Military Divorce Series: The Frozen Benefit Rule

Part 1: Military Divorce: THE FROZEN BENEFIT RULE

The following is the first of a 4 part series on the changes you need to know to stay up to date on changes affecting Military Divorce, as presented by Janice Boback at the National Business Institute Continuing Legal Education for Professionals last month.

The Frozen Benefit Rule Defined

The Uniformed Services Former Spouses Protection Act (USFSPA) 10 U.S.C.§1408 was amended through section 641 of the NDAA (National Defense Authorization Act) to include a provision which re-defines the military retired pay that DFAS can divide. The Rule provides for a uniform method of pension division in that the military member retires on the day that the judgment for dissolution of marriage is entered.

10 U.S.C. § 1408 (a)(4) — Disposable Retired Pay

(A) The term “disposable retired pay” means the total monthly retired pay to which a member is entitled (as determined pursuant to subparagraph (B) less amounts which — (i) are owed by that member to the United States for previous overpayments of retired pay and for recoupments required by law resulting from entitlement to retired pay; (ii) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court-martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38; (iii) in the case of a member entitled to retired pay under chapter 61 of this title [10 USCS §§ 1201 et seq.], are equal to the amount of retired pay of the member under that chapter computed using the percentage of the member’s disability on the date when the member was retired (or the date on which the member’s name was placed on the temporary disability retired list); or (iv) are deducted because of an election under chapter 73 of this title [10 USCS §§ 1431 et seq.] to provide an annuity to a spouse or former spouse to whom payment of a portion of such member’s retired pay is being made pursuant to a court order under this section. (B) For purposes of subparagraph (A), the total monthly retired pay to which a member is entitled shall be-(i) the amount of basic pay payable to the member for the member’s pay grade and years of service at the time of the court order, as increased by (ii) each cost-of-living adjustment that occurs under section 1401a(b) of this title [10 USCS § 1401a] between the time of the court order and the time of the member’s retirement using the adjustment provisions under that section applicable to the member upon retirement.

How the Frozen Benefit Rule Works

The USFSPA used to allow for the states to determine how to divide military retired pay. Each state has their own laws that detail the method of dividing pensions, valuation dates, what is marital vs. non-marital property, etc. These laws included the military cases which required division of military retirement pay. This is no longer the case.

The Frozen Benefit Rule in a Divorce Case

You and your client can choose to enter a different type of order but keep in mind that DFAS will only honor those drafted with the frozen benefit which is what DFAS will pay. If there is another arrangement, the service member could be responsible for payment directly to the former spouse of any additional amount.

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