Usual Fees:  $275 for 401(k), 403(b), 457, PERA; $350 for Pension Plans
50% Discount for Multiple QDROs

Preparation of a Federal TSP QDRO in Colorado

Summary: Unlike all other retirement plans, under the Federal Thrift Savings Plan (TSP), losses since the date of the valuation and division are always paid by the Employee.  And actual earnings are not credited to the Alternate Payee. This makes it difficult to plan and administer a court order which divides TSP assets.

Unlike Other Retirement Plans, the TSP Does Not Track Losses and Earnings

The Federal TSP (Thrift Savings Plan) is somewhat like a traditional 401(k) plan.  It is a type of tax-deferred savings and retirement plan.

However, when dividing a TSP with a court order to divide marital assets in Colorado, the TSP has 2 unique characteristics:

      1.   The TSP does not allocate losses to both parties, as of the date of the valuation and division (such as the date of the Decree); and

       2.   The TSP does not track actual earnings, but does permit the Order to specify earnings to be credited to the Alternate Payee (non owner spouse).

These two unusual characteristics make it more difficult to properly divide a TSP in a Colorado divorce.

Colorado law provides that the date of the Decree (unless the parties agree to something different) is the date of the valuation and division of a retirement asset. The link in the previous sentence provides some of the relevant law.

This means that with essentially all retirement plans (other than TSP) losses and earnings are allocated to the Employee's account and to the Alternate Payee's account just the same as if the retirement plan was actually divided on the date of the valuation and division.

What Can You Do About the Unusual TSP Characteristics?

     -   Do the TSP as soon as possible, preferably get the proposed Order into the Colorado court before the court signs off on your divorce decree.

     -   Allow some consideration for losses, if your TSP account is losing some money.  So, if it lost 5% in the past 7 months, maybe give 1 to 2% less to the Alternate Payee to allow for some continued losses.

     -   And/or do not consider either earnings or losses, just get the split done ASAP.

     -   If you cannot agree and you end up in court, the judge will not spend any time reviewing account statements, etc., but instead will likely just go with a 50-50 split to be done ASAP, without consideration for losses or earnings. (This may mean that all losses will be allocated to the Employee/Participant.)  However, if the court case was properly argued, the Judge may order a reduction in the amount that goes to the Alternate Payee, to account for losses.)