Pensions in “Pay” Status are Marital Property and Subject to Distribution.
The Courts in New York have held that marital pension benefits do not lose their status as marital property merely because the plan participant (titled spouse) has already retired and payment of benefits has commenced. Dunne v. Dunne, 172 A.D.2d 4823, 567 N.Y.S.2d 838, 839-840 (2nd Dept. 1991).
In the Dunne decision, the Appellate Division ruled:
Although the defendant was retired and receiving a monthly pension check as his main source of income, a portion thereof was clearly marital property and should have been considered by the court. The court could have fashioned an award by applying the formula set out in Majauskas v. Majauskas (61 N.Y.2d 481; see, Graepel v. Graepel, 125 A.D.2d 447, 448-449).
Id.
QDRO’s For Pensions in “Pay” Status Must Use the Shared Interest Approach
For pensions that are already in pay status, a Shared Interest approach (as opposed to a Separate Interest approach) is mandatory. Under a Shared Interest approach, the alternate payee receives a percentage or specific dollar amount of the Participant’s monthly lifetime benefit. The assigned portion will be payable for the life of the Participant. The following is a summary of how the Shared Interest approach functions where the participant is already in Pay Status:
Duration of Payment: The alternate payee’s assigned portion will be payable for the life of the Participant.
Death of Participant: The assignment of benefits to the Alternate Payee will not longer be payable upon the Participant’s death. If the Alternate Payee had been designated as a surviving spouse at the commencement of the Participant’s retirement benefits, the Alternate Spouse will receive a QJSA upon the death of the Participant pursuant to the terms of the option that was chosen at the time of retirement.
Early Retirement Subsidies: The Alternate Payee will receive a proportionate share of early retirement subsidies if the Alternate Payee’s assigned benefit is expressed as a percentage of the Participant’s payments (as opposed to a specific dollar amount).
QDROpedia’s New York QDRO Form for a Pension in Pay Status meets all the requirements of both New York’s Domestic Relations Law, and ERISA.