Recent changes to the military retirement system could impact family law issues, particularly division of marital property in a divorce. If you or your spouse are retired military or will be in that category in the future, it’s probably a smart idea to talk to a family lawyer to see how you could be affected by these changes.
Historically, retired military personnel participated in what’s now known as the “legacy” retirement system. This is a defined benefit program, meaning that after 20 years of service, personnel can receive roughly half their monthly base pay as their pension. For retirees with more than 20 years of service, the government multiplies years of service by 2.5 percent of base pay for larger benefits.
Service members on active duty who joined the military before the end of 2017 can be grandfathered into this legacy system or choose the new “blended” retirement system instead. Under the new system, which applies to everyone who joined after 2017, there’s a defined benefit component that makes up part of your retirement benefit, although it’s a smaller percentage of monthly base pay.
But there’s also a “defined contribution” component, which is like a 401(k) plan, an investment plan that grows over time (or shrinks if the markets do poorly). Personnel automatically put 3 percent of their pay into the plan but can contribute up to 5 percent, with the government matching contributions after two years.
This is relevant to family law because it creates questions about how the new plans will be handled by a divorce court. It’s unclear whether it’ll be treated as marital property to be divided in a divorce or non-marital property that the other spouse doesn’t get to share in.
These changes also affect the amount of retirement pay former military spouses receive if they and their ex got divorced before the member retired, particularly if that member is eligible to opt in to the new “blended” program. Talk to a family lawyer in your state to see how this might all work.