Blog Post You Actually Enjoy Reading


Thrift Saving Plans- Tax Deferred Retirement Accounts Division During Oklahoma Divorce

Posted by Amy Hayes | Mar 14, 2024 | 0 Comments

Do you or the spouse you're divorcing have a Thrift Savings Plan? This is a tax-deferred retirement account for members of the military and federal employees, similar to 401k plans offered by private employers. Participants add to their accounts through regular payroll deductions and the money is placed in investment funds to grow over time.

Frequently, a Thrift Savings Plan account can be a substantial marital asset. Under family law, the account belongs to both spouses. It doesn't matter which one is the actual plan “participant” or in other words, the one who worked where the plan was offered, set up an account and made the contributions each pay period.

The money that accumulated during the marriage is a marital asset and subject to division in a divorce. (Any contributions made before the marriage by the participant, however, are exempt and belong to the participant).

Here is just some of what you'll want to consider:

Know the tax implications

If you will be getting part of a TSP, be sure you understand the tax implications. If you have to pay taxes on the amount you receive, you will actually be getting less than what you may have expected in the marital settlement agreement.

For instance, you could be in for a surprise if you believed that your divorce agreement specified you would receive $50,000 from your spouse's TSP account, only to later learn that the IRS expects you to pay 20 percent of that in income taxes. Suddenly, your marital settlement is less than you planned on.

You can avoid taxes by rolling the distribution into your own retirement account. Again, the Office of Personnel Management will require you to send in the right forms in order to do this. Otherwise, it will take out 20 percent automatically to send to the IRS.

When Divorce is Complete

The federal Office of Personnel Management oversees Thrift Savings Plans and is the agency that handles division of TSPs. The agency has precise rules and this is something that you will need to follow through on if you are the “payee” who is entitled to a distribution from your spouse's account.

Change the beneficiary!

If you're the plan participant (the federal employee or military service member who contributes to the TSP), you will probably want to change the beneficiary after your divorce. Usually, people name their spouses as beneficiaries. You now have an ex-spouse – is he or she still named as the beneficiary?

This is where the TSP rules are quite strict.

Nothing overrides who is named as the beneficiary, according to the Office of Personnel Management. Not a divorce decree, even if the ex-spouse gave up all rights. Not a will. Not a pre-nuptial agreement. Not remarriage. If your ex-spouse is still the designated beneficiary, he or she will get the proceeds of the account. So change the beneficiary, if this is something you would rather not happen (i.e., you've remarried or want to leave the account to your children).  Call Hayes Legal Solutions, PLLC for a consult at 405-635-5578.

About the Author

Amy Hayes

Hayes Legal Solutions, PLLC is owned by Amy Hayes, she is also known by some as Amy Hayes-Thompson. She has been licensed to practice law in Oklahoma since 2003. Amy started Hayes Legal Solutions to make legal services more accessible and affordable to Oklahomans. Family Law, LGBTQ Family Law, Real Estate Law, Oil &Gas Law, Small Business Contracts, and Renewable Energy Law are her primary practice areas.


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment


Hayes Legal Solutions, PLLC Is Here for You

Family LawLGBTQ Family LawReal Estate LawOil & Gas LawSmall Business ContractsRenewable Energy Law

Contact Us Today

Hayes Legal Solutions, PLLC offers a free fifteen- minute exploratory consultation. Reach out today via text, phone, or proceed with scheduling your appointment on-line. We are committed to timely replying with all inquiries within twelve hours. Talk To Us On Social Media

Office Location

3030 NW Expressway, Suite 200
Oklahoma City, OK 73112

Mailing Address
3030 NW Expressway, #599
Oklahoma City, OK 73112

Schedule Now