[Federal Register Volume 60, Number 66 (Thursday, April 6, 1995)]
[Proposed Rules]
[Pages 17507-17509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8408]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 63


Former Spouse Payments From Retired Pay

AGENCY: Office of the Secretary of Defense, DoD.

ACTION: Proposed rule; amendment.

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SUMMARY: This proposed rule amends part 63 of title 32 of the Code of 
Federal Regulations to reflect amendments to the Uniformed Services 
Former Spouses' Protection Act and to clarify the language in 
Sec. 63.6(c)(8) concerning court orders that provide for a division of 
retired pay by means of a formula. Guidance implementing the amendments 
have been incorporated into Volume 7, Part B of the DoD Financial 
Management Regulation, DoD 7000.14-R, but has not been previously 
published in the Federal Register.

DATES: Comments must be received June 6, 1995.

ADDRESSES: Interested parties should submit written comments to: Deputy 
Director for Finance, Defense Finance and Accounting Service, 1931 
Jefferson Davis Highway, Arlington, VA 22240-5291, Attention: Military 
Pay Directorate.

FOR FURTHER INFORMATION CONTACT: Mr. Fiti Malufau, (703) 602-5279.

SUPPLEMENTARY INFORMATION: Because of the large number of comments 
anticipated, we do not plan to acknowledge or respond to individual 
comments but will address the comments, as appropriate, in the preamble 
of the final rule.
    To avoid undue hardship on those seeking to enforce support orders 
providing for a division of retired pay, the Department of Defense will 
continue to follow its current implementing guidance with regard to the 
amendments to the Uniformed Services Former Spouses' Protection Act 
and, effective April 1, 1995, will accept court orders containing 
formulas that are consistent with the proposed rule until a final rule 
is issued.

Executive Order 12866, ``Regulatory Planning and Review''

    The Under Secretary of Defense (Comptroller) has determined that 32 
CFR part 63 is not a significant regulatory action. The rule does not:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.

Public Law 96-354, ``Regulatory Flexibility Act of 1980'' (5 U.S.C. 
601-612)

    The Under Secretary of Defense (Comptroller) has certified that 
this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 
601-612) because it affects only certain military members and their 
former spouses.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. 3501-
3520)

    The Under Secretary of Defense (Comptroller) has certified that 
this amendment of 32 CFR part 63 does not impose any new reporting or 
recordkeeping requirements under the Paperwork Reduction Act of 1980 
(44 U.S.C. 3501-3520).

List of Subjects in 32 CFR Part 63

    Alimony, Child support, Retirement, Uniformed Services, Payments to 
former spouses, Military retired pay.
    Accordingly, 32 CFR part 63 is proposed to be amended as follows:

PART 63--FORMER SPOUSE PAYMENTS FROM RETIRED PAY

    1. The authority citation for part 63 continues to read as follows:

    Authority: 10 USC 1408.

    2. Section 63.6 is proposed to be amended by adding the word 
``certified'' after the word ``A'' in paragraph (b)(1)(ii), by revising 
paragraphs (b)(5), (c)(8) and (e), and by adding a new paragraph 
(h)(13) to read as follows:


Sec. 63.6  Procedures.

* * * * *
    (b) * * *
    (5) The designated agent for each uniformed service is:
    (i) Army, Navy, Air Force and Marine Corps: Defense Finance and 
Accounting Service, Cleveland Center (Code LF), PO Box 998002, 
Cleveland, OH 44199-8002.
    (ii) Coast Guard: United States Coast Guard, Commanding Officer 
(L), Pay and Personnel Center, 444 Quincy Street, Topeka, KS 66683-
3591.
    (iii) Public Health Service: Office of General Counsel, Department 
of Health and Human Service, Room 5362, 330 Independence Avenue, SW, 
Washington, DC 20201.
* * * * *
    (c) * * *
    (8) The court order shall require payment of child support or 
alimony or, in the case of a division of property, provide for the 
payment of an amount of disposable retired or retainer pay, expressed 
as a dollar amount or as a percentage. Court orders specifying a 
percentage or fraction of disposable retired pay shall be construed as 
a percentage or a fraction of disposable retired pay. A court order 
that provides for a division of retired pay by means of a formula 
wherein the elements of the formula are not specifically set forth or 
readily apparent on the face of the court order will not be honored 
unless clarified by the court. For orders served on or after April 1, 
1995, an exception to requiring such a clarifying order will be made 
only if in accordance with (c)(8) (i), (ii) and (iii) of this section:
    (i) The order otherwise qualifies for direct payment but the 
parties are divorced when the member is on active duty. In that 
situation, where the pertinent court order is expressed in terms of a 
formula and the element missing from that formula is the member's years 
of service, then the designated agent will supply the member's years of 
service in terms of whole months to arrive at a percentage of 
disposable pay due the former spouse. Partial months of service will be 
dropped. The member's service that is creditable for retirement 
percentage multiplier purposes (See Chapter 1, Section C of DoD 
Financial Management Regulation, DoD 7000.14-R, Volume 7, Part B<SUP>1) 
will be used in all formulas. In the case of reserve members, points 
earned during the member's marriage must be contained in the court 
order. The designated agent will supply total retirement points earned 
by a reservist [[Page 17508]] if that element is missing from the 
formula. The formula will be computed based on the member's service for 
retirement multiplier or points and carried out to four decimal places.

    \1\Copies may be obtained from the Deputy Director for Finance, 
Defense Finance and Accounting Service, 1931 Jefferson Davis 
Highway, Arlington, Virginia 22240-5291, Attention: Military Pay 
Directorate.
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    (ii) The order otherwise qualifies for direct payment but the 
parties are divorced when the member is on active duty and the 
pertinent court order awarding the former spouse a portion of the 
member's retired/retainer pay is expressed in terms of a hypothetical 
retired pay amount--one that is conditional or based upon the 
occurrence of certain facts and/or events. No application will be 
processed by the designated agent in the absence of a clarifying order 
where the hypothetical retired pay amount is to be based upon retired/
retainer pay due the member at the time of divorce and the divorce 
occurs prior to the member's retirement eligibility (at least 15 or 20 
years of service) unless the hypothetical retired pay amount is 
contained in the order or is based on 15 or 20 years of service. All 
hypothetical awards will be computed on the basis of the member's 
retired pay at the time of retirement (as explained in paragraph 
(c)(8)(iii) of this section) and, if the order also provides for the 
same percentage of cost-of-living adjustments, will be converted to a 
percentage of current disposable pay. If the hypothetical contained in 
the court order does not provide for the same percentage of cost-of-
living adjustments, then payments will be made in a fixed dollar amount 
only. As noted in this section, the formula will be carried out to four 
decimal places.
    (iii) Example. A court order awards the former spouse 25% of the 
member's monthly retired/retainer pay of a retired rank of Captain with 
20 years of service to include the same percentage of cost-of-living 
increases. The member later retires after 25 years of service as a 
Major. The monthly retired pay of a Captain with 20 years of service 
equals $1,000.00 and the monthly retired pay of a Major with 25 years 
of service is $1,100; $1,000.00 divided by $1,100.00 equals .909091. 
This amount (.909091) multiplied by 25% (amount of former spouse award) 
is .2272. This 22.72% award is proportionately the same share as the 
25% award in the court order except it is expressed in terms of the 
member's actual rather than hypothetical retirement pension.
    (iv) Except for years of service or date of retirement, as well as 
hypothetical retired pay amounts mentioned in paragraphs (c)(8) (i) and 
(ii) of this section, in order to be honored without the necessity of 
obtaining a subsequent clarifying order from the court, pertinent court 
orders must contain a fixed dollar amount or a percentage of disposable 
pay that can be computed using the qualifying court order alone without 
reference to any facts or values external to the court order dividing 
the member's retired/retainer pay.
* * * * *
    (e) Limitations. (1) Divorces, dissolutions of marriage, 
annulments, and legal separations that became effective before February 
3, 1991. Upon proper service, a member's retired pay may be paid 
directly to a former spouse in the amount necessary to comply with the 
court order, provided the total amount does not exceed:
    (i) Fifty percent of disposable retired pay for all court orders 
and garnishments paid under this part.
    (ii) Sixty-five percent of disposable retired pay for all court 
orders and garnishment actions paid under this part and garnishments 
paid under 42 U.S.C. 659.
    (2) Divorces, dissolutions of marriage, annulments, and legal 
separations that become effective on or after February 3, 1991. Upon 
proper service, a member's retired pay may be paid directly to a former 
spouse in the amount necessary to comply with the court order, provided 
the total amount does not exceed:
    (i) Fifty percent of disposable retired pay for all court orders 
and garnishment actions paid under this part.
    (ii) Sixty-five percent of the remuneration for employment as 
defined under 42 U.S.C. 659 and 662 for all court orders and 
garnishments under this part and garnishments paid under 42 U.S.C. 659.
    (3) Disposable retired pay. Disposable retired pay is the gross pay 
entitlement, including renounced pay, less authorized deductions. 
Disposable retired pay does not include annuitant payments under 10 
U.S.C. Chapter 73. For court orders issued on or before November 14, 
1986, (or amendments to such court orders), disposable retired pay does 
not include retired pay of a member retired for disability under 10 
U.S.C. Chapter 61. The authorized deductions are:
    (i) For divorces, dissolutions of marriage, annulments, and legal 
separations that become effective before February 3, 1991:
    (A) Amounts owed to the United States.
    (B) Amounts required by law to be deducted from member's pay.
    (C) Fines and forfeitures ordered by a court-martial.
    (D) Amounts waived in order to receive compensation under Title 5 
or 38 of the United States Code.
    (E) Federal employment taxes and income withheld to the extent that 
the amount is consistent with member's tax liability, including amounts 
for supplemental withholding under 26 U.S.C. 3402(i) when the member 
presents evidence to the satisfaction of a designated agent that 
supports such withholding. State employment taxes and income taxes when 
the member makes a voluntary request for such withholding from retired 
pay and the Uniformed Services have an agreement with the State 
concerned for withholding from retired pay.
    (F) Premiums paid as a result of an election under 10 U.S.C. 
Chapter 73, to provide an annuity to a spouse or former spouse to whom 
payment of a portion of such member's retired pay is being made 
pursuant to a court order under this part.
    (G) The amount of the member's retired pay under 10 U.S.C. Chapter 
61 computed using the percentage of the member's disability on the date 
when the member was retired (or the date on which the member's name was 
placed on the temporary disability retired list), for court orders 
issued after November 14, 1986.
    (ii) For divorces, dissolutions of marriage, annulments, and legal 
separations that become effective on or after February 3, 1991:
    (A) Amounts owed to the United States for previous overpayment of 
retired pay and for recoupment required by law resulting from 
entitlement to retired pay.
    (B) Forfeitures of retired pay ordered by court-martial.
    (C) Amounts waived in order to receive compensation under Title 5 
or 38 of United States Code.
    (D) Premiums paid as a result of an election under 10 U.S.C. 
Chapter 73 to provide an annuity to a spouse or former spouse to whom 
payment of a portion of such member's retired pay is being made 
pursuant to a court order under this part.
    (E) The amount of member's retired pay under 10 U.S.C. Chapter 61 
computed using the percentage of the member's disability on the date 
when the member was retired (or the date on which the member's name was 
placed on the temporary disability retired list).
* * * * *
    (h) * * *
    (13) For divorces, dissolutions of marriage, annulments, and legal 
separations that become effective on or after February 3, 1991, 
payments to a former spouse for a division of property are excluded in 
determining a member's gross wages concerning retired pay.
* * * * * [[Page 17509]] 
    Dated: March 31, 1995.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 95-8408 Filed 4-5-95; 8:45 am]
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