North Carolina residents who work or have worked for the federal government and whose marriages are ending may find that their divorce can become complex when it comes to a federal Thrift Savings Plan. While there is no federal law that requires a worker to share his or her TSP account balance with a former spouse, a court could potentially award a certain portion.
Before a portion of the TSP can be awarded to the former spouse, it requires a Retirement Benefits Court Order. The RBCO can be a court decree of divorce, a legal separation or an annulment. In some cases, a Qualified Domestic Relations Order could potentially qualify as a RBCO. The court may order the TSP account to be frozen, meaning no withdrawals or loans can be taken from that account, until the divorce has been finalized.
Because dividing up federal benefits in a divorce can be difficult, there is a booklet available for the TSP called Court Orders and Powers of Attorney. This 31-page booklet has pertinent information when it comes to drafting documents that meet court standards.
Some individuals who have been preparing for retirement may suddenly find that their financial plans are interrupted due to the end of their marriage. If a person has multiple retirement accounts and benefits from long-term employment, dividing these assets up can be difficult and, in many cases, confusing. People who are in this position may want to have the assistance of their family law attorney when attempting to negotiate an appropriate settlement agreement.