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How will the BRS affect military divorces?

When Congress passed the National Defense Authorization Act in 2016, part of the legislation included provisions to update the retirement plans service members receive.

While some members may be able to keep their current retirement system, other members may choose to opt in to the new Blended Retirement System (BRS). This plan will go into effect on January 1, 2018.

The BRS combines two different savings elements. One aspect is the defined benefit that retired veterans will receive based on their years of service and their retired base pay. The second aspect is the defined contribution that functions similarly to a matching contribution in a 401k plan. Service members can receive up to 5% in matching contributions for the contributions made to the BRS.

For military families who are going through divorce, there may be some questions regarding how that divorce will affect benefits received from the BRS. Entering into the BRS will affect the benefits that the service member and the service member’s ex-spouse will receive.

Will ex-spouses be eligible for continuation pay?

Some service members may be eligible to receive continuation pay under the BRS. Continuation pay essentially functions as a bonus for a service member in exchange for an agreement to serve three additional years. When thinking about divorce, it will be critical for courts to decide whether the continuation pay is marital or non-marital property.

A court may consider the continuation pay to be a martial benefit because it the support of the marriage helped the service member continue to serve. A court may also view the continuation pay to be non-marital property because it is a promise of future service, presumably after the divorce is final.

Lump sum option will reduce benefits for ex-spouses

A service member may opt to receive a portion of their retirement benefits in a lump sum. By choosing the lump sum option, ongoing benefits that the ex-spouse receives will be reduced.

It is still unclear whether the ex-spouse will be eligible for a portion of the lump sum benefits. The fact that these rules are still evolving underscores the importance of working with an attorney who is experienced resolving military divorces. As service members transition into using the BRS, it is important they have someone protecting their rights.

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