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FEDERAL THRIFT SAVING PLAN – DIVORCE

CALCULATION OF EARNINGS ---- SURPRISE!!!!

Listajo and Jane Pacaro filed an action for divorce on January 4, 2012. Jane, a federal employee is a participant in the Thrift Savings Plan (TSP). As part of the settlement it is agreed that Listajo is awarded half of Jane's TSP as of January 4, 2012. On that date the full value of Jane's TSP was $438,000.00. Thus, the Marital Settlement Agreement when finally crafted on July 10, 2014 awarded Listajo, $219,000.00 as of January 4, 2012.

Commentary.

The required instrument to award a portion of a participant's TSP to a Former Spouse is: Retirement Benefits Court Order (RBCO).

Jane's attorney retained a Third Party Preparer (not an attorney) to prepare the RBCO.

The Third Party Preparer prepared an Order that provided:

Listajo Pacaro's award from Jane' Pacaro's TSP as of January 4, 2012 is $219,000.00. From this date up to the date a RBCO is accepted by TSP, Listajo's award shall be adjusted for earnings.

To avoid any loss of value of the TSP, on January 5, 2012 Jane transferred all of her TSP assets into a safe conservative investment account.

The RBCO was accepted by TSP on September 4, 2014. The TSP then made a distribution to Listajo Pacaro.

Jane Anticipated Listajo Would Receive.

Listajo's Share on January 4, 2012 $219,000.00

Investment Gain from 1/4/12- 9/4/14 17,984.26

(3% for 2.67 years)

Jane believes Total To Listajo will be $236,984.26

($219,000.00 + $17,984.26)

Impact of a Non-Lawyer Preparing the RBCO.

The language of the Third Party Preparer failed to recognize

Title 5 C.F.R. 1653.4(f)(3)

What the Third Party Preparer failed to understand was TSP's interpretation of the language in his RBCO. The applicable TSP methodology is based on the Code of Federal Regulations (see above cite).

Starting Point.

Compute the Award to Listajo on January 1, 2012 $219,000.00

Now the Big Difference.

Based on the Investments in the Plan on January 4, 2012 determine the growth in value of Listajo's share to September 4, 2014.

Actual Annual Growth of the Aggressive Assets in Jane's portfolio on January 4, 2012 was 24%.

Based on this asset growth what is the worth

of Listajo's award on September 9, 2014 $388,937.68

(24% for 2.67 years)

Actual Amount in TSP at time of distribution to Listajo $473,968.52

($438,000.00 growing a 3% for 2.67 years)

Amount Due Listajo $388,937.68

WHAT IS LEFT FOR JANE???? $85,030.85

How will Jane react to this division of her TSP????

If Jane sues her attorney, will her attorney's malpractice carrier consider the contract void since the attorney delegated a legal function to a non-lawyer????