Court Order Acceptable for Processing (COAP)

A court order acceptable for processing (COAP) is a court order that the U.S. Office of Personnel Management (OPM) will carry out to divide retirement benefits under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). OPM's regulation defines it as a court order that meets the requirements of 5 CFR Part 838 "to affect an employee annuity", "to affect a refund of employee contributions", or "to award a former spouse survivor annuity." A "court order" for this purpose is a judgment or property settlement issued or approved by a state, territorial or tribal court "in connection with, or incident to, the divorce, annulment of marriage, or legal separation of a Federal employee or retiree."

Why federal workers need a different order. A qualified domestic relations order divides private-sector and many other retirement plans under the Internal Revenue Code and ERISA. CSRS and FERS annuities are paid by OPM under title 5 of the U.S. Code, and OPM's own regulation, 5 CFR Part 838, sets what an order must say. The regulation is explicit that a document labeled a "qualified domestic relations order", or issued on an ERISA QDRO form, is not acceptable for processing unless it expressly states that its provisions on CSRS or FERS benefits are governed by Part 838, which means referring to Part 838 and stating that those provisions are drafted in its terminology. Parts of Part 838, subparts F and I, supply that terminology and model language.

Three things an order can do. An order may give the former spouse a share of the employee annuity, the monthly retirement benefit; a share of a refund of employee contributions, the lump sum paid to someone who leaves federal service and withdraws their contributions; or a former spouse survivor annuity, a benefit paid to the former spouse after the employee or retiree dies. Each has its own requirements, in subparts C, E and H.

Dividing the annuity. To affect the employee annuity, an order must expressly divide it, identifying the retirement system and stating that the former spouse is entitled to a portion of the employee annuity in terms Part 838 recognizes. It must also provide for OPM to pay the former spouse, either by directing OPM to pay directly, directing the retiree to arrange for OPM to do so, or being silent on who pays; an order telling the retiree to make the payments personally is not acceptable. The former spouse's share of the employee annuity stops when the retiree dies; an order that says it continues for the former spouse's lifetime is not acceptable for that purpose.

The survivor annuity is a separate award. Payments to a former spouse after the retiree's death come only from a former spouse survivor annuity, and the order must expressly award one, or expressly direct the employee or retiree to elect one, using terms that identify it. Wording that the former spouse "will continue to receive benefits after the death of" the employee, without terms such as "survivor annuity" or "former spouse annuity", does not create one. For this purpose, the former spouse must have been married to the employee for at least 9 months, the employee must have at least 18 months of civilian service covered by CSRS or creditable under FERS, and the marriage must have ended before the employee or retiree died. Timing is strict: an order awarding, increasing, reducing or eliminating a former spouse survivor annuity must be issued before the employee's retirement or death, or be the first order dividing the couple's marital property. An amended order issued after retirement or death cannot add one.

What a COAP does not reach. The Thrift Savings Plan, the federal defined contribution plan, is divided by a "retirement benefits court order" under its own regulation at 5 CFR Part 1653, which requires the order to refer expressly to the Thrift Savings Plan, or to describe it so it cannot be confused with other retirement benefits, and to be written in terms suited to an account balance rather than a benefit formula. Military retired pay is divided under a different statute, 10 U.S.C. 1408, rather than through OPM. A divorce involving a federal employee with both a FERS annuity and a TSP account therefore needs language for each, under each program's rules.

The path from a divorce settlement to payment runs through OPM.

1. Agree on the division of the annuity, any refund of contributions, and whether the former spouse will receive a survivor annuity.
2. Draft the order in Part 838's terms, identifying CSRS or FERS, expressly dividing the employee annuity, providing for OPM to pay the former spouse, and expressly awarding any survivor annuity.
3. Have the court issue it, as part of or incident to the divorce, annulment or legal separation, and before retirement or death if a survivor annuity is involved, unless it is the first order dividing marital property.
4. Send it to OPM, which reviews whether it is acceptable for processing and applies it when benefits become payable.
5. Handle the TSP separately with a retirement benefits court order that meets the TSP's own rules.

For example: Lionel retires under FERS with a monthly annuity of $3,200, and his COAP awards his former spouse, Odette, 40% of the employee annuity. OPM pays Odette 40% x $3,200 = $1,280 a month directly and pays Lionel the other $1,920, before any deductions. When Lionel dies, Odette's $1,280 share of his annuity stops, because a share of the employee annuity cannot continue past the retiree's death. Only if the order had also expressly awarded her a former spouse survivor annuity, and been issued in time, would payments to her continue.

Pros

• OPM pays the former spouse directly, so the retiree never has to forward payments.
• Part 838 publishes the terminology and model language that work, which reduces the risk of a rejected order.
• A properly drafted order can protect a former spouse after the retiree's death through a survivor annuity.

Cons

• Language suited to a private-plan QDRO can fail, and a document labeled a QDRO is not acceptable unless it expressly invokes Part 838.
• A survivor annuity missed in the first order or before retirement cannot be added later.
• The TSP and military retired pay need separate orders under different rules.
• A share of the employee annuity ends when the retiree dies, which surprises former spouses who did not also secure a survivor annuity.