NYSTRS Logo
Domestic Relations Orders and a Member's Retirement Benefit
C. Domestic Relations Orders Basics
 
1. What role does NYSTRS play when a member's benefit is subject to equitable distribution?

The System’s Legal Department is responsible for reviewing DROs when submitted to the System to determine whether the DRO is consistent with applicable law and can be administered by the System. The System’s Legal Department will also review draft proposed DROs and provide information about the System and its benefits to members, retirees, spouses and their attorneys. Once a court-signed DRO has been filed with the System and approved by the Legal Department, other departments within the System will handle the division of the affected benefits and their payment to the parties.

Practice Pointer: The System’s Legal Department is available to answer questions the practitioner may have bearing upon a DRO and its impact upon a member or retiree’s benefits. Attorneys are strongly advised to submit proposed DRO language to the System’s Legal Department for its review prior to seeking court approval. A failure to do so could result in additional court proceedings if a DRO not submitted for review is not acceptable and could delay in the alternate payee’s receipt of benefits.

Please note, however, that it is not the role of the System to comment on the terms of a proposed or final DRO, except to the extent those terms either fail to comply with applicable law or rules or cannot be implemented by the System and only to that extent. The System will find a proposed or final DRO acceptable to the System, so long as it can be implemented by the System and is in accordance with the laws governing the System and the System’s rules and regulations. The System assumes that the terms of a DRO submitted to the System for review represent the terms which have or will be negotiated by the parties and their attorneys or which have been or will be ordered by the court, as applicable. Any questions as to the fairness of the terms contained in a DRO must be addressed by the parties’ respective counsel.
2. What is a DRO?

A Domestic Relations Order (DRO) is a judgment, order or decree of a court made pursuant to the Domestic Relations Law setting forth how a member’s benefits are to be divided between the member and the member’s former spouse.

Practice Pointer: The DRO typically received by the System is a court-signed document which is separate from the judgment or decree of divorce and which addresses only the member’s benefit entitlements from the System. Following this practice assists System staff in reviewing the DRO and also avoids disclosure of matters which are not germane to the System.

Please note that this guide will often refer to proposed DROs submitted to the System for review. A proposed DRO is not binding on the System. Only a judgment, order or decree which is signed by the court and properly certified and filed with the System can be binding upon the System.
3. Does the System mandate a specific form of DRO?

The System does not mandate a specific form of DRO. However, a sample of language consistent with the Majauskas formula and considered acceptable by the System is contained in Appendix A.
4. What can NYSTRS be ordered to do by a DRO?

The System may be directed by a DRO to pay a portion of a member’s retirement benefit directly to the member’s former spouse (known as the “alternate payee”). If the member has not retired or the period for electing an optional form of retirement benefit following retirement has not lapsed, the DRO may direct the member to elect a specific form of retirement benefit. Lastly, the DRO can also direct the System to pay a portion of a death benefit to the alternate payee if a death benefit is payable following the death of the member, whether before or after retirement.
5. What cannot be ordered by a DRO?

In general, a DRO may not order the System to take an action which is not permitted under the law and rules governing the System. For example:

• A DRO may not order the System to pay a benefit to an alternate payee when no moneys are otherwise payable. Thus, the alternate payee cannot be paid a share of the member’s retirement benefit if the member has not retired and commenced receiving a retirement benefit and cannot be paid a share of a member’s death benefit if the member has not died. See Majauskas v. Majauskas, 61 NY2d 481 (1984); Alexandre v. Chase Manhattan Bank, 61 AD2d 537 (2d Dep’t 1978). Put another way, an alternate payee’s rights are derived from the member’s rights.
• A DRO cannot order the System to provide an optional form of retirement benefit which is not permitted under law or cannot be administered by the System.

6. Are there circumstances in which a spouse or former spouse could lay claim to a member's benefit without there being a DRO in place?

Generally not. Member benefits are exempt from attachment, garnishment or any other form of legal process by virtue of Education Law §524. However, Civil Practice Law and Rules §§5241 et seq. does provide for income executions to enforce court orders of support, including in situations in which no DRO is on file with the System.
7. Is NYSTRS subject to tax code or ERISA provisions which apply to Qualified Domestic Relations Orders (QDROs)?

No. As a governmental plan, the System is specifically exempt from the provisions of IRC §414(p) and Title I of ERISA, including ERISA §206 relating to qualified domestic relations orders applicable to private sector retirement plans. See IRC §414(p)(11), 26 USC §414(p)(11); ERISA §4(b)(1), 29 USC §1003(b)(1).
8. What must happen once a court has signed a DRO?

When a DRO has been signed by a court, a certified copy of the DRO should be promptly sent to the System’s Legal Department. The System is under no legal obligation to take any action directed by a DRO unless and until a certified copy of a court-signed DRO has been filed with the System and approved by the System’s Legal Department. If the Legal Department determines that it can be honored by the System, it will be placed in the member’s file for immediate implementation at the time of retirement or death or will be transmitted to the appropriate departments within the System for implementation if the member has already retired.
9. What is an acceptable certification of a DRO?

As stated above, the System will not honor a court-signed DRO unless and until a certified copy of the DRO has been duly submitted to the System by an interested party or the party’s attorney. The System will accept an original certification by the court or an original attorney’s certification pursuant to CPLR §2105. Please note that a time-stamped copy of a signed DRO must still contain either an original court certification or an original attorney’s certification pursuant to CPLR §2105.
10. What happens if a certified copy of a signed DRO is not filed with NYSTRS?

If a certified copy of a DRO is not filed with the System, the System must pay benefits as otherwise required by the law and rules governing the System. Thus, a failure to file a DRO on a timely basis by the responsible attorney could cause the alternate payee to lose benefits to which s/he may be entitled under the DRO.

The following illustrate the potential adverse consequences of a failure to file a DRO:

• If a DRO is not filed until after the 30-day period for electing or changing an option selection has lapsed, the System has no power to implement a form of payment directed by the DRO, unless it happens that the member had elected that form of payment prior to the expiration of the 30-day period. The System, however, may implement a DRO to the extent that it directs the System to divide the benefit payable during the joint lives of the retired member and the alternate payee between the parties.
• If a DRO is not filed until after the member has commenced receiving retirement benefits, the System cannot pay the alternate payee a share of those benefits already paid to the retired member, unless the DRO expressly requires the System to take the missed share out of the retired member’s share of his/her future benefits.
• If a DRO is not filed with the System until after a member or retiree has died, the System has no power to pay the alternate payee’s share of the death or survivor benefit, as applicable, provided for under the DRO because, under law, the benefit has already vested in the member’s designated beneficiary or beneficiaries.