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Basics of pension benefits division during divorce

by | Jun 6, 2017 | Blog

In New York, the property subject to equitable distribution in a divorce may include pension benefits. Generally, the specific type of retirement account will not matter as distribution includes all kinds of plans.

Calculating the portion of the benefit subject to distribution and dividing it can be a complex matter. In New York, courts typically use the formula set forth by the decision in Majauskas v. Majauskas to determine the appropriate division of any retirement plan.

Majauskas formula

Using the formula, one first creates a fraction. The number of months the pension accrued during the marriage serves as the numerator and the number of total months the benefits accrued at the time of retirement serves as the denominator. Then one multiplies this fraction by the percentage the non-pensioned spouse receives in the distribution, which in most prolonged marriages is usually 50 percent.

For example, the spouse with the pension plan earns pension benefits for a total of 120 months. The portion of these months that took place during the marriage equals 60. Thus, the fraction will equal 1/2; multiplying that by 50 percent will yield 25 percent. Thus, the non-earning spouse may be entitled to receive 25 percent of the pensioned ex-spouse’s monthly benefit.

Formula may be adapted or substituted

In some cases, the court may choose to adapt the formula; as with all other aspects of equitable distribution, courts look primarily to establishing a fair division. The divorcing couple may also choose to agree to a different method of division of retirement benefits.

Necessity of QDRO

For the spouse to actually obtain the benefits, there must be a Qualified Domestic Relations Order (QDRO) directing the plan administrator to distribute part of the benefits to the other spouse. To be effective, a QDRO must contain highly precise instructions as to the amounts. It should also contain contingency instructions for events such as the pensioned spouse’s death prior to becoming eligible for receiving benefits. A divorce attorney who understands the intricacies of QDROs can help you obtain the benefits you may be entitled to.