1. Is it necessary for a divorce always to result in a division of a member's retirement benefits?

No. There is no requirement that the equitable division of the marital estate upon the parties' divorce result in the division of a member's retirement benefit. Although a NYSTRS member's benefits may be considered marital property subject to equitable distribution, the parties could conceivably determine to divide the marital estate in a way which does not involve the division of the member's NYSTRS benefits. For example, the parties could hire an actuary or other professional to calculate a value for the member's benefits and then apportion that value among other assets in the marital estate. On the other hand, in many cases, it is likely the member's retirement benefit will be one of the most valuable marital assets, apart from the parties' house, and it may be difficult, if not impossible, to avoid a division of the member's benefits and still have an equitable division of the marital estate. Additionally, depending upon the former spouse's financial situation, it may be ill-advised for the former spouse to forego the financial security provided by sharing in the member's benefits.

2. How should a member's retirement benefit be divided between the member and his or her spouse in equitable distribution?  

There is no best or unique way for dividing a member's retirement benefit. Many DROs received by the System divide a member's retirement benefit according to the formula set out in Majauskas v. Majauskas, 61 NY2d 481 (1984) (the " Majauskas formula") which takes into account the service credit which the member accumulated during the marriage and the member's total accumulated credit at the time of retirement. (Appendix A provides a form of language acceptable to the System which utilizes the Majuaskas formula.) However, the System has also received DROs which divide member benefits in ways which do not appear to employ a Majauskas -type formula.

3. Does NYSTRS determine a present value for a member's future retirement benefits?  

No. The System does not do present value calculations of members' future benefits. The System can only give information about a member's current benefit accruals and estimates of a member's future benefit at retirement. The parties will need to consult with an actuary or other financial professional if they desire to have a present value calculated for a member's future benefit.

4. When may the member's former spouse begin to receive a share of the member's retirement benefit?  

As stated previously, a former spouse's rights are derived from the member's rights. A member's former spouse may, therefore, only begin to receive a share of the member's retirement benefit as an alternate payee once the member has filed for retirement with the System and commenced receiving a retirement benefit. A DRO may not provide for the alternate payee to receive a benefit any earlier than the member does or require the member to retire on or by a particular date. Rather, a DRO may only provide that the alternate payee is to begin to receive a share of the member's retirement benefit at the time the retired member begins to receive a retirement benefit. Similarly, a former spouse may only receive a share of the member's death benefit when the death benefit is otherwise payable under law.

Practice Pointer: When considering how the parties' retirement benefits are to be divided, an attorney should be aware that, if one of the parties is a member of the System and the other party is a participant in some other retirement plan, the respective parties may have different rights to commence receiving and/or continue receipt of their benefits. Even when both parties are members of the System, their benefits may commence at different times and in different amounts.

5. Are there circumstances in which a former spouse could cease receiving a share of the member's retirement benefit after the member has retired?

Yes. If a retiree returns to active public service in New York, New York law requires that the payment of the retiree's benefit be suspended during the return to service. See Civil Service Law §150; Education Law §503(5). If the payment of a retiree's benefit is suspended due to a return to service, the payment of the alternate payee's share of that benefit would cease as well. Note, however, that a suspension is only required if the retiree returns to public employment in New York. A suspension is not required if the retiree goes to work in the private sector, in public service in another state or in federal government service. There are also rules under which NYSTRS retirees may return to public service in New York without a suspension of pension benefits in certain circumstances. Refer to NYSTRS' pamphlet Working in Retirement for more information.

6. Are there any other limitations on the alternate payee's share of a member's retirement benefit?

In no event may an alternate payee receive an amount which would be greater than the amount to which the retiree would have been entitled, had there been no division of the retirement benefit. Moreover, an alternate payee may not receive his/her share of a member's retirement benefit in any other form than as a portion of the member's retirement benefit when and as it is payable to the member. For example, the alternate payee may not require the System to commute his/her share of a member's retirement benefit to a lump sum to be paid on a one-time basis.

7. Can it make a difference if the member has already retired when the parties are divorced?

Yes. Once the member has retired and the 30-day period following retirement for electing an option has elapsed, the form of payment elected by the member at retirement cannot be changed. For example, if the member elected to have his/her retirement benefit paid in the form of an annuity payable for the life of the member in retirement without any provision for a survivor benefit, that election cannot be altered by a subsequent divorce. Or, for example, if the member had elected a form of benefit providing for the payment of a survivor benefit under a joint and survivor option to the member's spouse whom the member is now divorcing, the divorce cannot rescind or otherwise change the option or the option beneficiary. The System only has the power to implement a late-filed 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.

Practice Pointer: Education Law §539(6) makes the form of payment or option elected by a member at retirement irrevocable, once 30 days has elapsed from the date of the member's retirement. This deadline makes it incumbent upon the attorney for an alternate payee to have a court-signed DRO on file with the System prior to the lapse date or, failing that, to make sure the member has elected the desired option. Once the 30-day period has elapsed, neither the System nor a court has any power to revive the member's right to elect an option or change the option selection made by the member at retirement.

8. What happens to the amount of a member's benefit in retirement when a member is required to elect a post-retirement survivor benefit?

In order to maintain actuarial equivalence, the election of any optional form of retirement benefit requires the amount of the benefit payable to the retired member during the retired member's lifetime to be reduced. This means that the monthly amount paid during the retired member's lifetime will be less than the amount paid during the retired member's lifetime, had the member retired under the Maximum single life annuity.

Practice Pointer: In the System's experience, there is considerable discussion between the parties as to the impact that option selection will have on the benefit payable during the retired member's lifetime and how that, in turn, might affect the way in which that benefit should be divided during the joint lives of the parties. For example, where the member is required to elect an option providing survivor protection to the alternate payee, the member may wish to require that the member's share of the benefit payable during the joint lives of the parties is to be computed on the Maximum single life annuity, rather than on the member's lifetime benefit as reduced by the option election. Conversely, where the ability of the member to elect a survivor option is not constrained, the alternate payee may wish to require that the alternate payee share be computed on the Maximum single life annuity, rather than on the member's lifetime benefit as reduced by reason of the option selection.

9. What are the ways in which the retirement benefit payable during the joint lives of the parties be divided?  

When a DRO requires a member to elect a form of post-retirement survivor protection in favor of the alternate payee, there are three basic ways in which a DRO can provide for the division of the retirement benefit payable during the joint lives of the parties:

• The DRO could provide that the alternate payee's share is computed on the basis of the member's Maximum single life annuity, in which event the alternate payee's share of the benefit payable during the parties' joint lives would not be affected by any option selection;
• The DRO could provide that the alternate payee's share of the benefit is to be calculated "after optional modification," in which event the reduction in the benefit payable during the parties' joint lives is borne proportionally to their respective Majauskas shares; or,
• The DRO could provide that the member's share is computed on the basis of the member's Maximum single life annuity, in which event the member's share of the benefit payable during the parties' joint lives would not be affected by any option selection. Alternatively, the DRO could provide that the alternate payee's share is to be computed on the basis of the member's Maximum single life annuity but then reduced dollar for dollar by the amount by which the benefit payable during the member's lifetime has been reduced as a result of the option election.

DROs with more complicated directions as to the form of the option to be selected by the member or the way in which the parties' benefits are to be computed may require review by the System's Actuary to determine the impact of such provisions.

Practice Pointer: Sometimes, a DRO submitted to the System will contain conflicting language regarding the election of a post-retirement survivor benefit. Attorneys need to carefully review a DRO to make sure it clearly states what is intended and does not contain extraneous or conflicting language which might create confusion when the DRO is to be implemented. A failure to do so can potentially lead to disastrous outcomes. For example, if a DRO requires the alternate payee's share to be reduced as a result of the election of an option required by the DRO but then does not require the member to provide any survivor protection, the alternate payee's share will not be reduced if the member proceeds to elect survivor protection in favor of the alternate payee because nothing in the DRO had required the member to elect that survivor protection.

10. What happens to an alternate payee's share of a retirement benefit if the retired member predeceases the alternate payee?

Because payments of a retired member's retirement benefit cease upon the retired member's death, payments of a share of that retirement benefit to the alternate payee will cease as well at that time. In order for an alternate payee to continue to receive any payments from the System after the retired member's death, the retired member must have elected, whether pursuant to a DRO or otherwise, a survivor benefit at the time of retirement in favor of the alternate payee.

11. What happens to an alternate payee's share of a retirement benefit if the alternate payee predeceases the retired member? 

Payments of an alternate payee's share of a retirement benefit cease upon the alternate payee's death. Following the death of the alternate payee, the entire retirement benefit is thereafter paid to the retiree. If the alternate payee had been designated the beneficiary of a joint and survivor benefit at retirement, no payments are made following the death of the retired member. On the other hand, if the alternate payee had been designated the beneficiary of a guaranteed or lump sum option, the retired member may designate another beneficiary or other beneficiaries to receive any payment, if any that is made upon the subsequent death of the retired member.

12. Is the alternate payee entitled to share in a retired member's post-retirement death benefit if the retired member predeceases the alternate payee?

As noted above, a post-retirement death benefit may be payable upon the death of a retired member following retirement in cases where the retired member had a date of membership on or after July 1, 1973. The amount payable will typically be very modest. If the alternate payee has survived the retired member and the DRO on file with the System specifically provides for the alternate payee to share in the member's death benefit, the System will pay the alternate payee his/her share of that benefit.

Practice Pointer: New York law requires a DRO must specifically provide for the payment of a portion of a member's death benefit in order for the alternate payee to share in a death benefit provided by a retirement plan. Language dividing a plan participant's retirement benefit is not sufficient to require a division of a death benefit payable under the terms of the plan. However, if the DRO provides for an alternate payee to share in a NYSTRS member's death benefit and the alternate payee survives the retired member, the alternate payee will be entitled to share in the post-retirement death benefit pro tanto, unless the DRO specifically provides either that the alternate payee is not entitled to share in any post-retirement death benefit or that the alternate payee's right to share in the member's death benefit is limited to the death benefit payable prior to the member's retirement.