The Armed Services Blended Retirement System In Colorado Divorce

Are you involved in a Colorado divorce or family law proceeding involving military retirement? An experienced Colorado Springs divorce attorney can guide you through the legal process and assist you in exploring your options. You have one bite at the apple in the court system so make it count.

The Blended Retirement System (BRS) is the retirement plan available to members who first entered a uniformed service on or after January 1, 2018, and to certain members with fewer than 12 years of service as of December 31, 2017, who previously opted into the system. It combines a reduced defined-benefit pension with government matching contributions to the Thrift Savings Plan (“TSP”), and a mid-career continuation-pay component. 10 U.S.C. § 1409; 5 U.S.C. § 8440e. BRS is “blended” because it allocates retirement value between three components:

1. a smaller lifetime defined benefit;
2. government-matching TSP savings plan, which may provide portable retirement value even for a member who separates before full retirement eligibility; and
3. mid-career continuation pay

BRS offers a retirement annuity, using a 2 percent multiplier rather than the 2.5 percent multiplier that applies under the legacy system. For a nondisability retiree subject to BRS, retired pay is generally determined by multiplying the applicable retired-pay base by 2 percent for each year of creditable service. Thus, a member retiring with 20 years of creditable service ordinarily has a 40 percent retired-pay multiplier. 10 U.S.C. § 1409(b)(4).

The retired-pay multiplier is the percentage applied to a service member’s retired-pay base to calculate the defined-benefit portion of monthly military retired pay. For most nondisability retirees under the legacy system, the multiplier is 2.5% for each year of creditable service. A member retiring after 20 years, for example, generally has a 50% multiplier (20 × 2.5%). Under the Blended Retirement System, the multiplier is generally 2% for each year of creditable service; a 20-year BRS retiree therefore generally has a 40% multiplier (20 × 2%). 10 U.S.C. § 1409.

The resulting percentage is multiplied by the member’s applicable retired-pay base—typically the statutory high-36-month average basic pay base—to determine the gross monthly retired pay before deductions. 10 U.S.C. § 12739.

Writer’s Practice Observation: It is important to calculate the estimated retirement pay at the time of preparing the retirement order under the frozen benefit rule as it is very and time-consuming to calculate after the fact. When calculating at the time of preparation of the dividing order, future years of pay can be calculated by simply adding the cost of living allowance (COLA) each year to the subsequent year’s number since spouses benefit from the COLAs.

The BRS also provides TSP participation with government contributions. This allows eligible members to make their own TSP contributions and requires government matching contributions of up to 5% of the member’s basic pay for each pay period. Automatic contributions begin after the member has completed two years and one day of service, and end upon completion of 26 years of service. 5 U.S.C. § 8440e(e).

Unlike the defined-benefit pension, the TSP component is not dependent on completion of a full military retirement career, therefore a member who separates before becoming eligible for a defined benefit retired payment retains the value of the member’s TSP account, subject to the plan’s governing rules. 37 U.S.C. § 211.

BRS includes continuation pay, which is a mid-career retention payment available to full TSP members who have completed at least seven but not more than 12 years of service and who agree to perform at least three additional years of obligated service. 37 U.S.C. § 356(a). The member may elect a lump-sum payment or up to four payment installments. A member who does not complete the service obligation may be subject to statutory repayment requirements for the continuation pay. 37 U.S.C. § 356(b), (e)–(g).

Sabra Janko is a highly knowledgeable and experienced Colorado Springs divorce attorney who can guide you through Colorado Springs divorce and military retirement matters by negotiating, mediating and litigating on your behalf. You can focus on moving to a better future instead of spending your time attempting to navigate complex legal rules and procedures.

Sabra Janko from Janko Family Law has more than 20 years of legal experience and has written “the book” on Colorado divorce and family law – “Colorado Family Law With Forms”, published by LexisNexis, which you can find at here. Contact us at 719-344-5523 or complete our online scheduling request for a free 30-minute informational consultation. We also offer paid advice sessions for a more in-depth analysis of your case.