How do retirement plans get divided?
Pensions can be divided by the court by entry of a Qualified Domestic Relations Order (QDRO) or other similar order, depending upon the type of pension. Some pensions have an easily determined cash value and can be divided now into separate pension accounts for each spouse. Others have a future benefit which can either be valued by an actuary or divided by the court on an as, if and when paid basis. If you are receiving a future pension benefit, the death of your spouse may terminate the pension benefit. Therefore it is important to get a survior annuity, which is similar to life insurance. Having a QDRO drafted, approved by the pension administrator, and entered by the court, is not an easy task, even for a lawyer. The stakes are usually high, and the pension may be the largest marital asset. If your spouse has a substantial pension earned during the marriage, you probably need to hire a lawyer to draft the appropriate court orders.
In New York, the law is that all forms of retirement plans, whether called pensions, 401ks, IRAs, profit sharing plans, or any other name, which are marital property, are subject tp being equitably distributed. All benefits which are part of a spouse’s retirement plans, to the extent that benefits accrued during the marriage and prior to the commencement date of the divorce action, are subject to equitable distribution. The courts use a formula (referred to as the “Majauskas” formula), to calculate the split. Under the Majauskas formula, the actual accrued benefit is multiplied by a fraction. The numerator is the number of months of the marriage, and the denominator is the number of months of employment with pension credit upon retirement. The accrued benefit is the benefit received by the spouse upon his/her retirement. Finally the result is multiplied by the percentage to go to the other spouse. In a long-term marriage this is usually 50%. For example: If the Husband’s retirement ben
There are two types of retirement plans for most people – Defined Benefit Plans (like a pension) and Defined Contribution Plans (like a 401(k), IRA, or other form of savings). There are basically two ways to divide retirement plans – cash out now, or divide them at the time of retirement. Information can be obtained from the Plan Administrator of each retirement you or your spouse have. From this information, an expert witness called an “ACTUARY” can calculate what a future pension in a Defined Benefit Plan is worth today. Defined Contribution Plans, like 401(k)s and IRAs are easy, because they are worth their present cash value. Each type of retirement has a different method, but basically all of them can be divided with special provisions in your Decree of Dissolution or a Qualified Domestic Relations Order. The rules are very complicated, and you should consult with an attorney for guidance. When the rules are properly followed, the division of retirement assets is done without any
There is a provision in the Va. Code for division of a pension plan between the parties. As to whether some or all of the property is “marital” depends on the application of the “equitable distribution” Code Section to the circumstances and in accord with above Va. Code 20-107.3 “All property including that portion of pensions, profit-sharing or deferred compensation or retirement plans of whatever nature, acquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property.” When that is determined in favor of the “non-member” of the plan, the details of the split are covered by a federal Code section dealing with what is called a “Qualified Domestic Relations Order” under the Retirement Equity Act of 1984, P.L. 98-397, 26 USC, Sections 401(a)(3) and 414(p) of
