Military Pension Division in a Colorado Divorce

Military pensions are governed by federal law, and federal law overrides Colorado's rules in several critical ways. Getting the pension division wrong can cost the non-military spouse thousands of dollars annually for decades — or strip a service member of future VA loan entitlement. Both sides need to understand how this works.

Colorado Can Divide It — With Federal Limits

Colorado classifies military retirement pay as marital property subject to equitable division under C.R.S. § 14-10-113. But the mechanics of how it is divided are controlled by the Uniformed Services Former Spouses' Protection Act (USFSPA) under 10 U.S.C. § 1408.

The state court decides whether and how much of the pension the non-military spouse receives. Federal law dictates how the payments are calculated and distributed.

The Frozen Benefit Rule

For divorces involving active-duty service members, the National Defense Authorization Act of 2017 introduced the Frozen Benefit Rule. This is the single most important change to military pension division in decades, and many attorneys and DIY filers still get it wrong.

Under the Frozen Benefit Rule, the former spouse's share is locked in based on the service member's rank, pay grade, and years of creditable service at the exact date the divorce decree is entered — plus subsequent cost-of-living adjustments (COLAs). Post-divorce promotions and longevity pay increases do not increase the former spouse's share.

Before this rule, a former spouse could benefit from the service member's continued career advancement after the divorce. That is no longer the case.

For service members who are already retired at the time of the divorce, the Frozen Benefit Rule does not apply. Courts continue to use the traditional formula to calculate the marital share:

Marital Share = (Months of military service during the marriage ÷ Total months of creditable service) × 50%

This fraction is applied to the actual retired pay the service member receives.

The 10/10 Rule Is Not an Eligibility Rule

A common misconception: people believe the former spouse can only receive a share of the pension if the marriage lasted at least 10 years overlapping with at least 10 years of military service. That is wrong.

Colorado courts can award a share of the military pension regardless of the length of the marriage. The 10/10 rule is strictly an enforcement mechanism. If the 10-year overlap threshold is met, the Defense Finance and Accounting Service (DFAS) will send payments directly to the former spouse. If it is not met, the pension is still divided — but the retired service member must write a check to the former spouse each month.

The practical difference matters. Direct DFAS payments are reliable and enforceable. Personal payments from the service member depend on their willingness and ability to pay, and enforcement requires going back to court.

VA Disability Waiver

Under the Supreme Court's ruling in Howell v. Howell, state courts cannot divide VA disability compensation, and they cannot order the service member to indemnify the former spouse if the service member waives retirement pay to receive tax-free disability pay.

This matters because a service member who receives a VA disability rating can elect to waive a portion of their retirement pay to receive an equal amount as tax-free disability compensation. That waiver reduces the former spouse's share dollar-for-dollar, and the court cannot order the service member to make up the difference.

The judge can consider this disparity when setting spousal maintenance or dividing the remaining marital estate. If your spouse has a VA disability rating or is likely to apply for one, this should be addressed in the separation agreement.

The Survivor Benefit Plan

The military Survivor Benefit Plan (SBP) is a form of life insurance on the retirement pay. If the retired service member dies, SBP pays the designated beneficiary up to 55% of the base retired pay.

Without SBP coverage, the former spouse's pension payments stop at the service member's death. The separation agreement should explicitly address whether the service member will elect the former spouse as the SBP beneficiary and how the premiums (currently 6.5% of the base amount) will be split. DFAS must be notified of the SBP election within one year of the divorce.

How to File the Court Order

The court order dividing military retirement must be sent to DFAS for processing. DFAS has specific requirements for pre-retirement orders: depending on the member's service component and entry date, the order must state the award (fixed amount, percentage, formula, or hypothetical) and the member's rank/pay grade or high-3 amount, plus years of creditable service or reserve points at the time of divorce. The separate DFAS application requests identifying information such as Social Security numbers and the former spouse's mailing address.

DFAS rejects orders that are ambiguous, use undefined terms, or fail to specify a clear formula. Unlike Colorado PERA (which has its own form — JDF 1202), there is no standard Colorado form for military pension division orders. The order is drafted as part of the separation agreement or as a separate court order.

Our Colorado Divorce Financial Split Guide includes a retirement-division tracking worksheet that covers military pensions alongside 401(k)/IRA and PERA divisions — so you can compare options and document the division clearly for your separation agreement.

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