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How to split a pension in New York

On Behalf of | Oct 22, 2020 | Blog, Division Of Pensions

If you get divorced in New York state, you may be entitled to a portion of a former spouse’s pension benefits. In most cases, the Majauskas formula is used to calculate how much an individual is allowed to receive. However, other methods may be used to create an equitable distribution of this marital asset.

An overview of the Majauskas formula

The Majauskas formula says that you are entitled to half of your spouse’s pension benefit accrued during the course of the marriage. Let’s say that the plan participant spouse has accrued 20 years of service credit with 15 of those years occurring during a marriage. In that scenario, you would be entitled to half of the pension benefit earned during those 15 years.

Depending on the facts of your case, it may be necessary to alter the formula to ensure that an equitable distribution occurs. It is important to point out that you don’t have to use either the standard or modified version of this formula when allocating a pension benefit.

There are other methods to create an equitable distribution

Instead of using the Majauskas formula, you may choose to accept a fixed payment or agree to receive a percentage of the pension’s value at the time of the divorce. However, accepting a fixed payment typically means that you won’t benefit from any cost-of-living adjustment (COLA) that may be applied in the future.

Furthermore, if you agree to receive a percentage of your spouse’s current hypothetical pension payment, the amount that you receive generally won’t be revised upward once the divorce is final. This means that you won’t benefit from any salary or service credit increases that might inflate your former spouse’s actual payment.

In most cases, pension and other retirement benefits must be split per the terms of a domestic relations order, and this document is separate from the divorce decree issued by the judge in your case. An attorney may be able to help craft a domestic relations order that protects your rights while also complying with state law.