Military Blended Retirement System (BRS) and Cali Divorce

Dividing the BRS Pension Portion

The defined benefit pension under the BRS is divided using the same methods as the legacy system pension. California courts apply the time rule, which calculates the community property fraction by dividing the months of marriage overlapping military service by the total months of service at retirement. This fraction is then applied to the pension amount to determine the community property share, which is divided equally between the spouses.

The key difference is the pension multiplier. Under the legacy system, a 20-year retirement provided 50% of high-36 base pay (20 years times 2.5%). Under the BRS, the same 20-year retirement provides only 40% (20 years times 2.0%). This 20% reduction in the pension means that the pension portion of the BRS is less valuable than the legacy pension for the same career length.

However, the reduced pension is partially offset by the TSP contributions and the lump sum option. When evaluating the total retirement package for division purposes, courts should consider all components together rather than focusing solely on the pension. A service member under the BRS may have a smaller pension but a larger TSP account than a legacy system peer with identical service.

Dividing the TSP Under the BRS

The Thrift Savings Plan portion of the BRS is divided differently than the pension because it is a defined contribution account with a current balance rather than a future income stream. California courts typically order the TSP divided as of a specific date, usually the date of separation or the date closest to the divorce trial.

Division requires a Retirement Benefits Court Order (RBCO) submitted to the TSP administrator. The order must specify either a dollar amount or a percentage of the account to be transferred to the former spouse. The TSP administrator then establishes a separate TSP account in the former spouse’s name and transfers the specified amount. This process is straightforward and does not require actuarial calculations.

The TSP account may contain both community and separate property portions. Contributions made during marriage, including the government’s automatic 1% and matching contributions, are community property. Contributions made before marriage or after separation are separate property. Earnings on the community property portion are also community property, while earnings on the separate property portion remain separate.

Continuation Pay: The Mid-Career Bonus

The BRS includes a continuation pay provision designed to encourage service members to remain in the military through mid-career. At approximately 12 years of service, the service member receives a cash bonus in exchange for committing to additional service. This bonus is typically two to four months of base pay, though specific amounts vary by service branch and year.

Continuation pay received during marriage is community property subject to equal division. The timing of this payment creates an interesting issue because it occurs mid-career, often before retirement or divorce. If the service member receives continuation pay during marriage and later divorces, the pay has typically been spent or invested. Tracing the specific use of continuation pay may be necessary if the funds were deposited into a joint account or used to purchase community property.

Some courts treat continuation pay as a form of deferred compensation that should be included in the overall retirement valuation. Others treat it as a bonus received during marriage that is simply part of the community income of that year. The appropriate treatment depends on whether the pay was received during the marriage and how it was used.

The Lump Sum Option and Divorce Implications

Under the BRS, service members may elect to receive a portion of their retirement benefit as a lump sum at retirement. They can choose to take 25% or 50% of the discounted present value of their future pension payments in exchange for reduced monthly payments until full retirement age (usually 67), at which point the full pension amount resumes.

This lump sum option creates unique issues in divorce. If the service member elects the lump sum after the divorce but before the pension payments begin, the former spouse’s share of the pension is reduced accordingly. Courts can address this possibility by ordering that any lump sum election triggers a corresponding payment to the former spouse or by prohibiting the lump sum election without the former spouse’s consent.

If the lump sum is elected during the marriage, the funds received are community property subject to division. However, because the lump sum reduces future pension payments, courts must ensure that the former spouse is not double-counted by receiving a share of both the lump sum and the undiminished pension. Careful drafting of the pension division order prevents this problem.

Valuation Comparison: Legacy vs. BRS

When comparing the total retirement value under the legacy system versus the BRS, several factors must be considered. The legacy system provides a larger pension but no government TSP contributions. The BRS provides a smaller pension but significant TSP matching. The total value depends on the service member’s rank, years of service, investment returns, and career choices.

For service members who invest their TSP contributions aggressively and achieve strong returns, the BRS may actually provide greater total retirement wealth than the legacy system. For service members who do not contribute to the TSP or who invest conservatively, the reduced pension under the BRS may result in lower total retirement income.

California courts should consider the total retirement package when dividing assets rather than focusing on any single component. A former spouse who receives a smaller pension share under the BRS may be compensated with a larger share of the TSP account or other community property. The goal is equitable division of the total retirement benefit, not mathematical equality of each component.

USFSPA Requirements for BRS Division

The Uniformed Services Former Spouses’ Protection Act governs how state courts divide military retired pay, including the BRS pension portion. To enforce a pension division through DFAS, the court order must meet specific requirements: it must provide for payment of a portion of the service member’s disposable retired pay to the former spouse, the parties must have been married for at least 10 years overlapping 10 years of service for direct DFAS payment, and the order must be clear and specific.

For marriages shorter than 10 years, the former spouse can still receive a share of the pension, but the service member must make the payments directly rather than through DFAS. This creates enforcement risk because DFAS will not track or enforce the payments. Former spouses in this situation should consider negotiating a lump-sum buyout of the pension interest rather than relying on ongoing payments from the service member.

The TSP portion is not governed by the USFSPA. TSP division is handled through the TSP administrator under separate regulations. This means that two different court orders may be required: one for the pension under the USFSPA and one for the TSP under TSP regulations.

Bottom Line: Divide the Total Package

The Blended Retirement System creates a more complex retirement picture than the legacy system because it combines two distinct asset types: a defined benefit pension and a defined contribution savings account. California courts must divide both components as community property while ensuring that the total division is equitable.

If you are facing divorce under the BRS, work with an attorney who understands both components. Obtain current TSP statements. Calculate the time rule fraction for the pension. Consider the lump sum option and continuation pay. And most importantly, ensure that your settlement considers the total retirement value, not just one component in isolation.

At Hayat Family Law, we represent clients in BRS division cases with the expertise these complex assets require. We coordinate with actuaries, prepare the necessary court orders for both DFAS and TSP, and negotiate settlements that protect your financial future. Whether you are the service member or the spouse, we will ensure your BRS benefits are divided fairly under California law.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Military divorce involves complex interactions between state family law and federal military regulations. Results vary based on specific circumstances, and past performance does not guarantee future outcomes.

Sources:

• California Legislative Information – Family Code Sections 2550, 760
• California Courts – Family Law Rules and Forms
• Defense Finance and Accounting Service – Military Retirement Division
• Thrift Savings Plan – Court Orders and Division
• Air Force Legal Assistance – Blended Retirement System