Top 7 Things to Know About Dividing Military Retirement

1. The 10/10 Rule Determines Direct Payment

The 10/10 rule is not about whether the court can divide the pension. It is about whether DFAS will send the former spouse’s share directly. Under 10 U.S.C. § 1408, DFAS will make direct payments to a former spouse only if the service member has at least 10 years of creditable service overlapping 10 years of marriage. This is the 10/10 rule.

If the marriage and service overlap for 9 years and 11 months, the court can still divide the pension. California Family Code § 2550 requires equal division of community property regardless of the 10/10 rule. But the service member must pay the former spouse directly, usually by monthly check or allotment. DFAS will not handle the distribution.

This matters for enforcement. If the service member fails to pay, the former spouse cannot garnish DFAS directly. They must go back to court for contempt or wage garnishment through other means. We always check the 10/10 overlap early in the case so our clients know whether direct payment is available or if we need to build alternative enforcement into the judgment.

2. The Coverture Formula Is the Standard Method

California courts use the coverture formula to calculate the marital share of military retired pay. This formula divides the months of marriage overlapping military service by the total months of military service. The result is a fraction that represents the community property portion of the pension.

For example, if a service member was married for 15 years and served for 20 years, with all 15 years of marriage overlapping service, the coverture fraction is 15/20 or 75%. The community property share is half of that, so the former spouse gets 37.5% of the disposable retired pay.

The formula is not optional. California courts have adopted it as the standard method for military pension division. But the inputs matter. We dispute the start date of marriage, the date of separation, and whether certain training periods count as service. Each month changes the fraction and the dollar amount.

We also make sure the order specifies that the denominator is total service at retirement, not service at the date of divorce. This prevents the service member from getting a windfall if they continue serving after the divorce and increase the denominator.

3. Disposable Retired Pay Is Not the Same as Gross Pay

DFAS divides only disposable retired pay, not gross retired pay. Under 10 U.S.C. § 1408, disposable retired pay means gross retired pay minus certain deductions. These deductions include amounts owed to the government for previous overpayments, court martial forfeitures, and waived retired pay taken in exchange for VA disability compensation.

This is where VA disability creates a hidden problem. If a retiree waives $1,000 of retired pay to receive $1,000 of tax free VA disability, that $1,000 comes out of disposable retired pay. The former spouse’s share drops because the pension being divided is smaller. The retiree gets the same total income, but the former spouse gets less.

California courts have addressed this through offset methods. Some orders require the retiree to make up the difference from other assets or income. Others structure the division as a fixed dollar amount rather than a percentage. We analyze the VA waiver risk in every case and build protections into the judgment so our clients are not surprised at retirement.

4. Post Separation Promotions Stay With the Earner

A service member who gets promoted after separation earns a higher retired pay based on the new rank. Under California law, post separation earnings are separate property. The former spouse has no claim to the increased pay that results from promotions earned after the marriage ended.

But the coverture formula, if applied blindly, can give the former spouse a share of those promotions. If the formula uses total service at retirement in the denominator, and the service member gets promoted twice after separation, the former spouse benefits from the higher rank even though they contributed nothing to it.

We fix this by using a dual coverture formula or a fixed benefit approach. The dual coverture formula calculates the pension as if the service member retired at separation rank, then applies the coverture fraction to that lower amount. The post separation promotions are excluded from the community share. This is the fair result under California Family Code § 2550, and it is the approach we advocate in every case.

5. Concurrent Receipt Changes the Income Picture

Under 10 U.S.C. § 1414, a retiree with a VA disability rating of 50% or higher can collect both full retired pay and tax free VA disability compensation. This is called concurrent receipt, and it fundamentally changes the support calculation.

Before concurrent receipt, retirees had to waive retired pay dollar for dollar to get VA disability. That reduced the divisible pension and the former spouse’s share. Now, with concurrent receipt, the retiree keeps the full pension plus the disability. The former spouse gets their full share of the pension, and the retiree gets the disability on top.

For support purposes, the VA disability is income under California Family Code § 4058 even though it is not divisible as property. A retiree with concurrent receipt may have $5,000 in retired pay and $3,000 in VA disability, for a total of $8,000 in monthly income. The support calculation should include all $8,000, not just the retired pay. Lawyers who miss concurrent receipt set support too low and leave money on the table for the supported spouse.

6. The SBP Election Must Be Addressed in the Judgment

The Survivor Benefit Plan, governed by 10 U.S.C. § 1447 et seq., provides a monthly annuity to a surviving spouse or former spouse after the retiree dies. The premium is deducted from retired pay. In divorce, the SBP election is a major negotiation point.

If the service member elects former spouse coverage, the former spouse keeps the annuity even after the retiree remarries or dies. If the service member elects new spouse coverage instead, the former spouse gets nothing. The election is binding and hard to change after the fact.

The judgment must specify who pays the premium, who is named as beneficiary, and what happens if the service member remarries. We also address the insurable interest issue. A former spouse can only be named if the marriage lasted at least one year, or if there are children from the marriage. We verify these requirements before negotiating the SBP so there are no surprises at retirement.

7. DFAS Rejects Orders That Do Not Meet Formatting Requirements

DFAS is not flexible. If your pension order does not include the service member’s Social Security number, the specific language required by 10 U.S.C. § 1408, and a clear percentage or fixed dollar amount, DFAS will reject it. We have seen orders rejected because the judge used the word “shall” instead of “must” or because the order referenced a state statute instead of the federal one.

The solution is drafting the order with DFAS guidelines in hand. We use the exact language DFAS requires. We include all mandatory data elements. We submit the order for pre approval when possible. This prevents the rejection letter that arrives six months after the divorce is final and forces you back to court for a corrected order.

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 federal statutes and specific procedural requirements. Results vary based on specific circumstances, and past performance does not guarantee future outcomes.

Sources:

• Cornell Law School Legal Information Institute
• California Legislative Information
• Defense Finance and Accounting Service