Must Utah courts divide military pensions net of taxes under Johnson v. Johnson? Thayer v. Thayer Explained

The Utah Court of Appeals clarified an important issue regarding the division of military retirement benefits in divorce proceedings, addressing when courts should apply current versus historical federal law definitions.

Background and Facts

Diane and Richard Thayer divorced in 2013 after a 35-year marriage. Their stipulated decree provided that Richard’s military retirement pay through the United States Public Health Service would be divided equally based on his disposable retired pay, calculated “pursuant to Johnson v. Johnson and 10 U.S.C.A. § 1408(a)(4)(C).” The decree defined disposable retired pay as “gross retirement pay less authorized deductions, including amounts properly deducted for federal, state, or local taxes and disability benefits.”

When Diane sought direct payment from the federal Personnel Center, Richard objected, arguing that Johnson required taxes to be deducted before division. The Personnel Center rejected the request, noting that current federal law does not authorize tax deductions for divorces occurring after 1991.

Key Legal Issues

The central issue was whether the parties’ reference to Johnson v. Johnson required division of the military pension on a net basis (after tax deductions) or according to the current Uniformed Services Former Spouses’ Protection Act definition, which does not authorize tax deductions for post-1991 divorces.

Court’s Analysis and Holding

The Court of Appeals reversed, holding that Johnson does not mandate any specific mathematical calculation but rather stands for the principle that courts must apply the USFSPA’s current definition of disposable retired pay. The court noted that Johnson applied the 1984 version of federal law, which authorized tax deductions, but emphasized that the case’s holding was procedural—requiring compliance with applicable federal law—not substantive regarding specific deduction calculations.

The court found that the parties intended to divide the pension according to current federal law, evidenced by their agreement to use the federal direct payment mechanism and their expectation that the Personnel Center would “calculate the ‘disposable retired pay’ per existing regulations.”

Practice Implications

This decision highlights the importance of careful drafting in military pension division provisions. Practitioners should reference current federal statutes and regulations rather than relying solely on case citations that may reflect outdated legal frameworks. The court also emphasized that equitable principles constrain parties’ contractual freedom in divorce proceedings, preventing arrangements that create unfair disparities between spouses’ retirement benefit divisions.