The New York Supreme Court considers retirement plans and pension benefits as marital property. As such, these accounts are subject to the state’s equitable division laws when you file for divorce. Courts divide the retirement assets fairly between you and your spouse rather than splitting everything 50/50.
What if you had a retirement plan before marriage?
Only the benefits your retirement account or pension plan earned during your marriage count as marital property. If you or your spouse had a pension plan before marriage, the benefits earned while you were still single may qualify as separate property. This can make dividing retirement or pension plans more complicated.
How the court may divide pension plans fairly
New York courts have different ways to divide retirement or pension plans while ensuring equitable or fair distribution. Four ways they may do this are:
- Using the Majauskas formula: The formula divides the years of service credit or pension accrued during your marriage by the total service credit upon retirement to get the marital share percentage. This percentage is divided by two to give you or your spouse’s share of the pension.
- Using a hypothetical pension amount: The court decides on a hypothetical amount calculated from your final average earnings and service credit by a specified date, such as when you filed for divorce. You then multiply the amount by the percentage the court determines as fair to you and your spouse.
- Using a flat dollar amount: With this option, you receive a fixed amount each month. The amount usually does not account for cost-of-living adjustment unless specifically ordered to do so. Divorcing couples who already receive pension benefits usually have their share determined anyway.
- Using a flat percentage: This is one of the easiest ways to divide pensions. You or your spouse simply receive an equitable percentage of the other’s pension benefit.
Different processes to divide retirement accounts
The process of transferring the assets may differ depending on the type of retirement account. For example, a 401(k) plan requires a qualified domestic relations order or specialized court order. Meanwhile, you only need to request a transfer incident to divorce for individual retirement accounts. Consulting a seasoned divorce attorney may help you better understand the process and prepare the necessary documents.