How Long Does It Take to Get TSP Money After Divorce?

The Thrift Savings Plan (TSP) is a retirement savings and investment program for federal employees and members of the uniformed services. Similar to private sector 401(k) plans, TSP accounts allow participants to build retirement funds. In the event of a divorce, assets held within a TSP account can be subject to division between spouses. This process is governed by federal law and TSP regulations.

The Required Legal Order

To divide TSP funds in a divorce, a specific type of court order, known as a Retirement Benefits Court Order (RBCO), is necessary. Unlike private sector retirement plans that typically use a Qualified Domestic Relations Order (QDRO), a standard QDRO is generally not sufficient for TSP. The RBCO must explicitly refer to the “Thrift Savings Plan” and cannot use general terms like “government retirement benefits.”

The RBCO must contain precise information for TSP processing. This includes clear identification of the TSP participant and the alternate payee (the former spouse). The order needs to specify the exact amount or percentage of the TSP account to be awarded, and detail how the payment should be made, such as a lump sum or transfer. It must also include the specific date as of which the division is based.

Adherence to TSP’s specific requirements helps avoid rejection. The TSP website provides guidance and sample language for court orders.

Submitting the Order to TSP

Once finalized and certified by the court, the Retirement Benefits Court Order (RBCO) must be submitted to the TSP for processing. The RBCO, along with any required forms, should be sent to the TSP Court Order Center. The mailing address for submitting divorce decrees, Retirement Benefits Court Orders, and child support court orders is TSP Court Order Center, c/o Broadridge Processing, PO Box 120, Newark, NJ 07101-0120. For overnight delivery, the physical address is 2 Gateway Center, 283-299 Market Street, 17th Fl., Newark, NJ 07102.

Certified copies of the order are required, and in some cases, original signatures may be needed. While general correspondence can be handled online, RBCO submission typically requires physical mail. A $600 fee is generally deducted from the participant’s TSP account balance for reviewing and processing the RBCO upon receipt. This fee is charged only once per court order and is not refunded if the order is rejected, though it is not charged again for revisions to a previously rejected order.

TSP Processing and Payment Timeline

Upon receiving a Retirement Benefits Court Order (RBCO), the TSP initiates an internal review process. This process includes a legal review to ensure the order complies with all federal regulations and TSP requirements. If the order is complete and valid, the TSP record keeper will freeze the participant’s account, restricting distributions, loans, or withdrawals until the award is paid or resolved.

The TSP aims to notify parties within 20 calendar days of receiving a draft or signed court order regarding its compliance. While specific timelines can vary, payment is typically disbursed as soon as administratively feasible after the order is qualified.

Several factors can influence the overall processing timeline. Orders that are incomplete, contain errors, or do not adhere to TSP’s specific formatting and language requirements will cause significant delays or even rejection. If either the participant or the alternate payee disputes the order, this can lead to legal holds and extended processing times. Additionally, the overall volume of requests that TSP is handling can affect how quickly individual orders are processed.

Receiving and Managing the Funds

After the TSP processes a valid Retirement Benefits Court Order (RBCO) and approves the division of funds, the alternate payee has options for receiving and managing their share. The funds are typically disbursed as a one-time total payment, which can be received via direct deposit or a United States Treasury check. The RBCO itself cannot contain specific payment or rollover instructions; the payee must make a separate request for distribution or rollover to the TSP.

The alternate payee can choose to roll over the funds into another qualified retirement account, such as an Individual Retirement Account (IRA) or another eligible employer plan. This direct rollover option is a common strategy to avoid immediate taxation and potential early withdrawal penalties. Conversely, taking a cash withdrawal directly will result in the payment being treated as taxable income to the alternate payee.

While divorce-related transfers generally avoid penalties, an early withdrawal penalty of 10% may still apply if the alternate payee is under age 59½ and does not qualify for an exception. The TSP will provide tax information, such as Form 1099-R, related to the disbursement. Consulting with a tax professional is advisable to understand the specific tax implications of receiving and managing these funds.