The 10/10 Rule
Following a dissolution of marriage, a former spouse who has at least 10 years of marriage overlapping 10 years of creditable military service may apply for direct payment of the retirement from the Defense Finance & Accounting Service (DFAS). 10 U.S. Code § 1408(d)(2).
Known as the 10/10 rule, this often causes confusion, as people believe that the former spouse is not entitled to retirement unless the couple was married for at least 10 years. That is not correct - the 10/10 rule is for direct payment from DFAS; courts can divide retirement with fewer than 10 years of marriage.
Note also that the overlap between marriage and service must be at least 10 years. So if a couple has been married for 12 years, but only 8 of them were while the member was in the military, the 10/10 rule is not satisfied.
Direct payment has advantages to both spouses over counting on the retiree to make direct payment, including:
- No issues with late/missed payments.
- Reduces contact, and potential for friction, between the spouses.
- DFAS will issue a 1099 to each party reflecting their shares of the retirement and taxes withheld - this ensures that the retiree is not taxes on those payments going to the former spouse.
DFAS will only pay directly to the former spouse prospective retirement payments as they become due, and not retirement arrears. DOD Financial Management Regulation, Volume 7B, Chapter 29, Section 290304. So if the court orders the payment of arrears, or retroactive retirement, the judge must order an alternative way for the payments.
What Counts as Creditable Service for 10/10 Rule?
For active duty members, creditable service is also known as 1405 service - it includes the years of service for which the member was eligible to receive active duty pay. 10 U.S. Code § 1405. Additionally, a member who has reserve retirement points but qualifies for an active duty retirement can receive day-for-point credit for such points.
Creditable service excludes time in AWOL status, time incarcerated, or time lost due to an injury caused by the member's misconduct. 10 U.S. Code § 972.
For reservist, a creditable year is is any year in which the member accrued at least 50 points. 10 U.S. Code § 12732(b)(2). Simplistically, reservists get 15 points annually for being in the reserves, plus 1 point per day of actual service.
Moreover, if a spouse is married for at least 10 years overlapping military duty, it doesn't matter if those 10 years are all active, all reserve, or a combination of both.
Requirements for Court Order to Divide Retirement
The court order to divide military retirement must meet very specific requirements, otherwise DFAS will not process it. And note that while many attorneys may refer to the order as a QDRO, a military retirement is not a qualified pension under section 401(a) of the Internal Revenue Code, so a QDRO is neither needed, nor is it sufficient.
Per the DOD Financial Management Regulation, Volume 7B, Chapter 29, the order must contain:
- SCRA. An indication that the member's rights under the Servicemembers Civil Relief Act (formerly the SSCRA) were respected, if the dissolution was finalized while the service member was still on active duty (Section 290602).
- Jurisdiction. An indication of the Colorado divorce court's jurisdiction over the member (either residence, domicile, or consent to jurisdiction, including not contesting jurisdiction) (Section 290604),
- Amount to Divide. The percentage share (or, less commonly, the dollar amount) awarded to the former spouse (Section 290601), and
- Date of Marriage. While not an actual requirement for the order itself, DFAS requires an application for direct payment to include proof of the date of marriage. To save the former spouse from the logistical headaches trying to prove the date of marriage when filling out the application, or having to dig up the original marriage license, just include this in the order.
DFAS has a very handy publication entitled Guidance on Dividing Military Retired Pay. It’s a comprehensive guide with explanations of the law, sample retirement language, and references to specific requirements in the DOD Financial Management Regulation.
Because much can go wrong if the military retirement order is not drafted properly, this is not something a pro se client should do - the former spouse will require the assistance of qualified counsel who knows the military system. If you have a Colorado Springs case, you can consider the attorneys at Graham.Law (shameless plug!)
Procedure to Apply for Direct Payment from DFAS
DFAS has a great page with exhaustive instructions for applying for direct payment, but in short, here are the steps:
- Obtain certified copies of the decree of dissolution and the order dividing retirement.
- Copy of marriage certificate, unless the date is included in the court order.
- Complete the DD Form 2293, Application for Former Spouse Payments from Retired Pay, a simple 2-page form
- Complete a DFAS-CL Form 1059, Direct Deposit Authorization so DFAS can pay the retirement directly to a bank account.
- Complete an IRS Form W4-P, Withholding Certificate for Pension or Annuity Payments.
Send everything to:
Attn: DFAS-HGA/CL, Assistant General Counsel for Garnishment Operations
P.O. Box 998002
Cleveland, OH 44199-8002
The application may also be faxed to (877) 622-5930 (toll-free) or (216) 522-6960.
Then, sit & wait. Once received, the application typically takes about 90 days to process, during which time notice is provided to the military member/retiree. Because of this delay, a well-drafted retirement order will obligate the military retiree to pay the former spouse directly until DFAS commences direct payments.
Maximum Retirement Payments from DFAS
The maximum portion of a retirement that DFAS will pay a former spouse as part of a property division is 50% of the member's disposable retired pay. This does not prevent a court from awarding a former spouse more than 50% of the marital share (theoretically possible, but I’ve never seen it happen). Should a service member be in that unlucky situation, he/she will have to make up the difference between what DFAS pays directly and the divorce court's division of military retirement.
In cases where military pay is both awarded to a former spouse as a property division, and subject to garnishment for child support or maintenance, per the DOD Financial Management Regulation, Volume 7B, Chapter 29, Section 290901, the maximum DFAS will pay the former spouse directly is 65% of the retiree's disposable earnings calculated consistent with 42 U.S. Code § 659 (not the same as disposable retired pay).
As with any judgment, should the amount DFAS pays the former spouse directly not be sufficient to cover the amount owed, the retiree is required to make up the difference between the amount DFAS paid out and the ordered amount.
