Federal thrift savings plans offer protection for splitting spouses
Separation and divorce from a spouse is always a stressful time. The income that used to support one household now must be used to sustain two. For federal employees facing divorce, the last thing you want to worry about is how to protect your retirement savings from being plundered by your soon to be ex-spouse.
You should know that although your spouse may be entitled to a certain portion of your Thrift Savings Plan (TSP) accounts, they cannot simply withdraw or borrow money without your permission. Whether you have a Federal Employee Retirement System (FERS) account or a Civil Service Retirement System (CSRS) there are certain requirements that must be met before a spouse may receive money.
To borrow or withdraw money from a FERS TSP, written consent of the spouse is always required. With a withdrawal, the spouse's signature must be notarized. The only way around these requirement would be if some exceptional circumstance existed or the whereabouts of your spouse were unknown.
For loans, it is important to understand that while the spouse's consent is required to obtain a loan, this does not make the co-signer on the loan. The person taking the loan retains responsibility for repaying it.
This retirement plan, which was replaced by the FERS plan in 1987, does not require the written consent of the spouse to take a loan or withdrawal, but it must provide notice to the spouse that the request has been made.
The only exception for the notification requirement is if the whereabouts of your spouse are unknown.
Penalties for Fraud
The Thrift Savings Plan does investigate withdrawals for fraud. Anyone who tries to prevent their spouse from obtaining their share of TSP funds may be prosecuted. This includes obstructing the receipt of funds by forging the other spouse's signature or providing the office with a false address for your spouse.
Your TSP is subject to court orders provided they meet certain requirements. Therefore alimony, child support as well as Qualified Domestic Relations Orders (QDRO) arising out of your separation agreement or divorce decree may be used to split or transfer assets as well. As soon as a court order has been issued to a TSP administrator all assets will be frozen until authentication is made.
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