1. What happens when a certified copy of a signed DRO is
filed with the System before the member is eligible to receive a retirement
If a certified copy of a signed DRO is submitted to the System prior to a
member's retirement, the System will give effect to the DRO upon the member's retirement, unless the DRO otherwise directs or, if applicable, upon the member's death.
2. What happens when a certified copy of a signed DRO is filed with the System after the member has begun receiving retirement benefits?
If a member has already retired when the DRO is received by the System and the DRO was signed by the court in the month in which it is received (and does not contain any provision for retroactive payments), the DRO will be given effect on the date the DRO was signed.
If a member has already retired when the DRO is received by the System and the DRO was signed by the court prior to the month in which it is received (and does not contain any provision for retroactive payments), the DRO will be given effect on the date the DRO was received by the System.
Retroactive provisions in DROs will be implemented to the extent permitted by applicable law and rules and to the extent they are capable of administration by the System.
3. May a DRO specify that a member must elect a particular form of post-retirement survivor benefit?
Yes. The default form of a retirement benefit paid by the System to a retired member is an annuity payable for the life of the retired member only. (The single life annuity is commonly referred to as the Maximum benefit.) New York law, however, allows a System member to elect, in lieu of the Maximum benefit, an optional form of retirement benefit (an "option") which involves the payment of a lower retirement benefit during the retired member's lifetime but also provides some form of post-retirement survivor benefit upon the death of the retired member. If the election of a post-retirement survivor benefit in favor of the alternate payee is required as a result of the division of the member's retirement benefit through equitable distribution, the DRO must clearly set forth that the member is required to elect that survivor benefit at the time of retirement. On the other hand, if there is no requirement that the member elect a post-retirement survivor benefit in favor of the alternate payee, then the DRO should be silent about the matter of post-retirement survivor protection. In that event, the member is free to take the default single life annuity or elect any available optional form of retirement benefit providing for the payment of a survivor benefit.
4. May a DRO provide that a member may not elect any optional form of post-retirement survivor protection?
Yes. A DRO could require a member to elect the Maximum retirement benefit, payable only for the life of the member. However, the same result for the alternate payee can be achieved by specifying that the alternate payee's share is to be calculated as if the retired member were receiving the Maximum retirement benefit. That approach would leave the member free to elect a post-retirement survivor benefit in favor of someone else, for example, the member's subsequent spouse, while the alternate payee's share would not be affected by the election.
5. Does a requirement in a DRO that the member must elect a post-retirement survivor benefit in favor of an alternate payee affect the ability of a member to provide post-retirement survivor protection to a subsequent spouse or loved one?
Yes. A member could well be prevented from providing survivor protection to a subsequent spouse or other loved one by a requirement in a DRO that the member elect a form of post-retirement survivor benefit in favor of the alternate payee. For example, if the member is required to elect a joint and survivor annuity with the alternate payee as the beneficiary, the member will be unable to provide joint and survivor protection for a subsequent spouse or other loved one. On the other hand, depending upon the circumstances, certain types of provisions can be made as described in our fact sheet Important Information for Members Required by a DRO to Elect a Joint & Survivor Option in Favor of a Former Spouse.
Practice Pointer: An attorney representing a member may wish to consider the preclusive impact of a required option selection, particularly in cases where the parties have been married for a very short time or where the divorce occurs relatively early in the member's career.
6. How will a DRO affect a retired member's entitlement to cost-of-living adjustments?
Education Law §532-a added by Chapter 125 of the Laws of 2000 established a mechanism for providing cost-of-living adjustments (COLA) on the first $18,000 of a retired member's retirement benefit. COLAs generally commence after the member has been retired for five years.
As a general matter, when a DRO requires the System to pay a percentage of the retiree's benefit to an alternate payee, the System will use the same percentage to pay the alternate payee a share of any COLA adjustments as well, unless the DRO expressly provides that the alternate payee is not to share in the COLA adjustments. On the other hand, as a general matter, when the DRO requires the System to pay a specific dollar amount to the alternate payee, the alternate payee will not share in any COLA adjustments.
Practice Pointer: Under law, COLAs are only payable during the retiree's lifetime and are not payable to any beneficiary under any form of post-retirement survivor protection, except in the limited case where the retiree's current spouse is entitled to receive a survivor annuity under a joint and survivor option. Accordingly, any payments of a share of the retiree's COLA to an alternate payee will cease upon the death of the retiree, even where the alternate payee is entitled to receive survivor annuity benefits under an option which the retiree was required to elect at retirement. Thus, in the case of an alternative option, under which the alternate payee is to receive the same amount following the death of the retiree as the alternate payee was receiving during the retiree's life, the System would continue to pay the alternate payee the share of the benefit the alternate payee commenced receiving at the time of retirement, not the share as increased by the alternate payee's share of any COLA to which the retiree subsequently became entitled.