For many going through a divorce, their primary concern is their children. However, if you are divorcing later in life, your children are likely adults, and one of your primary concerns is your retirement accounts and pensions. Other than your real estate holdings, these are likely your most valuable assets, and you simply do not have the years left to earn back those funds, should they be liquidated.
Retirement accounts as marital property
First, retirement accounts are considered marital property in New York. This means that they are subject to equitable distribution in the divorce property division process. This applies to all types of retirement accounts, including 401(k)s and IRAs.
Not all of the retirement account may be marital property
However, not all of the retirement benefits are necessarily marital property. Only the portion of the benefits earned or accrued during the marriage is subject to division. Any benefits that were earned or accrued before the marriage or after the separation are considered separate property and belong to the individual spouse.
Majauskas formula
To determine how much of the retirement benefits are marital property and how they should be divided between the spouses, New York courts use a formula that was established by the landmark, Majauskas v. Majauskas. The formula is as follows: marital portion of retirement benefits = total accrued benefits x (months of contributions during marriage / total months of contributions) x 50%
How is the marital portion split?
The marital portion of the retirement benefits is then, generally, divided equally between the spouses. Though, the judge could find that there are factors that justify an unequal distribution.
Some of the factors that courts may consider are for an unequal distribution include the income and assets of each spouse, age and health of each spouse and the contribution each spouse made to the retirement benefits themselves and the marriage itself. The judge also looks to the length of the marriage, any tax consequences and anything else the judge believes is relevant.