What Should You Know About Thrift Savings Plans or Military Members Going Through Divorce or Legal Separation in San Diego: 2019
Many military members, whether in the Marines, Navy, Army, Air Force or other Armed Services Branch, accumulate benefits during their service. These benefits may be divided in a legal separation or divorce in San Diego Divorce Court. While some issues are non monetary, such as where your children will leave and their custody and parenting schedule, many issues are monetary. These can include child support and alimony and division of debts and assets. For asset division, for military service members, these can include retirement and survivor benefit plan and thrift savings plan among others. Doppelt and Forney, APLC, has represented many military members in their family law case.
The first place to start is a definition of a thrift savings plan. A thrift savings plan (otherwise known as a “TSP”) is a savings plan for retirement for federal employees and members of the Uniformed Services. This savings plan was created by the Federal Employee’s Retirement System Act of 1986. Under Federal Law, this is considered a defined-contribution plan. The purpose was to give employees of the federal government some of the same retirement-savings benefits which were being offered to private sector workers. In many respects, the thrift savings plan resembles a 401(k) and there are other savings plan for retirement which are similar.
The benefits from the TSP can include matching contributions by the governmental agency as well as automatic contributions “ catch up” contributions. Federal employees can elect contributions [which are tax deferred] into a traditional thrift savings plan. Money through this program into the account is not be taxed until withdrawn. Traditional TSP plans, in this sense, function very much the same as employer-sponsored 401(k) plans. Participants can also invest in a Roth TSP. This option allows employees to make after-tax contributions into their plans while securing the benefit of making eligible tax-free withdrawals. Employees can also direct 401(K) and individual retirement account (IRA) assets into a TSP and vice versa upon leaving federal employment. A valid court order to divide the TSP benefit can be issued by a San Diego Judge. This order is, normally, done at the trial or marriage settlement agreement and judgment. Always consult a CPA for any tax consequences. The Court may award, to your former spouse, his or her community property interest under California law. Another important consideration is the beneficiary for the thrift savings plan account itself.
The TSP is only one of many assets in the family law case. Real property and other accounts and other assets can be used for an “equalization” if both parties agree rather than dividing each individual asset equally. While the Judge may not have discretion in the division of the assets under California Family Law, the parties have the option to create a settlement which is in their best interests.
You may feel free to call 800-769-4748 to schedule a consultation with an attorney who is licensed in California and has family law experience. It is hard to make intelligent decisions without accurate and current information. A free virtual consultation, such as offered at the law office, is a very good place to start with obtaining information.