The Blended Retirement System and Divorce in California

In a California divorce, the Blended Retirement System is not one asset but three: future military retired pay, a Thrift Savings Plan account, and any Continuation Pay. The part of each earned during the marriage while domiciled in California is community property, and each part is characterized, valued and divided on its own terms.

Most people facing a military divorce in California were told about the Blended Retirement System at a briefing years ago, signed a form, and never thought about it again until a petition was filed. Now a service member at a San Diego County command, or a spouse who followed that member through several PCS moves (permanent change of station, the military's term for a reassignment to a new duty location), is trying to work out what is actually on the table. The confusion is understandable, because the system mixes a traditional pension with an investment account and a one-time cash payment, and California treats each one a little differently.

This article walks through what the Blended Retirement System (BRS) is, how California community property law reaches each of its pieces, how federal law affects payment, and what the process looks like in the Superior Court of California, County of San Diego.

What the Blended Retirement System Is and How It Differs from the Legacy System

The BRS is the newer military retirement design. Members who joined after it took effect are enrolled in it, and many members already serving at that time had a one-time window to opt in. Others stayed in the older "legacy" High-3 system, a defined-benefit pension only, with no government contributions to a savings account and no Continuation Pay.

Under the BRS, three separate things can build up during a career:

1. Defined-benefit retired pay. This is the monthly payment a member receives after retiring from service. Federal law sets the general formula: under 10 U.S.C. § 1409(b)(1), subject to the exceptions in the paragraphs that follow it, the multiplier is the product of 2½ and the member's years of creditable service. That 2½ figure is the legacy High-3 multiplier. The BRS uses a lower multiplier, which is the trade-off for the savings account described next.

2. The Thrift Savings Plan (TSP). The TSP is the federal government's retirement savings plan. Under 5 U.S.C. § 8440e, members of the uniformed services who are eligible may contribute to the Thrift Savings Fund, and they are treated as employees for purposes of the plan's rules. Under the BRS, the government also adds contributions to a member's account during service. The TSP is a defined-contribution account. It holds a balance that rises and falls with investments, not a promise of a monthly payment.

3. Continuation Pay. This is a mid-career cash payment offered in exchange for an agreement to serve additional time.

Each piece is a different kind of asset, held by a different federal system and divided by a different method. Treating them as one "military pension" is one of the most common sources of mistakes in a BRS divorce. A few more acronyms recur below: DFAS is the Defense Finance and Accounting Service, the agency that pays military retired pay, and USFSPA is the Uniformed Services Former Spouses' Protection Act, the federal law that allows state courts to divide that pay.

How California Community Property Law Applies to BRS

California's starting rule is in Family Code section 760: "Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property." Domicile, meaning the place a person treats as a permanent home, is the test, not simply where someone was stationed. For military families that question can take real attention, since orders move people in and out of California.

Family Code section 2550 then directs the court to divide the community estate equally, except upon the written agreement of the parties, an oral stipulation in open court, or as otherwise provided in that division of the Family Code. And under Family Code section 2552, the court generally values assets and liabilities as near as practicable to the time of trial, though for good cause and on 30 days' notice it may use a date after separation and before trial.

Applied to each BRS piece, the analysis usually looks like this:

• Retired pay. The portion earned through service during the marriage while domiciled in California is community property. A common way to measure that portion is a coverture fraction, sometimes called the time rule: the months of creditable service during the marriage, over the total months of creditable service at retirement. If half of a career fell within the marriage, about half of the retired pay is community, and each spouse's share of that community half is generally equal. More on this appears in the site's overview of military retirement division, and on how rank and service are measured at divorce in the explainer on the frozen benefit rule.
• TSP. Contributions and earnings that built up during the marriage while domiciled in California are generally community property. Money contributed before the marriage or after separation, and its growth, is generally separate property.
• Continuation Pay. Characterization depends on timing and domicile, and on what the payment was earned for. A payment received during the marriage while domiciled in California may be community property in whole or in part.

Federal law opens the door to all of this without deciding the outcome. The USFSPA, at 10 U.S.C. § 1408, governs payment of retired pay in compliance with court orders, and it defines a "court" to include "any court of competent jurisdiction of any State." The USFSPA does not automatically give a former spouse anything. A former spouse's share comes only from a California court order dividing the retired pay under California law. The site's page on the USFSPA covers that federal framework in more depth.

Dividing the Defined-Benefit Component: Retired Pay and the USFSPA

The retired pay division is usually the piece that worries spouses most, because it may not be paid for years. Federal law allows state courts to treat "disposable retired pay" as divisible. In general terms, disposable retired pay is gross retired pay minus certain deductions that federal law authorizes, so the divisible figure is often smaller than the number on a retiree's statement.

For DFAS to pay a former spouse from retired pay, the order has to be a court order that DFAS can act on: a final decree of divorce, dissolution, annulment or legal separation, or a court-ordered, ratified or approved property settlement incident to one. The award also has to be expressed clearly, typically as a fixed dollar amount, a percentage of disposable retired pay, or a formula such as the coverture fraction with the numbers DFAS needs to apply it. Ambiguous wording is a frequent reason an order cannot be processed.

The 10/10 rule is often misunderstood. It is a federal threshold based on how long the marriage overlapped with the member's creditable service, and it decides only whether DFAS can send the former spouse's share directly. It does not decide whether retired pay can be divided, and it is not an entitlement rule. A California court can divide retired pay regardless of whether the threshold is met. When it is not met, the member pays the former spouse under the court order rather than DFAS doing so. The site's page on the 10/10 rule explains the distinction further.

Other military payments sit next to retired pay but are not the same thing. When a member waives retired pay to receive VA disability compensation, the retired pay available to divide can shrink, which may reduce the former spouse's share. Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC) are separate federal payments with their own rules. Each is analyzed separately, and none of them is the same as retired pay.

Survivor benefits are the last major piece. Family Code section 2610 directs the court to make whatever orders are necessary or appropriate to ensure that each party receives the full community property share in any retirement plan, "including all survivor and death benefits," and it allows the court to order a party to elect a survivor benefit annuity where a plan provides one, provided no court orders a plan to provide increased benefits determined on the basis of actuarial value. For the military, that annuity is the Survivor Benefit Plan (SBP). Under 10 U.S.C. § 1450(a), the annuity is paid "effective as of the first day after the death" of the member, or on such other day as the member may provide under subsection (j), to beneficiaries that can include an eligible former spouse. The size of the annuity is tied to a "base amount," which 10 U.S.C. § 1447(6) defines differently depending on the kind of annuity. For a standard annuity where the person dies after becoming entitled to retired pay, it means the monthly retired pay, "determined without regard to any reduction under section 1409(b)(2) or 1415(b)(1)(B)," to which the person was entitled when first eligible or later became entitled. The site's page on the Survivor Benefit Plan covers how former-spouse coverage works.

Dividing the TSP: What Makes It Different from the Pension

The TSP behaves like a bank or brokerage balance, not a paycheck promised for life. That makes it simpler to measure in some ways: there is a statement with a dollar figure on it. It also means its value can change between separation and trial, which is part of why California's valuation rule in section 2552 matters here.

Dividing a TSP account in divorce is done through an order the TSP itself will accept, generally called a Retirement Benefits Court Order (RBCO). People sometimes call it a QDRO, borrowing the term for private-employer plans, but the TSP has its own requirements. In general, the order relates to a divorce, annulment or legal separation and states the amount or percentage awarded to the former spouse, or a formula for calculating it.

Only the community portion of the balance, contributions and earnings during the marriage while domiciled in California, is divided as community property. Pre-marriage money and post-separation contributions are generally separate property, and identifying them often means reading years of account statements.

Because the TSP and DFAS are different federal systems with different requirements, the TSP order and the retired pay order are typically separate documents. If any of it is community property, it is commonly dealt with in the marital settlement agreement as a cash asset rather than through an ongoing payment order.

BRS Divorce in San Diego County: Where Cases Are Filed and What the Process Looks Like

Family law cases in San Diego County are heard by the Superior Court of California, County of San Diego. A BRS case follows the same California procedure as any divorce, with the federal pieces layered on top. For families stationed in the region, the timing of a deployment or a PCS move often shapes how the case unfolds, and the site's page on San Diego County military divorce covers that local picture.

The waiting period. Under Family Code section 2339, a judgment of dissolution is not final to end the marriage until six months have passed from the date the summons and petition are served or the date the respondent appears in the case, whichever occurs first. The court may extend that period for good cause. It does not run from the filing date.

Disclosure. Under Family Code section 2104(f), each spouse serves a preliminary declaration of disclosure with the petition or response, or within 60 days of filing it, unless the parties extend that time by written agreement or the court extends it by order. It lists every asset and debt in which the spouse has or may have an interest, which includes each BRS component. Under Family Code section 2105(a), the final declaration of disclosure and a current income and expense declaration are due before or at the time the parties reach an agreement resolving property or support issues other than temporary support, or, if the case goes to trial, no later than 45 days before the first assigned trial date. A mutual waiver of the final declaration is possible only if executed under penalty of perjury in open court or by separate stipulation (section 2105(d)).

The orders. A BRS case usually ends with at least two division instruments: one for retired pay that DFAS can honor, and one for the TSP that the TSP can accept. An order that blends the two, or leaves out language a federal system requires, risks not being processed.

The SCRA. The Servicemembers Civil Relief Act protects members whose duty affects their ability to take part. Under 50 U.S.C. § 3932, when a servicemember has notice of the case, the court may on its own motion, and must on the servicemember's application, stay the case for not less than 90 days, if the application includes a statement of how current duty materially affects the ability to appear and when the member will be available, and a commanding officer's statement that duty prevents appearance and leave is not authorized. Under 50 U.S.C. § 3931, before a default judgment is entered against a respondent who has not appeared, the court requires an affidavit about whether that person is in military service. If it appears they are, the court may not enter judgment until it appoints an attorney to represent them.

If You'd Like to Talk Through a BRS Question

The hard part of a BRS divorce is rarely the rule itself. It is applying the rule to one family's facts: when the marriage began and ended relative to service, where the family was domiciled along the way, what the TSP statements show, whether Continuation Pay was taken, and whether disability or survivor benefits are in play. A consultation is a place to raise those questions. Military Family Law Advocates practices California family law only.

To talk with the firm about the Blended Retirement System, call Military Family Law Advocates at 888-771-0460 for a confidential consultation.