In New York, divorcing couples can use a variety of ways to divide the portion of the retirement benefits that will be paid to an ex-spouse as part of the divorce settlement. Once the spouses reach an agreement, the information will be included in a QDRO or qualified domestic relations order.
Retirement benefits and divorce settlements
According to state law, when a couple divorces, the retirement benefit accrued during the life of the marriage will be part of the division of assets through equitable distribution. Spouses can negotiate a settlement of these benefits in a variety of ways.
Dividing the retirement benefits during divorce
During the division of property, divorcing couples can take several routes to split the retirement benefits. These include:
• Using the Majauskas Formula
• Modifying the Majauskas Formula with numbers that fit their needs
• Establishing a set dollar amount
• Setting a specific date of retirement to calculate the benefits
How the Majauskas Formula works
The Majauskas Formulas multiplies by 50% the amount of benefit accrued during the marriage and divides this by the total number of years of service by the participant when they retire. This formula is commonly used but can also be modified either by court order or by an agreement reached by the two parties.
Using the QDRO for retirement benefits
Once the parties have reached an agreement on how to divide their retirement benefits, a QDRO must be drafted which clearly states how the benefit will be divided. If the couple has chosen to use the date of the beginning of the divorce process as the hypothetical date of retirement for the purpose of the division of the benefits, there is specific language that must appear in the QDRO, including the number of months that will be considered in dividing the benefit and the total number of service months up until that date.