By Leslie Miller, Esq.
Effective June 1, 2022, the Thrift Savings Plan (TSP) has had a new administrator for processing court orders AND a new record keeper. The switch to the new administrator has caused substantial challenges in many areas, resulting in an investigation by the Government Accountability Office which was scheduled to begin before the end of 2022. No further information is available yet.
For family law practitioners, however, here is the relevant information regarding the changes to the TSP court order process:
- Valuation dates for dividing a TSP account prior to June 1, 2022 MUST be the end of a quarter. If the date is not the end of a quarter, then the TSP court order administrator will use the closest quarter-end date for the valuation date. What does this mean for parties? Take control and pick a quarter-end date for any valuation date prior to June 1, 2022.
- How to describe the amount to be transferred to the former spouse: a percentage of the account or a dollar amount. The amount to be transferred must include a valuation date. If using a date other than the transfer date for the valuation date, the order must specify whether gains and losses are included in the transfer amount. (Historically the TSP would allow for a percentage of the account’s accrual between two dates. This division type is no longer accepted and will result in a rejected order.) How to handle this change? Be specific. If there is a pre-marital interest in the account, do all the arithmetic and describe the transfer amount as the proper percentage or dollar figure that should be transferred.
- The TSP court order administrator charges $600 to review and implement the court order. Previously no such fee was charged. How to handle this change? Include in any agreement or court order how the fee should be paid, if entirely by one party or the other, or shared between the parties. The fee will be deducted from the retirement account and/or the funds being transferred depending on which party is supposed to cover this fee.
- A reference to the applicable domestic relations laws that allow for the transfer must be stated. This does not have to be a cite to the specific statute, but a simple statement that the order is entered pursuant to the state’s domestic relations laws will suffice.
- Scans of certified court orders can be uploaded directly to the TSP court order administrator. The website is at https://qoc.rk.tsp.gov/qoc/b/CsHome010Home.htm. After completing the upload, the web page refreshes to say that a determination will be made in 20 business days. In my experience, most orders submitted are receiving a response within 1-2 months (as of July, 2023), a bit beyond the 20 business days, though it is getting quicker. You can call the TSP administrator at 877-968-3778 to ensure that your order is in the queue for processing.
Overall, what does this mean for parties seeking a divorce where a TSP division is involved? The short answer: there are a few more pieces to consider in the negotiations, and the final order can be submitted to the plan administrator quicker.
One final piece of information: many orders submitted during the transition period were lost. If you submitted an order in May / June 2022 and have not heard back, you may want to call TSP to check if they have the order and resubmit it if needed.
Leslie Miller is with the Markham Law Firm’s Bethesda’s office, where she focuses her practice in the areas of complex retirement divisions and the preparation of qualified domestic relations orders while also maintaining a divorce practice.