Dividing NASA Retirement Benefits in a Divorce

December 27th, 2019

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Whenever an astronaut speaks to “Houston,” they are talking to someone in Clear Lake. This area acquired the nickname “Space City” more than fifty years ago, and NASA remains one of the area’s biggest employers. About three thousand civilian employees work for NASA at the Johnson Space Center (JSC) in Clear Lake. Private contractors employ another twelve thousand people at the JSC or nearby. NASA’s civilian employees include scientists, engineers, and others. The agency provides benefits to its employees and their families through the Federal Employees Retirement System (FERS). In a divorce, these benefits are subject to different rules than retirement plans offered by private employers. Dividing federal retirement benefits between soon-to-be-former spouses in a divorce involves procedures that often stand in stark contrast to NASA’s cutting-edge technology.

NASA Retirement Benefits

NASA is an independent agency within the Executive Branch of the federal government. It operates facilities all over the country, including the JSC in Clear Lake, the Kennedy Space Center in Florida, and the Jet Propulsion Laboratory in California. The agency’s three thousand employees at the JSC make up less than one-fifth of its total workforce. That said, when most people hear the word “NASA,” they probably think of “Mission Control,” which means they think of Houston.

As a civilian employer in the federal government, NASA provides benefits through FERS. Congress created this system through legislation passed in 1986. It replaced the earlier Civil Service Retirement System (CSRS), which dated back to 1920. FERS has three main components:

Basic Benefit Plan (BBP), also known as the FERS annuity: This is a defined benefit plan that pays retirement benefits to employees once they meet certain retirement criteria.
Thrift Savings Plan (TSP): This is a defined contribution plan that resembles many 401(k) plans offered by private employers.
Social Security: Prior to FERS, government employees covered by CSRS generally did not pay into the Social Security system, and therefore were not eligible for benefits. FERS makes participation in Social Security mandatory for civilian government employees.

The BBP and TSP offered through FERS both use the term “defined.” In the BBP’s case, the eventual payment amounts are defined in advance. Conversely, the employer and employee make contributions to the TSP in predetermined — or “defined” — amounts. Both plans are subject to the same general procedures for division in divorce.

Division of FERS Benefits in Divorce

A retirement plan administrator cannot divide the value of a plan or reallocate benefit payments without a signed court order specifying how to carry out the division. This order must comply with state law, federal law, and in the case of a private retirement plan, the plan provider’s particular rules. It can be incorporated into the divorce decree itself, but it is often more efficient to draft a separate order for the court to sign at the same time as the decree.

Orders dividing retirement plans are broadly identified as domestic relations orders. Most retirement plans offered by private employers require a document known as a qualified domestic relations order, or QDRO (pronounced “QUAH-droh.”) The requirements for being “qualified” are found in the federal tax statutes. Public retirement plans for state employees in Texas also use the term QDRO, but they use a definition found in state law. Federal employment retirement plans do not use QDROs.

Court Order Acceptable for Processing

The federal Office of Personnel Management (OPM) administers FERS and various other federal benefit programs. It is therefore responsible for receiving and processing orders dividing federal retirement benefits in divorce. Much like how private retirement plan administrators have specific rules and requirements for QDROs, OPM has rules and requirements for orders dividing federal benefits. The good news is that the rules are largely consistent for all federal employers providing benefits through FERS. The bad news is that the rules are complicated and dense.

Instead of a QDRO, OPM requires a “court order acceptable for processing” (COAR). The term’s definition is rather self-evident, but OPM regulations define it anyway. A COAR is an order that meets the requirements set forth for three types of benefits: employee annuities, refunds of employee contributions, and spouse survivor annuities. These requirements may be found in Title 5, Part 838, Subparts C, E, and H of the Code of Federal Regulations.

Subpart C, which addresses employee annuities like the BBP, states that a COAR must identify the retirement system and “expressly state that the former spouse is entitled to a portion of the employee annuity.” It also identifies language that may not be used in a COAR. The words “qualified domestic relations order,” for example, could render an order an order unacceptable as a COAR in some cases.

The Federal Bureaucracy

Once a court has signed an order dividing FERS benefits, the parties must send certified copies of the order and the divorce decree to the OPM’s Court Ordered Benefits Branch, located in Washington, DC. If OPM determines that the order does not meet its requirements, it will be necessary to go back to court to get a new order with the correct language signed. This is why it is often more efficient to have a separate order specifically dealing with the retirement benefits.

This review process can take a significant amount of time. OPM has been slow to upgrade its system for processing paperwork. A 2014 article in the Washington Post entitled “Sinkhole of Bureaucracy” describes an agency located “inside the caverns of an old Pennsylvania limestone mine,” where about six hundred employees process most of the paperwork by hand, using actual paper. Perhaps OPM has improved in the five years since the publication of that article. As of 2014, though, the agency was reportedly using many of the same systems it had been using since at least 1977, a time before NASA had even launched a single space shuttle.

Stacey Valdez is a board-certified family lawyer in the greater Houston, Texas area. Our top priority at Stacey Valdez & Associates is, and always will be, our clients and their families. We are committed to helping our clients through difficult ordeals like divorce and child custody with compassion and tireless advocacy. Please contact us today online, or give us a call at (281) 218-0900 to schedule a confidential consultation to discuss your rights and options. Your first meeting with us is free in most cases.

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