Protecting Pensions & 457's

Pension in a Divorce

Dividing a Pension in a Divorce

A pension is considered a marital asset that is subject to distribution during a divorce settlement. However, when distributing a pension in a divorce, there are limits to the amount of the pension that is subject to distribution. In New York, the Majauskas formula is used to determine the amount of the pension the non-employee spouse is entitled to in a divorce. Under this formula, only the marital portion of the pension is subject to distribution. The marital portion of the pension is limited to what accrues during the marriage. This means that the non-employee spouse is only entitled to share in the amount of the pension accrued after the date of the marriage and up until the time of filing for divorce. This “marital portion” of the pension in a divorce is shared 50/50 amongst the spouses.

In distributing the pension in a divorce, a domestic relations order (“DRO”) is required to advise the pension distributor as to how to make the payment distributions. The divorcing couple may opt to payout the non-employee spouse by using a lump sum that is adjusted for future value. Another way of distributing the pension to the non-employee spouse would be to wait until the time that the pension is actually distributed. Under this approach, the DRO would require the pension distributor to make monthly payments not only to the employee spouse, but also to the non-employee spouse for the marital portion.

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