.[12] Although the SCRA does not apply in cases where the member is retired or is not on active duty at the time the decree was entered, USFSPA does not make that distinction; it requires such a statement in all cases.

Fourth, in most cases involving those still serving, the order must state the “High-3” pay of the member at the time of divorce and also the number of years of creditable service at that time. If the individual is in the Guard or Reserves and still drilling, then the order needs to state retirement points as of the date of divorce (instead of years of service). More information on this is contained in the two Silent Partner info-letters on “the Frozen Benefit Rule,” found at either of the above websites. This doesn’t apply if the member is already retired and in pay status at divorce.

The pension order or divorce decree may be submitted at any time after it is entered.[13]  One need not wait until the SM has already applied for retirement or is in pay status. If the SM is not yet in pay status when the order is tendered to the retired pay center, a conditional approval will be made, subject to final approval at the time the individual actually starts to receive retired pay.[14]

At the time of final approval, the retired pay center will notify the SM that payments will start not later than 90 days after the service date of the approved application or the start of retired pay, whichever is later.[15] The FS also gets an approval notice.[16] When the court order divides military retired pay as property, no more than 50% of disposable retired pay (DRP) may be deducted.[17] The retiree remains liable for any amount still owing.[18] In cases where there is an application for the direct payment of court-ordered division of military retired pay and a garnishment issued pursuant to 42 U.S.C.§ 659 (child or spousal support), the retired pay center may deduct up to 65% of the military member’s disposable earnings.[19]

Tip #5 – Use the Right Language.

“Creative drafting” and “made-up wording” may result in your pension order being rejected. Don’t make the mistake of thinking that (without guidance such as is found herein) you can write it up better than the officials at DFAS who are going to be processing the order; you probably can’t. And if your order is rejected, you’ll have to explain to your client why the payments are still not flowing, or the legal bill keeps going up, or the order has not been accepted by the retired pay center, or you still have not finished with his or her case, although you’re “trying really hard” to do so!

Even if it is incorporated into a court order or a divorce decree, the separation agreement or property settlement must contain all the terms required for court orders to be honored by the retired pay center. You should state the following:

1. The names and addresses of the parties, and the last four digits of their Social Security numbers (the application document, DD Form 2293,[20] requires the full SSN);
2. The years of marriage and of military service, the overlap of these two periods and the date of divorce;
3. When the divorce was after 12/23/16 and at that date member has not started receiving retired pay, the member’s “High-3” monthly amount and years of creditable service (or, for those in the Guard or Reserve, the number of retirement points) at the date of divorce;
4. The SCRA rights of the member have been observed;
5. Jurisdictional findings (domicile, consent, or residence) under 10 U.S.C. 1408 (c)(4); and
6. A statement as to what the retired pay center will pay the spouse (see “Know What You Want” below).[21]

Payments are made once a month, starting no later than 90 days after service of the decree on DFAS or the start of retired pay, whichever is later.[22] They are made by direct deposit. The payments end at the death of the retiree or spouse, whichever occurs first.[23] Payments are prospective only; the retired pay center does not disburse arrears.[24] The USFSPA does not provide for garnishment of payments missed prior to the approval of the application by the retired pay center.

When dealing with a Guard/Reserve case, be careful as to how the pension clause is worded. Many RC members wind up with enough active-duty time to qualify for a regular retirement (i.e., one from active duty, with retired pay starting right away) rather than waiting for payments from a non-regular retirement (i.e., retired pay from Guard/Reserve service, which usually starts at age 60). When representing the FS, counsel should avoid such phrases as “John’s Army Reserve retired pay,” since the SM sometimes argues that this means the hypothetical non-regular retired pay he would have received if had hadn’t attained a regular retirement, and thus the FS should only start getting payments when he turns 60, not at present. A wise strategy is the use of a clause which contemplates “Plan A” for a non-regular retirement, as well as “Plan B,” for a regular retirement. The attorney for the FS should use language such as “military pension” or “uniformed services retired pay” to describe the asset being divided.

Tip #6 – Know What You Want.

The order may award a percentage or a fixed dollar amount to the former spouse of the military member.[25] Set out below are examples of the phrasing for these and other types of pension-division clauses.

A percentage clause might state: “Wife is granted 43% of Husband’s military retired pay.” Alternatively, a “fixed dollar amount” clause could read: “Wife is awarded $550 per month as military pension division.” Every allowable clause automatically provides for cost-of-living adjustments (COLAs) except for the “fixed dollar amount” clause.[26] A COLA cannot be added to a fixed dollar clause.

The rules also allow awards that are considered to be variations on the percentage clause.[27] The retired pay center will honor a court award in which the amount due to the FS is expressed as a formula or a hypothetical. These are usually used if the SM is still serving.

A formula is an award expressed as a ratio.[28] For example, the order could state: “Wife shall receive 50% of the Husband’s disposable retired pay times a fraction, the numerator being the months of marital pension service, and the denominator being the total months of service by Husband.” The order must then provide the numerator, which is usually the months of marriage during which time the member performed creditable military service. The retired pay center cannot guess or infer what the court (or the parties) have determined to be the months of service during marriage (the numerator). The retired pay center will, however, provide the total months of service (the denominator). Note that if the court also provides the total months of service, DFAS will honor that number regardless of its accuracy.

A hypothetical clause[29] is the most difficult one to draft. It involves an award based on a rank or status which is different from that which exists when the SM retires. For example, the order might say: “Wife is granted 50% of what an Army staff sergeant (E-6) would receive if he were to retire with over 18 years of military service and ‘High-3’ pay of $___ per month .”[30] Since there’s no table that shows this type of pay, DFAS would calculate the hypothetical pay amount and compute a ratio to the actual retired pay in order to calculate the amount to which the wife in this example should receive.

Be sure to include the rank and years of service of the member when submitting a hypothetical award, as well as the “High-3 pay” of the SM. If variables such as these are missing, the retired pay center will not supply them; the order will be rejected.[31]

Guard/Reserve pension clauses deserve separate treatment. When a Guard or Reserve pension is involved and the member has not stopped drilling and put in for retirement, a “formula clause” is typically used, since the final retired pay isn’t known and the total service creditable for retirement is also unknown. The usual formula is marital pension service divided by total pension service. In a Guard/Reserve case involving a formula clause, you must specify division according to retirement points.[32] The usual language refers to points earned during marriage divided by total points during the member’s career.

If a formula clause is not used for a still-drilling Reserve/ Guard member, then this “points divided by points” rule does not apply. For example, the order could state “John will pay Mary 35% of his uniformed services retired pay,” or “John will pay Mary $500 per month as her share of John’s military pension.”

Tip #7 – Use a Checklist for Pension Division.

“One size fits all” definitely doesn’t apply to military pension division orders. A good practitioner will check and re-check the pension division order to be sure it complies with the regulations and the statute, accomplishes the needs of the client, makes sense, and will be honored by the retired pay center. In addition to the tips shown above, here is a checklist that DFAS uses for pension division orders:

DFAS CHECKLIST FOR MILITARY PENSION DIVISION ORDERS

• SERVICE OF APPLICATION (personal, certified or registered mail, return receipt requested)
• FINAL DECREE OF DIVORCE, DISSOLUTION OR ANNULMENT OR LEGAL SEPARATION ISSUED BY A COURT – OR – A COURT ORDERED, RATIFIED OR APPROVED PROPERTY SETTLEMENT INCIDENT TO SUCH A DECREE
• AUTHENTICATED OR CERTIFIED PRIOR TO SERVICE OF PENSION ORDER
• MEMBER PROPERLY IDENTIFIED (E.G., NAME, ADDRESS, SSN)
• NAME, ADDRESS, AND SSN OF FORMER SPOUSE
• ORDER PROVIDES FOR ONE OF THE FOLLOWING:

A)     PAYMENT OF FIXED MONTHLY AMOUNT OF $________

B)     FIXED PERCENTAGE OF ______%

C)     FORMULA CALCULATION (must use retirement points in Guard/Reserve case):

D)     HYPOTHETICAL CALCULATION:

• MEMBER’S RIGHTS UNDER THE SERVICEMEMBERS CIVIL RELIEF ACT COMPLIED WITH
• JURISDICTION MET –
• RESIDENCE (NOT DUE TO MILITARY ORDERS)
• DOMICILE
• CONSENT
• ORDER HAS NOT BEEN AMENDED, SUPERSEDED, OR SET ASIDE
• ORDER IS FINAL DECREE, NO APPEAL MAY BE TAKEN, NO APPEAL WAS TAKEN WITHIN TIME PERMITTED
• FORMER SPOUSE MARRIED TO MEMBER AT LEAST 10 YEARS DURING AT LEAST 10 YEARS OF CREDITABLE SERVICE

• IF DIVORCE AFTER 12/23/16 AND MEMBER WAS NOT RECEIVING RETIRED PAY AT DIVORCE, ORDER CONTAINS TWO DATA POINTS REQUIRED BY DoDFMR VOL. 7B, CH. 29, §2908: HIGH-3 PAY AT DIVORCE AND TOTAL YEARS OF CREDITABLE SERVICE (FOR RC MEMBER, TOTAL RETIREMENT POINTS) AT DIVORCE

For a full explanation of the Frozen Benefit Rule and the requirements found in the last check-box above, see the Silent Partner info-letters, “All Clauses Considered: Writing the Frozen Benefit Award,” and “Fixing the Frozen Benefit Rule.”

Tip #8 – Don’t Forget SBP Coverage for the Former Spouse.

SBP (the Survivor Benefit Plan) is an essential tool in divorce planning for the FS. It provides an annuity of 55% of the base amount chosen for the rest of the life of the FS, so long as she does not remarry before age 55. Divorce ends SBP coverage unless the court orders “former-spouse coverage” and the parties make a timely election with the retired pay center.

The retired pay center cannot apportion the SBP premium between the parties; the premium must be deducted “off the top” before arriving at “disposable retired pay.”^[33] DFAS resources on this topic are found at “Retired Military and Annuitants” at the DFAS website, www.dfas.mil, under the “Provide for Loved Ones” tab; look for “Survivor Benefit Plan” or “Reserve Component Survivor Benefit Plan.” The checklist below will help the practitioner to understand SBP and the cost and benefits of coverage for the non-military spouse.

SBP CHECKLIST

Tip #9 – Where and How to Serve the Order.

Addresses for service are found on the application form, DD 2293. Note that the decree must be certified by the clerk of court. The spouse or former spouse must sign the form, and the documents to be included are a certified copy of the order and divorce judgment (if separate order). DD Form 2293 can be obtained from the DFAS website, or from any internet search engine. Anyone may serve the completed application. While you should ensure delivery by sending the documents by certified or registered mail, return receipt requested, this is not a requirement.

Be sure to include the Social Security Number (SSN) of the servicemember (SM) or retiree in all correspondence and phone calls with the retired pay center. Providing this will ensure a more rapid response.

Tip #10 – Suggested Military Pension Division Order Clauses

For a set of model clauses to use in a military pension division order, see the text below. This is not perfect, and it’s not for every case. It should only be used in consultation with an expert in this area or after extensive review of the rules, regulations, statues and state cases in regard to division of the pension, allocation of SBP, indemnification and other matters which are important to the client.

[Case caption here]

MILITARY PENSION DIVISION ORDER

THIS CAUSE came before the undersigned judge upon Plaintiff’s claim for distribution of Defendant’s military retirement benefits. The Plaintiff was represented by [Plaintiff’s attorney], and the Defendant was represented by [Defendant’s attorney]. [if entered as a consent order, add next sentence] The parties agree to the entry of the following order to assign to Plaintiff a portion of those benefits. The court makes the following:

FINDINGS OF FACT

1. Plaintiff is a resident of [county], [state]. Defendant is a resident of [county], [state]. The parties were married on [date]. They were separated on [date]. They were divorced in a judgment filed on [date].

2. Plaintiff’s address is [address]. Her Social Security number is xxx-xx-______; the full SSN will be shown on DD Form 2293, which accompanies the court’s order when tendered to DFAS (Defense Finance and Accounting Service) for enforcement through garnishment. Note: DFAS administers orders for the Army, Navy, Air Force and Marine Corps. Pension orders for the Coast Guard and the commissioned corps of the Public Health Service and the National Oceanic and Atmospheric Administration are handled by the Coast Guard’s Pay and Personnel Center in Topeka, Kansas. Since the majority of military retired pay orders are submitted to DFAS, that agency is used throughout this order; when necessary, replace DFAS with “the Coast Guard Pay and Personnel Center.”

3. Defendant’s address is [address]. His Social Security number is xxx-xx-______; likewise the full SSN will be found on DD Form 2293.

4. The marital portion of the uniformed services retired pay of Defendant (hereafter military pension or retired pay) is subject to marital property division. Plaintiff is entitled to a share of Defendant’s military retirement benefits, as set out in the Decree below. Plaintiff’s entitlement to retired pay accrues upon the retirement of Defendant. The remaining portion of Defendant’s military retired pay is the sole and separate property of Defendant. [Note: Replace “marital” with “community” when the order is for a state which recognizes community property.]

5. [Selection A: if retired, use the following - -] The Defendant retired with the rank of [state rank] in the [here state branch of service, such as “U.S. Air Force” or “Utah Air National Guard”] and is currently receiving [state amount of retired pay and any deductions, such as SBP premium, federal income tax, etc.]. He is retired as of [give date of retirement (whether receiving retired pay or, if Guard/Reserve, awaiting age 60)].

[Selection B: if active duty, still drilling, or in the “gray area” (i.e., no longer drilling, but not yet receiving retired pay), use the following - -] The Defendant is currently a [state rank] in the [here state branch of service, such as “U.S. Air Force” or “Utah Air National Guard”].

6. [Use this clause to protect non-military spouse of non-retired member or retiree with no disability at present. Delete if not needed.] Currently there is no waiver in place for disability payments, and the court bases the award to Plaintiff set out below on these facts.

-OR-

[for retiree with disability rating] Defendant currently has a VA disability rating of [state percentage] and his election of disability compensation has reduced his military retired pay by [dollar amount]. [Use if parties are still married and divorce decree will be entered simultaneously with MPDO] This amount is based on the VA compensation table rates for veteran and spouse in effect at the time this Order is entered. Upon the parties’ divorce, the VA compensation should be recalculated based on the veteran only. This rate is currently [dollar amount].

Note: The above language helps the spouse to establish a base-line, setting out the current facts and data, as well as the court’s expectations in case the SM decides to waive additional military pension payments for disability compensation in the future.

7. Defendant’s rights under the Servicemembers Civil Relief Act, found at Chapter 50 of Title 50, U.S. Code, have been observed and honored.

Note: It is probably best to insert this into all orders, whether for SMs or retirees, although the SCRA doesn’t apply to retirees and usually does not apply to Guard and Reserve personnel, unless called up to active duty.

8. [This clause is to allow the non-military spouse to view the amount of total retired pay and any deductions. It is optional.] The terms below require Plaintiff to have knowledge of Defendant’s military retired pay on a regular basis. To avoid the inconvenience of monthly mail or e-mail exchanges of this information, the parties can use the myPay system available on the Defense Finance and Accounting Service (DFAS) website (https://mypay.dfas.mil/mypay.aspx). Defendant has the ability to set up a Limited Access Password for Plaintiff which, along with a proper Login ID, will allow the viewing of retired pay information (but not to make changes). Defendant can locate instructions on how to set up a Limited Access Password for Plaintiff on-line at https://mypay.dfas.mil/FAQ.htm. This applies to the Defendant upon the receipt of retired pay.

9. Plaintiff is entitled to former-spouse coverage as the beneficiary of Defendant’s Survivor Benefit Plan (SBP) as set out below [if applicable, and the Plaintiff’s share of the pension below is adjusted to account for her payment of the full SBP premium].

-OR-

Plaintiff is not entitled to former-spouse coverage as the beneficiary of Defendant's Survivor Benefit Plan.

10. [Use when the former spouse’s share of the pension is to be adjusted due to allocation to her of entire SBP premium]. Since Plaintiff will be responsible for paying the entire cost of the SBP premium and DFAS will not allocate SBP premiums to either party, Plaintiff’s share of the military retired pay must be adjusted downward to account for her full payment of the premium that is attributable to former spouse coverage. The shift of the premium to Plaintiff results in her share being reduced to ___% of the military retired pay.

Note: The premium is 6.5% of the selected base amount in active-duty cases and about 10% when the member of the Guard/Reserve selected “Option C,” that is, full coverage starting when he/she reaches 20 creditable years of service.

Note: The reduction is not simply 6.5% subtracted from the share of the former spouse (e.g., spouse’s nominal share of 45% less 6.5% for her to pay the full SBP premium = 38.5%). Rather, due to cost-sharing between the parties (since the premium comes “off the top” before division of “disposable retired pay”) the reduction is about 4% - 4.5% for active duty cases. Calculation details are below, and also in “Military Pension Division: The Servicemember’s Strategy,” a Silent Partner infoletter located at www.nclamp.gov > For Lawyers.

11. [Delete if not applicable] The marital share is a fraction made up of months [or points if Guard/Reserve] of marital pension service, divided by ___, which represents the total months [or points if Guard/Reserve] of Defendant’s military service. Based on this calculation, one-half of the marital share of the divisible retirement benefits is equal to Plaintiff receiving ____% of Defendant’s military retired pay. Note: [When a fraction with an unknown denominator is used in a case where there will be a non-regular retirement under Chapter 1223 of Title 10, U.S. Code, i.e., a Guard/Reserve retirement with pay starting at about age 60, the fraction must be expressed in terms of retirement points, not time.]

12. [When divorce was granted after 12/23/16 and member was not receiving retired pay at time of divorce, these two data points are required by federal law and regulations, under 10 U.S.C. §1408 (a)(4)(B) and Vol. 7b, Ch. 29, ¶2908, Dept. of Defense Financial Management Regulation]. The Defendant’s information required by the retired pay center is as follows:

1.FOR ACTIVE DUTY AWARDS

If the Defendant entered the service BEFORE 9/1/80:

On the date of divorce, [date], (a) the Defendant’s military pay grade (rank) was [grade/rank], and (b) the Defendant had [number of years and months] of creditable service.

If the Defendant entered the service ON OR AFTER 9/1/80:

On the date of the divorce, [date], (a) the Defendant’s military retired pay base (High-3) was $_____ per month and (b) the Defendant had [number of years and months] of creditable service.

2.FOR GUARD/RESERVE MEMBER’S NOT YET RECEIVING RETIRED PAY

If the Defendant entered the service BEFORE 9/1/80:

On the date of divorce, [date], (a) the Defendant’s military pay grade (rank) was [grade/rank], (b) the Defendant had ____ Reserve retirement points, and (c) the Defendant had [number of years and months] of service for basic pay purposes.

If the Defendant entered the service ON OR AFTER 9/1/80:

On the date of divorce, [date], (a) the Defendant’s military retired pay base (High-3) was $____ per month, and (b) the Defendant had ___ Reserve retirement points.

Note: “High-3” means the highest 36 months of compensation for the Defendant, using active-duty pay information. For information on what this means in terms of the pension which will be divided by the retired pay center, see the Silent Partner infoletters on the Frozen Benefit Rule at www.nclamp.gov > For Lawyers.

[If Frozen Benefit Rule is not applicable, use this clause] The data points required by the revised definition of “disposable retired pay,” 10 U.S.C. § 1408 (a)(4)(B) are not applicable in this case because [choose one of these clauses and delete the other one] (1) the parties were divorced on or before December 23, 2016, OR (2) the servicemember was already drawing retired pay on the date of divorce.

CONCLUSIONS OF LAW

1. This court has jurisdiction over the subject matter of this action and the parties hereto based on the consent of the Defendant to the jurisdiction of the court. [in non-consent cases, state other basis for jurisdiction -- see below]

Note: Read 10 U.S.C. 1408 (c)(4). In the case of a non-consent order, be sure to include statement which supports the court’s jurisdiction under 10 USC 1408(c)(4). This means evidence of domicile of the retiree or servicemember within the territorial jurisdiction of the court, or else residence within the state but not due to military orders. The jurisdictional basis must be stated in the order.

2. Plaintiff is entitled to an assignment of Defendant’s military retirement benefits as set forth herein, subject to the conditions set forth in the Decree below.

3. The facts above are incorporated herein by reference to the extent that they represent conclusions of law.

4. The terms of this order are fair, reasonable, adequate and necessary.

5. [When order is entered by consent] The parties have knowingly and voluntarily consented to this order.

6. The parties are entitled to the relief granted below.

DECREE

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT:

1. [Note: If retroactive parts are required, state effective date in this paragraph.] Defendant will pay Plaintiff [choose an Option from below and insert here]

Option A: [Percentage] % of Defendant’s military retired pay each month.

Note: DFAS will accept percentages carried out to four decimal places.

Note: The non-military spouse receives a specified percent, not to exceed 50%, of disposable retired pay. This increases with cost-of-living adjustments (COLAs), which are automatic under the regulations and need not be mentioned. This award is used when member has retired, and it is based on the final retired pay of SM, including post-divorce raises and grade increases.

Option B: [Time Rule] a percentage of the Defendant’s military retired pay, to be computed by multiplying ___% times a fraction, the numerator of which is [insert #] months [or points if Guard/Reserve] of marriage during the Defendant’s creditable military service, divided by the Defendant’s total number of months [or points if Guard/Reserve] of creditable military service.

Note: The spouse gets a percentage, usually 50%, of the marital share of member’s retired pay. This increases with COLAs, and that is automatic; it need not be mentioned. It is based on the final retired pay of member, including post-divorce raises and grade increases.

Note: Order must contain data for numerator – DFAS will not fill that in, although DFAS will complete the denominator when calculating final retired pay. Percent cannot exceed 50% of retired pay for property division.

Option C: [Fixed Dollar Amount] $per month.

Note: The spouse receives a fixed dollar amount, which may not exceed 50% of disposable retired pay. There are no COLAs for spouse, and all COLAs go to the retiree. This clause this favors the SM/retiree.

Option D: [Hypothetical Award]

D1: [Active-duty hypothetical calculated as of time of division, for all members regardless of service entry date] ___% of the military retired pay the Defendant would have received had the Defendant retired with a retired pay base of $______ and with ___ years of creditable service on ____________________.

D2: [Active-duty hypothetical calculated as of time of division; may only be use for members entering service before September 1, 1980] ___% of the military retired pay the Defendant would have received had the Defendant retired with the rank of ______ and with ____ years of creditable service on ____________________.

D3: [Active duty hypothetical calculated as of member’s actual retirement date] ___% of the military retired pay the Defendant would have received had the Defendant retired on his actual retirement date with the rank of ______ and with ___ years of creditable service.

D4: [Reservist hypothetical calculated as of time of division, for all members regardless of service entry date] ___% of the military retired pay the Defendant would have received had the Defendant become eligible to receive military retired pay with a retired pay base of $______ and with ___ retirement points on ____________________.

D5: [Reservist hypothetical calculated as of time of division; may be used for members entering service before September 1, 1980] ___% of the military retired pay the Defendant would have received had the Defendant become eligible to receive retired pay on ____________________, with the rank of ______, with ___ retirement points, and with ______ years of service for basic pay purposes.

D6: [Reservist hypothetical calculated as of the date the member becomes eligible to receive retired pay] ___% of the military retired pay the Defendant would have received had the Defendant become eligible to receive retired pay on the date he attained age 60, with the rank of ______, with ___ retirement points, and with ______ years of service for basic pay purposes.

Note: The spouse receives a hypothetical amount, based on the rank/retired pay base and years of service of the SM at time of separation, divorce or other date, according to state law or agreement of the parties. This increases with COLAs for retiree, and that is automatic; it need not be mentioned. This clause favors the SM/retiree. It is usually used in states which divide retired pay based on the fixed-benefit method, such as Florida, Texas, Kentucky, Tennessee and Oklahoma.

Note: If the clause does not specify a retirement year (i.e., date), DFAS will assume the year to be the actual year of retirement, and that year’s pay scale will be used. If a date is specified, DFAS will freeze the benefit based on the pay tables in effect on that date, not on the pay tables which exist when the SM actually retired or will retire.

Note: These sample clauses are found in the Department of Defense Financial Management Regulation (DODFMR), Volume 7B, Chapter 29, Appendix A, Figures 29-1 & 29-2. Figure 29-1 applies to divorce decrees entered on or before December 23, 2016, or for decrees entered after that date when the member is already receiving retired pay at divorce; Figure 29-2 applies to divorce decrees entered after December 23, 2016 when the member is not receiving retired pay as of the date of divorce.

2. Defendant has served at least ten years of creditable service concurrent with at least ten years of marriage to Plaintiff. Plaintiff is entitled to direct payments from DFAS.

-OR-

Defendant will pay Plaintiff directly the amount/share specified in the preceding paragraph. Payments will be due on the first of each month, beginning [date]. In the event that federal law changes to allow direct payments from DFAS to Plaintiff, then this order shall be submitted to DFAS by Plaintiff to accomplish this.

-OR-

Defendant will pay Plaintiff by a voluntary allotment from his retired pay the amount specified in the preceding paragraph. In the event that federal law changes to allow direct payments from DFAS to Plaintiff, then this order shall be submitted to DFAS by Plaintiff to accomplish this.

Note: As another alternative, the parties may agree to payment from Defendant to Plaintiff of maintenance, spousal support or alimony, which is not limited by the 10/10 overlap above; in this case, an alimony clause should be utilized which (a) does not terminate payments at remarriage or cohabitation of Plaintiff, and (b) does not provide for modification upon a change of circumstances. Note that, under documents executed on or after 1/1/19, alimony payments are neither taxable to the recipient nor excluded from the income of the payor, whereas pension-share payments remain includable in the payee’s income and deductible for the payor.

3. Plaintiff will receive payments at the same time as Defendant. The parties acknowledge that DFAS is not required to begin payments to the former spouse until 90 days after receipt of an acceptable order or the start of retired pay, whichever is later. Defendant is responsible for making these payments each month to Plaintiff until DFAS begins payments; during this interim period, Defendant will pay Plaintiff directly the full share – unadjusted for taxes, unless the parties agree otherwise in writing – as set out herein.

a. Payments are due on the first day of each month.

b. Pursuant to Pfister v. Comm’r, 359 F.3d 352, Proctor v. Comm’r, 129 T.C. 92 (2007), Mitchell v. Comm’r, T.C. Summary Opinion 2004-160, Mess v. Comm’r, 79 T.C.M. (CCH) 1443 and Eatinger v. Comm’r, 59 T.C.M. (CCH) 954, the parties acknowledge that the periodic payments made by Defendant to Plaintiff through a pension-share garnishment from DFAS are included in Plaintiff’s taxable income and excluded from Defendant’s taxable income.

c. As to the taxation of payments not made through DFAS, the parties are advised to consult with a qualified tax advisor.

4. [Delete if not applicable] The following terms apply to the Defendant upon the receipt of retired pay. Defendant will provide to Plaintiff a Limited Access Password and Login ID for access to the myPay system to verify receipt of the proper share of Defendant’s retired pay each month. Defendant shall set up Plaintiff’s access to myPay and provide the Limited Access Password and corresponding Login ID to Plaintiff simultaneously with the signing of this Order. Defendant shall not delete Plaintiff’s Limited Access Password without specific written approval from Plaintiff or by court order. If Defendant breaches this provision, attorney’s fees shall be assessed against him under the enforcement clause below.

5. When DFAS has determined that this order meets the requirements of the applicable federal law as a military pension division order, then it will carry out the provisions of this order and shall give written notice to Plaintiff (at her address set out above) and to her attorney, [name and address], that this order complies with said requirements.

6. [This is for protection of spouse; SM/retiree may reject this clause. It is not a requirement for MPDO.] Defendant will provide promptly to Plaintiff any information that she needs in order to have this order honored for direct payment of military pension benefits and will keep her informed at all times of his current address.

7. [This is for protection of spouse; SM/retiree may reject this clause. It is not a requirement for MPDO.] If Defendant receives any amount that belongs to Plaintiff pursuant to the terms herein, he will reimburse her immediately. Since the retired pay center may pay the Plaintiff less than what is owed under the terms of this Order, the Defendant is ordered to make up any difference promptly in direct payments to the Plaintiff.

8. To implement direct payments from DFAS, Plaintiff will tender a certified copy of this order to DFAS with a certified copy of the parties’ divorce decree and an executed DD Form 2293. [This is a requirement for direct payments from DFAS.]

9. [Selection A: If member is on active duty, or is Guard/Reserve and still drilling, or is in the “gray area” (no longer drilling, but not yet in receipt of retired pay), or is retired and NOT receiving disability compensation, use the following - -] The parties have agreed upon a set level of payments to Plaintiff to guarantee income to her based upon Defendant’s military retired pay without any deductions due to the election of VA Disability Compensation from the Department of Veterans Affairs, the election of Combat-Related Special Compensation (CRSC), or the receipt of Military Disability Retired Pay (MDRP) under Chapter 61 of Title 10, U.S. Code, or any other reason. Defendant shall indemnify Plaintiff as to any reduction in her payments from what they would have been based solely on length of service. If there is a reduction in Plaintiff’s share or amount of military retired pay, whether due to disability payments or caused by any other event (such as the receipt of severance pay, bonuses or an early-out payment), the parties consent to the court’s retaining continuing jurisdiction to provide relief to include 1) adjusting the pension division payments or the property division specified herein; 2) changing Plaintiff’s share or amount to the pre-reduction level; 3) reconfiguring the property division; or 4) granting contractual alimony pursuant to this clause to compensate Plaintiff for any losses she may suffer due to the above circumstances. [NOTE: Generally trial courts will not adjudicate this pre- or post-judgment without consent. See Howell v. Howell, 137 S.Ct. 1400 (2017), as to judicial indemnification being barred by the USFSPA.]

[Selection B: if retired and already receiving reduced retired pay due to disability compensation, use the following - -] The parties have agreed upon a set level of payments to Plaintiff to guarantee income to her, based upon Defendant’s military retired pay without any additional deductions for disability payments, over and above his present percentage disability rating (___%), or for any other reason. Defendant shall indemnify Plaintiff as to any reduction in her payments from what they would have been based solely on length of service. If there is a reduction in Plaintiff’s share or amount of military retired pay, whether due to increased disability percentage payments or caused by any other event, the parties consent to the court’s retaining continuing jurisdiction to provide relief to include 1) adjusting the pension division payments or the property division specified herein; 2) changing Plaintiff’s share or amount to the pre-reduction level; 3) reconfiguring the property division; or 4) granting contractual alimony pursuant to this clause to compensate Plaintiff for any losses she may suffer due to the above circumstances.

10. [This is to protect the spouse if the SM obtains civil service employment; delete if representing the SM or if not applicable.] If Defendant shall attempt to waive or convert any portion of his military service, whether active-duty or Guard/Reserve, into federal or state civil service time, without first obtaining Plaintiff’s consent, and the effect of this action is that her benefits would be reduced, then

a. Plaintiff shall receive either:

i. Non-modifiable alimony equal to the amount or share of the military pension that she was entitled to receive before any waiver (with cost-of-living adjustments, if applicable), and not terminating at her remarriage or cohabitation; or

ii. A portion of the federal retirement annuity (FERS or CSRS) that provides Plaintiff an amount equal to what she would have received as her share of the military pension had there been no waiver to obtain an enhanced federal retirement annuity.

iii. In the event of such conversion, pursuant to 5 U.S.C. § 8411(c)(5), Defendant shall authorize the Director of the Office of Personnel Management to deduct and withhold (from the annuity payable to Defendant) an amount equal to the amount that, if the annuity payment were instead a payment of Defendant’s military retired pay, would have been deducted, withheld, and paid to Plaintiff under the terms of this Order. The amount deducted and withheld under this subsection shall be paid to Plaintiff.

b. If the waiver of military pension for federal civil service retirement prevents Plaintiff’s coverage under the Survivor Benefit Plan, then Defendant will – 

i. Designate Plaintiff as beneficiary under the equivalent federal retirement survivor annuity plan and provide equivalent coverage; or

ii. Obtain life insurance (with Plaintiff as the owner) covering his life with a death benefit equal to full SBP coverage; or

iii. Purchase a single-premium annuity (with Plaintiff as the owner) that is equal to the benefits payable for full SBP coverage.

c. If Defendant accepts employment with the federal government and he intends to waive or convert any portion of his military service, whether active-duty or Guard/Reserve, into federal or state civil service time, he will promptly notify the Plaintiff before he transfers his active duty service to purchase credits with FERS and before he loses that active duty time, which may result in the elimination or reduction of his military retired pay. Any subsequent retirement system of Defendant is directed to honor this court order to the extent of Plaintiff’s interest in the military retirement and to the extent that the military retirement is used as a basis of payments or benefits under the other retirement system, program, or plan.

-OR-

d. [Use if the retiree is already employed by the federal government] Since Defendant is currently employed by the U.S. Civil Service, the terms of this paragraph are made with the purpose of ensuring that nothing involving that employment shall diminish the amount or share of Plaintiff’s pension benefit as specified in Paragraph 1 of this decree. Defendant shall not attempt to waive military retired pay to obtain credit for civil service retirement (CSRS or FERS). If he should do so, then the United States Office of Personnel Management is directed to pay Plaintiff’s share (as set out in Paragraph 1 of this decree) directly to her. The court retains authority over this award to ensure that Plaintiff shall receive her proper share, that such other remedies as may be necessary are still available to Plaintiff, that Defendant acts in good faith in carrying out the terms of this order, that he indemnifies her in the event of any reduction of her amount or share due to his actions, and that the intent of this order will be carried out by both parties in full.

e. [CSB/Redux clause – To protect spouse from effects on retired pay of the SM’s prior election of CSB/Redux bonus of $30,000 at or around the 15-year mark for military service, thus reducing pension share upon retirement, use this clause. Note that CSB/Redux was repealed effective January 1, 2018.] If Defendant elected CSB/Redux (a bonus of $30,000 paid at approximately 15 years of service, the election of which reduces the military pension), the Defendant will indemnify Plaintiff for any loss and cooperate as set forth below to protect Plaintiff’s interest in an unreduced share of the military pension. The court retains jurisdiction over this cause to implement and enforce these indemnification terms. As a remedy for Plaintiff, the court may award Plaintiff an equitable adjustment of her pension division award herein to make up for the decrease caused by CSB/Redux. Upon application by Plaintiff, the court may allow her an equitable share of the bonus received by Defendant or award such other equitable relief as is just and proper, including the reallocation of marital/community property.

11. [This is to protect spouse if future information is needed regarding member’s status, location or benefits for modification or enforcement purposes; SM may object to this] If Defendant breaches any terms in this document, then the court shall award to Plaintiff any and all attorney’s fees she may incur in obtaining information on Defendant from the U.S. government and in enforcement of the provisions herein.

12. If either party violates this order, then the court will indemnify the party seeking enforcement, and the court will award damages, interest at the statutory rate, consequential damages, reasonable expenses and attorney’s fees to that party.

13. The monthly payments herein shall be paid to Plaintiff regardless of her marital status and will not end at remarriage. Any future overpayments to Plaintiff by DFAS are recoverable and subject to involuntary collection from Plaintiff or from the estate of Plaintiff.

I[This is not necessary but the SM/retiree usually wants to see this in writing.] Plaintiff shall be responsible for the taxes on her share of Defendant’s military retired pay received from DFAS. Plaintiff shall not be entitled to any portion of retired pay upon the death of either party.

15. [Leave this out if this is not awarded by the judge or agreed to by the parties. If you want to be certain about this and are not concerned, when a consent order is involved, about raising “red flags,” you may state: There shall be no Survivor Benefit Plan coverage for Plaintiff.] Defendant shall provide coverage for Plaintiff through the Survivor Benefit Plan (SBP) as follows:

a. Upon the parties’ divorce, the Defendant shall immediately elect the Plaintiff as “former-spouse beneficiary” for SBP, with his monthly retired pay as the base amount. He will do nothing to reduce or eliminate her benefits.

b. Defendant will immediately complete DD Form 2656-1 and send the executed form to DFAS at the address shown thereon, with a copy sent simultaneously to Plaintiff’s attorney.

c. Plaintiff will effectuate a deemed election for former-spouse coverage within one year of the entry of the first court order granting former-spouse SBP coverage by sending a certified copy of said order to DFAS along with a certified copy of the divorce decree and an executed DD Form 2656-10.

Note: If Defendant has not yet made the SBP election and thus may elect coverage at less than the full amount of his monthly retired pay, then use the following clause: At the time of Defendant’s election of a base amount for the Survivor Benefit Plan, he will elect former spouse coverage, choosing as the base amount $. [This may be any amount from full retired pay down to $300 a month. The SBP base can also be a percentage of the member’s retired pay.]

16. If Defendant does anything that changes the former-spouse election, then an amount equal to the present value of SBP coverage for Plaintiff shall, at the death of Defendant, become an obligation of his estate. In addition, Plaintiff shall be entitled to any other legal or equitable remedies for breach.

Note: The premium for SBP coverage is deducted from the member’s gross retired pay before it is divided between the parties. This “off-the-top” deduction means that the parties share in the premium payment (in the same ratio as the division of military retired pay). If the parties desire to allocate SBP costs entirely to the non-military spouse, this can be difficult. DFAS will not honor such a clause under current law. When the retired pay amount is known or can be estimated with reasonable accuracy, then one can allocate the cost of SBP premiums to the non-military spouse by the following steps:

   Figure out what dollar amount the Plaintiff would get each month as pension division.

   Then figure out how much in dollars the SBP premium is (for spouse or former spouse coverage in active-duty cases, use 6.5% of the member’s selected base amount; it is approximately 10% for Guard/Reserve cases).

   Then subtract this from Plaintiff’s dollar amount or anticipated dollar amount. This gives her net share less the SBP premium.

   Next divide this figure by the disposable retired pay of the Defendant (gross pay less SBP premium) and multiply it by 100.

The resulting percentage is approximately what she should receive to have her pay for the full SBP premium. Go back to #1 of the Decree above and insert the revised percentage in place of 50% (or other fraction) of his disposable retired pay. Also complete Finding of Fact #12.]

-OR-

This clause sets out a way for the retired servicemember to be reimbursed by the spouse for the cost of SBP: Plaintiff shall reimburse Defendant within 10 days of each monthly premium payment for Defendant’s share of the SBP cost.]

If either event occurs, the adjustment herein shall stop, and Plaintiff shall be entitled immediately to her full, unadjusted share of the pension (without regard to shifting payment of the SBP premium). To obtain reversion to the original unadjusted percent or share from DFAS, Plaintiff will apply to the court for an order allowing same, and Defendant hereby stipulates that Plaintiff is entitled to such adjustment. If Plaintiff remarries before age 55, the Plaintiff is required to inform Defendant immediately. Defendant will cooperate with the entry of a new order effectuating the restoration of Plaintiff’s full, unadjusted share. Until the new order is implemented by DFAS, Defendant shall pay directly to Plaintiff her full and unadjusted share of his military retired pay.

18. [Use this clause when there is no SBP coverage at present, either through spousal concurrence or through lapse upon divorce. This requires the SM/retiree to elect SBP coverage for the spouse or former spouse at the next open enrollment period; note that all previous premium payments must be paid before coverage is effective, and this can be costly.] At the next open enrollment period for SBP, the Defendant agrees to elect and pay for coverage for the Plaintiff as his spouse/former spouse, using his full retired pay as the base amount [OR state other amount down to $300 a month].

19. [Use this clause to attempt to give Plaintiff some protections against reduction of disposable retired pay due to election of VA disability compensation or the election of CRSC by retiree] The parties shall comply with the terms of this order in good faith and shall notify the court and the other party if there are any substantial changes which would impact the retired pay of the Defendant. Examples of this include-

a. the remarriage of Plaintiff before age 55, which suspends SBP coverage (thus justifying termination of the SBP premium deduction), and

b. the Defendant’s election of VA disability compensation or Combat-Related Special Compensation, either of which would reduce the available retired pay of Defendant (thus reducing the share for Plaintiff).

Defendant will take no action to reduce Plaintiff’s share or amount of the military pension. As a remedy if the Defendant violates this clause, the court reserves jurisdiction to amend the pension division terms to increase Plaintiff’s share of Defendant’s retired pay, to indemnify the Plaintiff, to award compensatory alimony, to re-open the property division or to take other remedial action to grant equitable relief.

_____________________                Date: _____________

Judge Presiding