Originally published Are your TSP divorce payouts accurate? on by https://federalnewsnetwork.com/commentary/2025/03/are-your-tsp-divorce-payouts-accurate/ at Federal News Network
As a federal employee or annuitant, you may have been through a divorce where your former spouse was awarded a portion of your Thrift Savings Plan (TSP) account balance. Those awards are perfected through the service of a Retirement Benefits Court Order (RBCO) on the TSP. On 5/26/2022, the new TSP plan administrator took over, Accenture Federal Services (AFS).
During the ten years prior to the AFS contract, I drafted or reviewed hundreds of RBCOs. I can’t recall a single instance during that time where a former spouse’s TSP award was miscalculated by the TSP when the National Finance Center operated the TSP’s RBCO processing section. That’s not the case anymore.
In December 2023, I was contacted by M.G. (identified by initials to protect his privacy), who advised that he believed that the award of a portion of his TSP to his former spouse was too large, based upon his review of the TSP “Confirmation of RBCO Asset Transfer” form dated 11/15/2023. I examined the underlying RBCO and TSP records and determined that his former spouse was overpaid by approximately $127,469. I submitted M.G.’s fact set to a Federal Retirement Thrift Investment Board (FRTIB) executive for further investigation.
In March 2024, M.G. received a two-page letter from the TSP, ostensibly to detail how the TSP arrived at the award amount. I have read that letter and all it does is state the amount of the award without any supporting calculations. M.G. ultimately received a credit of $127,469 to his account. At no time did M.G. ever receive an accounting of how the award to his former spouse was calculated. Through M.G.’s discussion with TSP representatives, M.G. learned that in determining the earnings on his former spouse’s award, the TSP considered InterFund Transfers (IFTs) that he executed after the “as of” date of the award.
While waiting for word on the outcome of the recalculation of M.G.’s RBCO, I was contacted by J.D., who also believed that his former spouse’s award was miscalculated by the TSP. After reviewing the documents in his case, I estimated that the TSP overpaid J.D.’s former spouse by $127,626.
I submitted J.D.’s case to the same FRTIB executive that I regularly interact with, and who always supports TSP participants. If it weren’t for this FRTIB executive’s actions to investigate the issue, I believe that M.G and J.D. would still be waiting for answers.
On 1/10/2025, J.D. received a letter from the TSP, curiously dated 12/10/2024, responding to J.D.’s initial query. The TSP letter states, “The TSP has been reviewing the process for calculating earnings and losses in connection with court orders and has determined that the court order payment was not calculated in accordance with 5 CFR Part 1653.”
The letter goes on to state that if the award stated in the 7/12/2024 RBCO had been calculated correctly, the award would have been $524,569.13, which is $126,455.22 lower than the original TSP award computation of $651,114.35, and, of course, the TSP letter states “We apologize for the inconvenience.” As of press time, unlike M.G., J.D. is still waiting for his TSP account to be credited for the admitted overpayment to his former spouse.
For months, J.D. received the same email from the TSP stating, “The TSP is reviewing the process for calculating earnings and losses in connection with court orders. Therefore, all requests for court order calculations are currently on hold. Once we have completed our review, we will respond to your request.”
A couple of months after my submissions to the FRTIB, in written letters to M.G. and J.D. the TSP admitted failure in their method of calculation of these awards.
The method that the TSP is required to use when determining earnings “as of” a stated date on an award is defined at 5 CFR 1653.4 “Calculating entitlements.” Specifically, 5 CFR 1653.4(f) requires the TSP to 1) Determine the amount of the award without earnings, 2) determine the investment fund mix of the participant’s account on the “as of” date and use the award amount to “purchase” shares in the same allocation as the participant’s account, and 3) re-value those shares on the liquidation date. IFTs are not to be considered in the calculation of earnings on an award of apportion of a participant’s account to a former spouse.
In just these two cases, we’re looking at over a quarter-million dollars of payments made in error. This is a systemwide issue, meaning that it’s my belief that all the awards of this type (with earnings), served on the TSP after 5/26/2022, were incorrectly determined by the TSP’s RBCO administrator, AFS, through their agreement with Broadridge Processing to process RBCOs.
It’s simply unconscionable that TSP representatives in these cases tried to convince both M.G. and J.D. that the TSP was correct in their award calculation and that M.G. and J.D. were incorrect. Both M.G. and J.D. interacted frustratingly with the TSP, incurring delay after delay and were repeatedly told that they were incorrect in their determination of the award amount.
As a CPA, I am aware that material events should be reported because the TSP is a public entity. I have reviewed the FRTIB meeting minutes up to, and including, the 12/19/2024 meeting (the latest minutes published at press time), and observed no mention of this issue.
The GAO issued a report to Congress in August 2024, entitled “Thrift Savings Plan – Investment Board Needs to Greatly Improve Acquisition Management and Contractor Oversight.”
Page 33 of the GAO report stated this concerning the processing of RBCOs:
“In addition, participants with a court order to obtain retirement benefits, reported that they received a benefit amount that was not calculated correctly. This occurred because, as previously discussed, the standard process used by AFS for calculating the award amounts was inconsistent with federal regulations, which the contractor is required by the contract to follow in automating TSP services. As previously discussed, FRTIB planned to propose changing its regulations to align with AFS’s commercial approach to calculating these benefits and expected a proposed rule to be completed by the end of September 2024.”
It’s concerning that the FRTIB is planning to change the CFR to match AFS’ procedures for determining awards rather than making AFS conform to 5 CFR 1653. I assume that AFS’ earnings determination routines for other Broadridge clients consider post-valuation investment changes. I believe that 5 CFR 1653.4(f) protects former spouses from any trade activity that their former spouse (the participant) may engage in after the divorce. If the FRTIB were to change the language in 5 CFR 1653.4(f) to consider IFTs after the “as of” date, a spiteful participant could execute an IFT to move all of their funds to the G Fund or a low-earning fund. 5 CFR 1653.4(f) protects a former spouse from such actions.
I don’t know how the TSP plans to handle these earnings calculation errors prospectively. The TSP may be re-processing all the RBCOs served since 5/26/2022 that were “with earnings” and making adjustments, following 5 CFR Part 1653, without the need for the participant to contact the TSP. I never leave anything up to chance — if you are potentially affected by this TSP systemic processing error, I encourage you to calculate the awarded earnings on your own or consult a professional to make the proper calculation under the CFR and compare that calculated award to what was ultimately disbursed by the TSP to your former spouse.
If the award to your former spouse did not include earnings and losses, then you have nothing to worry about — your award should have been processed correctly by the TSP.
This issue begs the questions: “How will the TSP account for the overpayments?” Will they write them off? The TSP’s expense ratios for the S Fund and C Fund are already at least double the expense ratios of similar funds at Schwab or Fidelity. Writing the overpayments off as an expense will cause those expense ratios to rise even higher. Will the TSP seek repayment from the former spouse that was overpaid? How will that be accomplished? It’s not like the TSP can claw back the overpaid funds because the payment has already been disbursed. What about a former spouse that used the TSP award to purchase a home – will the TSP foreclose to recover the overpayment or file a lien? Trust me folks, this is a big issue, and all TSP participants will pay for it, one way or another. Certainly, there may be cases where a former spouse was underpaid — how will those be handled?
If you would like to contact the author to report your RBCO experience with the TSP, he can be reached at [email protected].
Dan Jamison is a 34-year CPA and retired FBI Agent that has assisted thousands of federal employees and annuitants with the division of federal retirement benefits in divorce. He authors the “FERSGUIDE,” a popular resource on federal benefits, available on Amazon.com.
Originally published Are your TSP divorce payouts accurate? on by https://federalnewsnetwork.com/commentary/2025/03/are-your-tsp-divorce-payouts-accurate/ at Federal News Network
FEMA has never been more called upon or its workforce more stretched thin. A growing frequency of catastrophic disasters and a once-in-a-century pandemic have had widespread impacts on emergency management writ large. This changing hazard landscape and operations tempo is now coupled with indiscriminate firings, regressive changes in policy, and freezes in funding resulting in […]
The post PERSPECTIVE: Future of FEMA appeared first on HSToday.
The Fairfax County Government announced its new Federal Workforce Resource Hub in a LinkedIn post earlier this week. Fairfax County, Virginia is home to around 80,000 federal employees and over 3,800 federal contractors. This hub is designed to help those affected by the changes to federal services and employment, including residents, government employees, active military/veterans, […]
The post Fairfax County Announces Federal Workforce Resource Hub appeared first on HSToday.
About Us
To assist commercially facing small and startup technology companies, and help determine if there is value in engaging with defense, intelligence community.
Are your TSP divorce payouts accurate?
Originally published Are your TSP divorce payouts accurate? on by https://federalnewsnetwork.com/commentary/2025/03/are-your-tsp-divorce-payouts-accurate/ at Federal News Network
https://federalnewsnetwork.com/wp-content/uploads/2022/06/Copy-of-Untitled-11.jpgAs a federal employee or annuitant, you may have been through a divorce where your former spouse was awarded a portion of your Thrift Savings Plan (TSP) account balance. Those awards are perfected through the service of a Retirement Benefits Court Order (RBCO) on the TSP. On 5/26/2022, the new TSP plan administrator took over, Accenture Federal Services (AFS).
During the ten years prior to the AFS contract, I drafted or reviewed hundreds of RBCOs. I can’t recall a single instance during that time where a former spouse’s TSP award was miscalculated by the TSP when the National Finance Center operated the TSP’s RBCO processing section. That’s not the case anymore.
In December 2023, I was contacted by M.G. (identified by initials to protect his privacy), who advised that he believed that the award of a portion of his TSP to his former spouse was too large, based upon his review of the TSP “Confirmation of RBCO Asset Transfer” form dated 11/15/2023. I examined the underlying RBCO and TSP records and determined that his former spouse was overpaid by approximately $127,469. I submitted M.G.’s fact set to a Federal Retirement Thrift Investment Board (FRTIB) executive for further investigation.
In March 2024, M.G. received a two-page letter from the TSP, ostensibly to detail how the TSP arrived at the award amount. I have read that letter and all it does is state the amount of the award without any supporting calculations. M.G. ultimately received a credit of $127,469 to his account. At no time did M.G. ever receive an accounting of how the award to his former spouse was calculated. Through M.G.’s discussion with TSP representatives, M.G. learned that in determining the earnings on his former spouse’s award, the TSP considered InterFund Transfers (IFTs) that he executed after the “as of” date of the award.
While waiting for word on the outcome of the recalculation of M.G.’s RBCO, I was contacted by J.D., who also believed that his former spouse’s award was miscalculated by the TSP. After reviewing the documents in his case, I estimated that the TSP overpaid J.D.’s former spouse by $127,626.
I submitted J.D.’s case to the same FRTIB executive that I regularly interact with, and who always supports TSP participants. If it weren’t for this FRTIB executive’s actions to investigate the issue, I believe that M.G and J.D. would still be waiting for answers.
On 1/10/2025, J.D. received a letter from the TSP, curiously dated 12/10/2024, responding to J.D.’s initial query. The TSP letter states, “The TSP has been reviewing the process for calculating earnings and losses in connection with court orders and has determined that the court order payment was not calculated in accordance with 5 CFR Part 1653.”
The letter goes on to state that if the award stated in the 7/12/2024 RBCO had been calculated correctly, the award would have been $524,569.13, which is $126,455.22 lower than the original TSP award computation of $651,114.35, and, of course, the TSP letter states “We apologize for the inconvenience.” As of press time, unlike M.G., J.D. is still waiting for his TSP account to be credited for the admitted overpayment to his former spouse.
For months, J.D. received the same email from the TSP stating, “The TSP is reviewing the process for calculating earnings and losses in connection with court orders. Therefore, all requests for court order calculations are currently on hold. Once we have completed our review, we will respond to your request.”
A couple of months after my submissions to the FRTIB, in written letters to M.G. and J.D. the TSP admitted failure in their method of calculation of these awards.
The method that the TSP is required to use when determining earnings “as of” a stated date on an award is defined at 5 CFR 1653.4 “Calculating entitlements.” Specifically, 5 CFR 1653.4(f) requires the TSP to 1) Determine the amount of the award without earnings, 2) determine the investment fund mix of the participant’s account on the “as of” date and use the award amount to “purchase” shares in the same allocation as the participant’s account, and 3) re-value those shares on the liquidation date. IFTs are not to be considered in the calculation of earnings on an award of apportion of a participant’s account to a former spouse.
In just these two cases, we’re looking at over a quarter-million dollars of payments made in error. This is a systemwide issue, meaning that it’s my belief that all the awards of this type (with earnings), served on the TSP after 5/26/2022, were incorrectly determined by the TSP’s RBCO administrator, AFS, through their agreement with Broadridge Processing to process RBCOs.
It’s simply unconscionable that TSP representatives in these cases tried to convince both M.G. and J.D. that the TSP was correct in their award calculation and that M.G. and J.D. were incorrect. Both M.G. and J.D. interacted frustratingly with the TSP, incurring delay after delay and were repeatedly told that they were incorrect in their determination of the award amount.
As a CPA, I am aware that material events should be reported because the TSP is a public entity. I have reviewed the FRTIB meeting minutes up to, and including, the 12/19/2024 meeting (the latest minutes published at press time), and observed no mention of this issue.
The GAO issued a report to Congress in August 2024, entitled “Thrift Savings Plan – Investment Board Needs to Greatly Improve Acquisition Management and Contractor Oversight.”
Page 33 of the GAO report stated this concerning the processing of RBCOs:
“In addition, participants with a court order to obtain retirement benefits, reported that they received a benefit amount that was not calculated correctly. This occurred because, as previously discussed, the standard process used by AFS for calculating the award amounts was inconsistent with federal regulations, which the contractor is required by the contract to follow in automating TSP services. As previously discussed, FRTIB planned to propose changing its regulations to align with AFS’s commercial approach to calculating these benefits and expected a proposed rule to be completed by the end of September 2024.”
It’s concerning that the FRTIB is planning to change the CFR to match AFS’ procedures for determining awards rather than making AFS conform to 5 CFR 1653. I assume that AFS’ earnings determination routines for other Broadridge clients consider post-valuation investment changes. I believe that 5 CFR 1653.4(f) protects former spouses from any trade activity that their former spouse (the participant) may engage in after the divorce. If the FRTIB were to change the language in 5 CFR 1653.4(f) to consider IFTs after the “as of” date, a spiteful participant could execute an IFT to move all of their funds to the G Fund or a low-earning fund. 5 CFR 1653.4(f) protects a former spouse from such actions.
I don’t know how the TSP plans to handle these earnings calculation errors prospectively. The TSP may be re-processing all the RBCOs served since 5/26/2022 that were “with earnings” and making adjustments, following 5 CFR Part 1653, without the need for the participant to contact the TSP. I never leave anything up to chance — if you are potentially affected by this TSP systemic processing error, I encourage you to calculate the awarded earnings on your own or consult a professional to make the proper calculation under the CFR and compare that calculated award to what was ultimately disbursed by the TSP to your former spouse.
If the award to your former spouse did not include earnings and losses, then you have nothing to worry about — your award should have been processed correctly by the TSP.
This issue begs the questions: “How will the TSP account for the overpayments?” Will they write them off? The TSP’s expense ratios for the S Fund and C Fund are already at least double the expense ratios of similar funds at Schwab or Fidelity. Writing the overpayments off as an expense will cause those expense ratios to rise even higher. Will the TSP seek repayment from the former spouse that was overpaid? How will that be accomplished? It’s not like the TSP can claw back the overpaid funds because the payment has already been disbursed. What about a former spouse that used the TSP award to purchase a home – will the TSP foreclose to recover the overpayment or file a lien? Trust me folks, this is a big issue, and all TSP participants will pay for it, one way or another. Certainly, there may be cases where a former spouse was underpaid — how will those be handled?
If you would like to contact the author to report your RBCO experience with the TSP, he can be reached at [email protected].
Dan Jamison is a 34-year CPA and retired FBI Agent that has assisted thousands of federal employees and annuitants with the division of federal retirement benefits in divorce. He authors the “FERSGUIDE,” a popular resource on federal benefits, available on Amazon.com.
Copyright
© 2025 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.
Originally published Are your TSP divorce payouts accurate? on by https://federalnewsnetwork.com/commentary/2025/03/are-your-tsp-divorce-payouts-accurate/ at Federal News Network
Originally published Federal News Network
Related Posts
This Week in the Russia-Ukraine War (March 7)
https://dsm.forecastinternational.com/wp-content/uploads/2025/03/image.png A snapshot of recent news from sources around the world on the
PERSPECTIVE: Future of FEMA
FEMA has never been more called upon or its workforce more stretched thin. A growing frequency of catastrophic disasters and a once-in-a-century pandemic have had widespread impacts on emergency management writ large. This changing hazard landscape and operations tempo is now coupled with indiscriminate firings, regressive changes in policy, and freezes in funding resulting in […]
The post PERSPECTIVE: Future of FEMA appeared first on HSToday.
Fairfax County Announces Federal Workforce Resource Hub
The Fairfax County Government announced its new Federal Workforce Resource Hub in a LinkedIn post earlier this week. Fairfax County, Virginia is home to around 80,000 federal employees and over 3,800 federal contractors. This hub is designed to help those affected by the changes to federal services and employment, including residents, government employees, active military/veterans, […]
The post Fairfax County Announces Federal Workforce Resource Hub appeared first on HSToday.
About Us
To assist commercially facing small and startup technology companies, and help determine if there is value in engaging with defense, intelligence community.
Let’s Socialize
This Week in the Russia-Ukraine War (March 7)
PERSPECTIVE: Future of FEMA