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Understanding the Majauskas formula for pension division

by | Apr 4, 2017 | Division Of Pensions

In 1984, the State Court of Appeals heard the case Majauskas v. Majauskas, a divorce case which concerned pension plan distribution. The plaintiff argued that his pension rights were not marital property because he began work for the Rochester Police Department before the marriage. He was vested in the pension plan when the marriage ended, but was not yet entitled to benefits. His ex-spouse believed she was entitled to a portion of the pension which was accrued during the marriage. The Appeals Court agreed with her. Out of the ruling came what is now called the Majauskas formula.

 

Doing the math of the Majauskas formula

 

The ex-spouse gets a 50 percent share of the participant’s pension earned during the marriage. To put this into plain English, you might have to remember some math.

 

Ex-spouse share = 50% * (y/t)

Y= years of service credit accrued during the marriage

T= total service credit at retirement

 

As an example, the participant in the pension accrued 10 years of service during the marriage, but retired with 35 years of service.

 

Spouse share = 0.50 *(10/35)

S=14 percent of the pension

 

Many consider the Majauskas formula as an equitable distribution formula, but the court can modify the formula or the participants can agree to another distribution. There are other options, such as:

 

  • A flat dollar amount upon receival of the pension, even if the participant’s salary increases prior to retirement. There would be no cost-of-living increase for the ex-spouse for receiving a flat dollar amount.
  • The retirement system can calculate a hypothetical retirement based on a complex formula to determine the ex-spouse’s distribution for the time spent in the marriage.

 

Save time by having your QDRO prepared correctly

 

Many lawyers will not prepare a Qualified Domestic Relation Order which transfers interest in a pension. A pension can be one of the largest assets in the marriage, after the house. Equitable distribution for the time spent in the marriage is important to your financial future, so you might consider contacting a lawyer well-versed with QDROs.

 

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