Military Retired Pay QDRO | Law Office of Elizabeth McMahon
How military retired pay is divided in divorce using QDROs, with expert guidance for attorneys and mediators handling military pension benefits.
Military Retired Pay
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Military Retired Pay in Divorce: QDRO-Guided Division

This guide outlines the rules for dividing military retirement benefits via the Department of Finance and Accounting Service (DFAS).

The Legal Framework: The MRPDO

Military pensions are divided using a Military Retired Pay Division Order (MRPDO). Unlike private-sector QDROs, military plans do not actuarially carve out the benefit; they only divide the stream of payments.

  • Timing: Payments to a former spouse begin only when the service member retires and the pension enters “pay status.”
  • Death of Spouse: If the former spouse dies first, their share is restored to the service member.
  • Death of Member: Payments end upon the member’s death unless Survivor Benefit Plan (SBP) coverage is specifically assigned.

Military Retired Pay

Defining the Assigned Benefit

You must choose how to calculate the monthly payment. Cost-of-Living Adjustments (COLAs) apply only if the award is a percentage, not a fixed dollar amount.

Award Type COLA Treatment
Fixed Monthly Amount No COLAs. DFAS will not calculate them, regardless of the order.
Percentage (at Divorce) The award applies to benefits earned as of the date of divorce. COLAs (if assigned) apply from the date of divorce.
Percentage (at Retirement) The award applies to the benefit earned through retirement.
Maximum Award Assigned benefit will be capped at 50% of the pension earned as of the divorce date.

The “10/10 Rule” for Direct Payment

To receive a check directly from DFAS, parties must meet the 10/10 Rule:

  1. The marriage lasted at least 10 years.
  2. The member performed at least 10 years of creditable military service during that marriage.

[NOTE] If parties do not meet this rule, the pension can still be divided, but the member must pay the former spouse directly—DFAS will not handle the distribution.

Survivor Benefit Plan (SBP)

  • The One-Year Rule: You must notify DFAS of the SBP election within one year of the divorce. Failure to do so usually results in a permanent loss of the benefit.
  • The Forms: Use DD Form 2656-1 (joint) or DD Form 2656-10 (signed by the former spouse alone) to ensure the election is processed.
  • Level of Coverage: SBP is 55% of the “base pay” selected.
  • Cost: SBP costs 6.5% of the “base pay” selected. This cost is taken “off the top,” meaning the parties share the reduction proportionately.

Disability & VA Waivers

  • The Impact: Since disability pay is not “disposable retired pay,” this waiver automatically reduces the amount paid to the former spouse without their consent.
  • Strategy: Waiver for Disability can be considered for support, but not for property awards.

Blended Retirement System (BRS)

  1. Pension: A 2.0% multiplier (instead of the traditional 2.5%).
  2. Thrift Savings Plan (TSP): A defined contribution account with government matching (up to 5%).
  3. Lump Sum Option: Retirees can take a partial lump sum at retirement in exchange for reduced monthly payments until age 67.

Sample Separation Agreement Wording: The following is a common approach to dividing a pension, but not the only one. It is your responsibility to make sure that the terms you eventually use in the separation agreement fit the circumstances and are appropriate for your client.

General Division

“Party A (Former Spouse) is assigned, via MRPDO, 50% of the marital portion of the military retired pay earned by Party B (Member) as of the date of divorce, including a proportionate share of COLAs. The ‘marital portion’ is defined as service creditable for retirement earned during the marriage divided by service creditable for retirement earned through the date of divorce.”

Survivor Annuity (Choose One)

  • Option 1 (SBP Assigned): “Former Spouse shall be entitled to SBP. The base amount shall be the Member’s ‘High-3’ pay scale at the time of divorce.* Notice must be filed with DFAS via DD Form 2656-10 within one year of the divorce.”
  • Option 2 (No SBP): “Former Spouse is not assigned SBP coverage and understands payments will end upon the death of either party.”

*Assignment of less than the maximum SBP can be accomplished if the Member has not already made an election. The agreement would specify the base pay on which SBP is based. The retired pay on which the spouse’s annuity can be based can be any amount between $300 a month and full retired pay. Some parties specify the Member’s current high-3 as the pay base for SBP. The resulting SBP will likely be less than what the former spouse gets during the member’s retirement