Which part of the pension is marital
In New York, the portion of a pension earned during the marriage is generally marital property, while benefits earned before the marriage or after the divorce action began are usually separate. Courts commonly use a time-based fraction to identify the marital share, comparing service during the marriage with total service. Defined benefit plans, which pay a monthly benefit at retirement, are handled differently from account-based plans, where balances can be tied to specific dates. Survivor benefits, early retirement subsidies, and cost-of-living increases need specific treatment, or they may be lost to the former spouse.
Orders and plan rules
Private employer plans generally require a qualified domestic relations order, often called a QDRO, before they will pay a former spouse. Government, military, and many public employee plans use their own versions with different rules. Request the plan's summary description, the administrator's procedures for domestic relations orders, and benefit statements showing accrued service. The order has to match both the plan's requirements and the divorce agreement. A judge signs it, but the plan administrator decides whether it qualifies and may ask for changes. Delays in preparing it can cause real problems if the employee retires, dies, or changes jobs before the order is accepted.
Planning the division
We start by identifying each plan, whether it pays a monthly benefit or holds an account, and whether payments have already begun. We discuss whether to divide the benefit itself or offset it with other assets, and how survivor protection fits into the arrangement. If the pension is already in pay status, the order may have to work within the form of benefit the employee chose at retirement. We also look at tax consequences, since transfers under a proper order are treated differently from cash withdrawals. Deciding who prepares and submits the order, and on what schedule, is part of finishing the divorce rather than an afterthought.
