Federal employees in Colorado who plan to divorce need to determine how to divide their Thrift Savings Plans. Since there are not any federal laws that govern the process, family court judges will apply state law in the event that the couple is unable to reach an agreement.
In Colorado, the courts divide property equitably. This does not mean that the marital assets will be divided equally. Instead, it means that the assets, including the portions of retirement accounts that accrued during the marriages, are to be divided in a fair manner. Generally, federal employees should expect that their estranged spouses will receive a large percentage of their TSP balances if the balances have grown in size during their marriages.
The contributions that were made during the marriage to a TSP and the interest that has accumulated are considered to be marital property. Spouses who are divorcing may reach agreements on the amounts that should be allocated to the non-owner spouse. If they don't agree, the courts will decide how to divide the TSP equitably. Whether the amount that will be given to the non-owner spouse is agreed upon or is decided by the court, the parties will need to submit a retirement benefits court order. While the divorces are pending, the balances will be frozen, and any outstanding loans will be considered as part of the total balances that are subject to division.
Dividing marital property in a high-asset divorce may be highly complex. When a spouse has been married for a long time and has accumulated substantial assets, it may be beneficial to speak with an experienced family law attorney who is familiar with these types of complex property division issues.