I’ve heard that the government doesn’t accept QDROs – is this true?
This is partly true, in the sense that the term QDRO (or Qualified Domestic Relations Order) only applies to the private sector. Federal pensions are exempt from QDROs because they are exempt from ERISA (the Employee Retirement Income Security Act of 1974).
This is not to say that if the Office of Personnel Management were to receive a court order with the term QDRO in it that it would be rejected. But rather, that it would need to make reference to Part 838 of Title 5 of the Code of Federal Regulations (CFR).
The federal government’s functional equivalent of QDRO is the Court Order Acceptable for Processing (COAP); a Retirement Benefits Court Order is required to make an award from a participant’s federal Thrift Savings Plan to a spouse or former spouse.
What makes COAPs different from QDROs is that a QDRO served on a pension plan in the private sector can provide for a separate interest for the alternate payee, if served on the plan before retirement. This allows for the monthly pension benefit to be payable over the lifetime of the alternate payee.
This is not true of most government plans, nor will the military provide for a separate interest for a former spouse. Separate Interest QDROs only pertain to private sector pensions and prior to retirement.
Government, military, and pensions in-pay status (private sector and government pensions) can only allow a non-participant spouse to “share” in the pension payments, hence the term “Shared Interest” QDROs, where payments end upon the death of either party. This is a good reason to consider survivor annuity language for the former spouse.
Aside from the voluntary federal Thrift Saving Plan, there are also two different federal pensions: Civil Service Employees Retirement System (CSRS), for those federal employees who began employment prior to December 31, 1983; and Federal Employees Retirement System (FERS), for those that commenced employment on or after January 1, 1984.
It is important to note that not only are the terms and conditions of the federal pensions different from the private sector in what can be provided to a former spouse, but there are also differences between FERS and CSRS. Understanding the differences will prevent you from having different expectations as to your awarded share.