This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.
On October 10, 2025, the United States Court of Appeals for the Federal Circuit issued a major ruling in OPM v. Moulton, holding that the Office of Personnel Management (OPM) may only divide a federal retiree’s Federal Employees Retirement System (FERS) annuity supplement with a former spouse if a court order or divorce decree expressly provides for such a division. The decision affirms the Merit Systems Protection Board’s (MSPB) interpretation of the law and rejects OPM’s broader approach adopted in 2016.
Background: FERS Annuity Supplement
Most federal employees are covered by FERS which is made up of three components: (1) Social Security benefits, (2) a Thrift Savings Plan (a retirement savings and investment plan similar to 401(k) plans available to private-sector employees), and (3) a basic annuity payment. For employees who retire before reaching age 62, the earliest Social Security retirement age, FERS also provides a retirement annuity supplement, which is a temporary payment meant to bridge the gap between retirement and Social Security eligibility.
Traditionally, OPM did not divide the FERS annuity supplement between a retiree and a former spouse, as the annuity supplement was not considered to be subject to division. However, OPM altered its approach in 2016. It began interpreting any court-ordered division of the basic annuity as implicitly including the annuity supplement, even if the order did not expressly say so. OPM applied this new interpretation retroactively, demanding repayment from retirees and reducing future supplement payments.
Federal Circuit Changes the Rules in OPM v. Moulton
In Moulton, the Federal Circuit addressed the question of whether OPM apportions the annuity supplement only when the terms of a court order expressly provide for the division of the supplement. Mr. Moulton, a federal retiree, challenged OPM’s revised policy after the agency began withholding part of his annuity supplement to pay his former spouse, despite his divorce order never mentioning the annuity supplement. He brought the case before the MSPB, which sided with him. OPM appealed to the Federal Circuit.
The Federal Circuit analyzed two key statutes: 5 U.S.C. § 8421(c), which governs the FERS annuity supplement and 5 U.S.C. § 8467(a), which authorizes OPM to comply with court orders in dividing retirement benefits “to the extent expressly provided for.” The Court ruled and emphasized that the annuity supplement is not automatically part of a divorce supplement and cannot be split unless expressly provided for.
Final Thoughts
The Moulton case changes the rules in FERS annuity supplement cases. Federal retirement benefits involve nuanced rules and procedures. If you’re dealing with a divorce or retirement issue involving federal retirement benefits or need help drafting or interpreting a Court Order Acceptable for Processing (COAP), you should consult with a federal retirement expert who understands the intricacies of federal retirement law.
Our firm advises individuals and attorneys nationwide on how to properly divide federal retirement benefits, draft, review and revise COAPs and court orders, and ensure compliance with OPM requirements among other related federal benefits issues. Please contact us here or at (703) 668-0070 should you wish to schedule a time to discuss your individual federal retirement issues.
