How Divorce Can Quietly Reshape the Federal Retirement Package You’ve Spent Years Building

Key Takeaways

• Divorce has lasting effects on federal retirement benefits, including pension division, survivor benefits, and Thrift Savings Plan (TSP) allocations. These can reshape your financial future without warning if not addressed during the divorce process.

• Court orders such as a COAP (Court Order Acceptable for Processing) or a QDRO (Qualified Domestic Relations Order) can dictate the long-term allocation of your annuity and other benefits. These legal instruments can remain in effect even after you retire, affecting both income and benefit access.

Why Divorce Has Unique Consequences for Government Employees

If you’re a public sector employee, your retirement package likely includes a Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) annuity, Social Security benefits, the Thrift Savings Plan (TSP), and federal health and life insurance coverage. These assets aren’t treated like regular pensions in divorce proceedings. Instead, they are governed by federal rules and court orders that make them subject to division in specific ways.

What many don’t realize is that your former spouse could remain entitled to a portion of your retirement benefits for life, even if you remarry or your relationship with them changes. That makes understanding the federal rules around divorce critical to preserving the retirement income you’ve worked hard to build.

The Court Order That Divides Your Annuity

Your annuity is usually your most valuable retirement asset. Under both CSRS and FERS, it’s subject to division by a Court Order Acceptable for Processing (COAP). This is a court-issued document that tells the Office of Personnel Management (OPM) how to divide your pension once you retire.

If your divorce decree includes a COAP, your former spouse may be entitled to:

• A flat monthly amount

• A percentage of your monthly annuity (often up to 50%)

• A portion of your annuity calculated from the date of marriage to the date of divorce

Once OPM receives a valid COAP, it administers the payments directly to your former spouse. Importantly, this happens before you receive your portion, and you cannot change it after retirement.

OPM will continue making payments to your former spouse for as long as your annuity is paid, regardless of your remarriage.

Survivor Benefits: A Decision With Permanent Impact

Survivor benefits provide a continuing annuity to a spouse after your death. If a divorce court orders a former spouse to be treated as a “former spouse survivor,” they are eligible for this benefit even after the marriage ends.

OPM requires an explicit court order for this to happen. But once awarded, this designation:

• Reduces your monthly annuity while you are alive (to pay for the survivor benefit coverage)

• Allows your former spouse to continue receiving part of your annuity after your death

You can only provide one survivor annuity at a time. So if your former spouse is named, your current spouse (if you remarry) may not be eligible for that benefit.

Survivor annuity elections must be made within 2 years of the divorce. Otherwise, the opportunity may be lost.

Thrift Savings Plan (TSP) Division

Unlike your pension, which is administered by OPM, your TSP account is subject to a Retirement Benefits Court Order (RBCO). This order must specifically instruct the TSP to divide the account.

Here’s what can happen under an RBCO:

• The account is divided as a flat dollar amount or a percentage as of a specific date

• The TSP will freeze the account during processing

• Your former spouse may transfer their share into their own retirement account, tax-deferred

If no RBCO is submitted, the TSP account remains untouched in the divorce, even if other assets are split.

You cannot control how the funds are used once transferred, and unlike the annuity, no ongoing link exists. After division, the two accounts are completely separate.

Social Security and Divorce: What Applies and What Doesn’t

Divorced spouses can receive Social Security benefits based on your work record if:

• The marriage lasted at least 10 years

• The ex-spouse is unmarried and age 62 or older

• The benefit they are entitled to on their own work record is less than what they’d receive based on yours

These rules are federal and automatic. You do not need to apply or approve it, and your benefits are not reduced because of what your former spouse receives.

If you were under CSRS and not paying into Social Security, this issue may not apply to you directly, but could affect your spouse’s eligibility.

Federal Health Insurance (FEHB) Post-Divorce

You may think that your former spouse can continue on your FEHB health plan after the divorce. That’s not usually true.

Once a divorce is finalized, your former spouse is no longer considered a family member eligible for FEHB. Their coverage ends at midnight on the day the divorce is final.

However, they may be eligible for temporary continuation of coverage (TCC) for up to 36 months. But they must:

• Apply within 60 days of losing coverage

• Pay the full premium plus a 2% administrative fee

Alternatively, some former spouses qualify for Spouse Equity coverage if awarded in the divorce decree. This allows them to enroll in FEHB but again, they pay the full cost.

Federal Life Insurance (FEGLI) and Divorce

FEGLI coverage is a bit different. You name beneficiaries directly, and a divorce decree can require you to keep your former spouse as a beneficiary on a Basic or Option B policy.

If your court order mandates this:

• You cannot remove your former spouse without court approval

• The designation survives your remarriage unless changed by court order

• OPM will honor the last valid designation on file

FEGLI does not automatically update upon divorce. If there is no court order, you must manually change your beneficiary designation. Otherwise, your former spouse could still receive the payout, even if you remarried.

Timing Matters: The Sooner You Act, the More Options You Have

Every benefit listed above has time constraints. Missing deadlines can permanently limit your choices:

• COAPs must be submitted before retirement

• Survivor annuity elections must occur within 2 years of divorce

• TCC for health insurance must be requested within 60 days

• RBCOs for TSP should be submitted during divorce proceedings

If you delay these decisions, you risk:

• Losing the ability to protect a current spouse’s survivor rights

• Paying unexpected annuity reductions after retirement

• Watching assets like your TSP be divided unfairly

Actively reviewing your retirement accounts, designations, and court orders after your divorce is essential.

Remarriage and Its Ripple Effects

Remarrying can create new complications if you haven’t addressed divorce-related benefit allocations. For example:

• If you already elected a survivor benefit for your former spouse, your current spouse cannot receive it

• Your new spouse may be excluded from FEHB survivor continuation if you didn’t update your enrollment type in time

• TSP and FEGLI beneficiaries must be changed manually; marriage does not update them automatically

You must re-evaluate all elections and designations after remarriage. Otherwise, your current spouse could be left with fewer benefits than expected.

How Retirement Income Can Be Affected Long-Term

Many federal employees underestimate the long-term impact of divorce on income. If your annuity is reduced by 30% for a former spouse and an additional 10% for survivor benefits, you may be left with only 60% of the amount you anticipated. Add in FEHB premiums and possible Medicare coordination, and your take-home pay in retirement could be much lower than expected.

The earlier in your career you address these issues, the more financial control you retain. Even if the divorce happened years ago, you should still revisit:

• Your TSP beneficiary and account division status

• Your FEGLI designations

• Your retirement service record to see what portion of service time is considered marital

Protecting What You’ve Built

Public sector retirement benefits are not automatically protected in divorce. Unlike private sector plans, they require specific legal action to divide or protect.

You can take steps now to:

• Request a retirement benefits estimate from OPM showing the marital share

• Draft a clear COAP with help from a lawyer experienced in federal benefits

• Update all beneficiary designations to reflect your current wishes

• Review your FEHB and FEGLI options with a licensed agent listed on this website

These measures can help ensure your retirement benefits are used the way you intend.

Divorce Doesn’t Have to Derail Your Retirement

Divorce doesn’t have to ruin your retirement—but it can quietly reshape it if you ignore the details. Every benefit you’ve earned is affected by how you handle your divorce paperwork. From annuities to TSP to insurance, your financial future depends on timely, informed decisions.

To protect what you’ve built, speak with a licensed professional listed on this website. They can help you interpret court orders, update your records, and ensure your retirement plan aligns with your post-divorce goals.