Why divorcing federal employees need an RBCO

The division of retirement accounts is usually one of the most significant aspects of property division in divorce. Traditional retirement plans offered by private employers are typically divided between spouses using a qualified domestic relations order (QDRO) issued by the court.

If you and/or your spouse is a federal employee, you have a Thrift Savings Plan (TSP) instead. The order used to divide that is called a Retirement Benefits Court Order, or RBCO. 

Getting an RBCO early can protect your assets

An RBCO can be issued at any time during the divorce. However, it’s a good idea to get your RBCO in place as soon as possible as you begin divorce proceedings because it requires that the TSP be frozen. That means that the person who owns the account cannot make any withdrawals from it or take out any loans on it until the division of assets is decided. 

You can still make contributions to your TSP and you need to continue to make payments on any loans you’ve taken out on your plan. If you have any outstanding loans on your TSP, the RBCO will include the amount of that loan.

Requirements for an RBCO

An RBCO must meet four basic requirements. These are the following:

  • It must be issued by a U.S. court.
  • It can include TSPs only and not any other government benefits.
  • Payments must be specifically detailed.
  • Payments can be designated only to former or current spouses or dependents.

As a federal employee or the spouse of a federal employee, this is just one aspect of your divorce that may require special handling, so to speak. That’s why it’s wise to learn about your rights and responsibilities and to ensure that you get a fair settlement. Experienced legal guidance is essential.



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