Retirement Benefits Court Order
When you make a TSP withdrawal request, one of the things that should be considered before approving the request is whether there is any Retirement Benefits Court Order that takes precedence over your withdrawal.
The only type of distribution made to you that takes precedence over a court order is a Required Minimum Distribution (RMD) mandated by the IRS when you reach age 70½. Apart from this, any type of withdrawal from your TSP account could have to play second fiddle to court orders.
So, exactly what kind of court orders are we talking about here? TSP won’t be entertaining legal collection verdicts obtained by private creditors, lenders, and others.
What they do allow is the following:
– Court orders that award part or all your account funds to a spouse, whom you may still be married to, separated from, or divorced
– Judgments to enforce payment of child support and alimony
– Qualifying Federal tax levies and restitution orders.
TSP Withdrawals and Retirement Benefits Court Order
A court order issued as part of your divorce, annulment or legal separation proceedings is called a Retirement Benefits Court Order. The account can be divided between a participant and spouse when there is a court decree of divorce, annulment, or legal separation. There may also be a court order or court-approved property settlement agreement incident to such a decree.
In such situations, TSP will only agree to make payments to the participant’s current or former spouse, or to the participant’s dependents. If there are multiple payees, the court order must specify the dollar amount, percentage, or fraction of the account that would go to each person.
The TSP also accepts injunctive court orders related to divorce proceedings that can in effect prevent a withdrawal or TSP loan by the participant while the divorce is in progress.