The Thrift Saving Plan (TSP) is a tax-deferred retirement account for members of the armed forces and certain federal employees that is similar to a 401k plan. Service members have the option of adding to the account through payroll deductions. Under Florida law, TSP can be considered a marital asset if accrued during the marriage; it would belong to both spouses and be subject to equitable distribution.
Since TSP is a tax-deferred retirement account, a spouse should be familiar with any tax implications that might result from their receipt of TSP funds. If the spouse has to pay taxes on the amount they receive, they may actually be getting less than what they bargained for. A spouse may avoid paying taxes (at the time of divorce) by rolling the distribution into another qualified retirement account. A party seeking to take this action must send in the appropriate forms. It is recommended that a party considering this course of action seek the advice of an accountant.
Generally speaking, a service member will want to change the beneficiary designation on their TSP account upon the finalization of the divorce. By law, whomever is listed as the beneficiary upon the death of the service member will receive the contents of the account. This is true even if the ex-spouse gave up all rights to such in the divorce. It is important to fill out a new Designation of Beneficiary form when going through a divorce.
NOTE: All new members who join after January 1, 2018, will have a TSP account as a result of being automatically enrolled in the Blended Retirement System (BRS).
NOTE: TSP can also be garnished to satisfy alimony or child support awards.
Medical/Health Benefits
TRICARE is the Department of Defense healthcare program. TRICARE provides healthcare coverage for most medical services, medications, and dental care for active duty and retired military and their families. A divorce affects the eligibility of the former spouse, while biological or adopted children’s eligibility should not change as long as certain criteria are met.
Former Spouse: The former spouse’s benefits end the day the Divorce decree is entered unless he or she meets certain requirements.
A former spouse is eligible for TRICARE as their own sponsor as long as they meet the criteria for one of the following scenarios:
Scenario 1: 20-20-20
- The service member/retiree has at least 20 years of creditable service towards determining retirement pay;
- The parties were married for at least 20 years; and
- All 20 years of marriage overlap the 20 years of creditable (Active or Reserve) service which counted towards the service member/retiree's retirement.
In addition to full healthcare privileges, meeting the 20-20-20 criteria also means a former spouse is entitled to Commissary and Exchange privileges.
NOTE: This applies to UN-REMARRIED spouses only and it is currently for life. A former spouse can also lose coverage if they enroll in an employer sponsored healthcare plan.
Scenario 2: 20-20-15
- The service member/retiree has at least 20 years of creditable service towards determining retirement pay;
- The parties were married for at least 20 years; and
- 15 of those years (of marriage) overlap the 20 years of creditable (Active or Reserve) service which counted towards your service member/retiree's retirement.
If a former spouse falls into this scenario, their coverage continues for a period of one year from the date of divorce.
NOTE: A former spouse can also lose coverage if they enroll in an employer sponsored healthcare plan.
Children: Unmarried biological and adopted children are eligible for TRICARE until age 21 (or 23 if in college and certain criteria are met). Step-children (those not adopted) lose coverage upon entry of the divorce. (NOTE: Eligibility may extend beyond these ages if a child is severely disabled and meets certain criteria.)
College Students: Child eligibility can be extended if:
- The child is enrolled in a full course of study at an approved institution of higher learning; and
- The service member/retiree is still providing more than half of the child’s financial support.
Eligibility ends on the child’s 23rd birthday or when he or she is out of school.
At age 23, a child may still qualify for TRICARE Young Adult coverage if they meet certain criteria.
Base Privileges
Base privileges such as commissary, exchange, and theater privileges depend on the 20-20-20 rule:
- The service member/retiree has at least 20 years of creditable service towards determining retirement pay;
- The parties were married for at least 20 years; and
- All 20 years of marriage overlap the 20 years of creditable (Active or Reserve) service which counted towards the service member/retiree's retirement.
If all three of these apply the spouse is entitled to full base privileges as long as they don't remarry.