Retirement + Divorce = Expensive

By on December 13, 2006 in Current Events, Retirement with 0 Comments

If you are involved in a divorce, spell out what portion of your retirement pay your ex-spouse will receive, and the Office of Personnel Management calculates the amount it will send to the ex-spouse, that’s not the end of it, as one retired fed found out. (Straiton v. Office of Personnel Management, C.A.F.C. No. 06-3325 (nonprecedential), 12/8/06)

John Straiton, a federal employee with NASA at the Kennedy Space Center, was divorced from his wife of 16+ years and the legal paperwork spelled out how his eventual annuity was to be divided between them. More than 13 years later, John retired and OPM made a calculation to determine how to divide up his annuity between John and his ex-wife. The calculation was based on a hypothetical amount, which was, when the divorce occurred, what John expected eventually to receive as an annuity once he retired.

More than three years after his retirement, OPM reconsidered its interpretation of the divorce decree and concluded that the portion to go to the ex-wife should be more since it should be based on what John’s actual annuity was rather than the hypothetical amount (which was lower). OPM also added on to the ex-wife’s share annual cost-of-living increases. The result had to have been a surprise to John – OPM notified him that he had been overpaid, and his ex-wife had been underpaid, to the tune of $24,123.31.

OPM stated its intent to recover this amount, and John appealed to the Merit Systems Protection Board. The Board affirmed OPM’s decision (Straiton v. OPM, No. AT-0831-05-0798-I-1 (MSPB Nov. 18, 2005)(Final Decision))

John then took his appeal to the Federal Circuit Court of Appeals, but he fared no better there. Finding no error, the court affirmed, pointing out in its decision: “A former spouse receives that portion of an employee’s retirement benefits expressly provided in a divorce order. [Citing 5 C.F.R. §838.1004(a) (2006)]” (p. 3)

The court explained the effect of this regulation: “…Unless the court order directly and unequivocally orders otherwise, a court order that awards a former spouse a portion of an employee annuity either on a percentage basis or by use of a fraction or formula provides that the former spouse’s share of the employee annuity will be adjusted to maintain the same percentage or fraction whenever the employee annuity changes as a result of ….salary adjustments occurring after the date of the decree and before the employee retires; and …cost-of-living adjustments occurring after …the date of the employee’s retirement.” (Id.)

The lesson learned with this case is to be very precise in divorce decree language if you don’t want surprises down the road. The secondary lesson is that OPM occasionally does and can change its mind on these kinds of calculations.

© 2016 Susan McGuire Smith. All rights reserved. This article may not be reproduced without express written consent from Susan McGuire Smith.

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.