Shared Pensions and Divorce in New York
During the distribution of assets portion of a divorce, it should come as no surprise that financial items as well as property will both be divided between the spouses. However, while the money in a bank account can be easily split in half, questions can arise over similar matters such as a 401(k) and pension. Because pensions are among the resources that will continue to provide income even after retirement, settling the distribution of money from pensions is vital to planning for retirement. Our firm frequently receives questions about the issue of shared pensions during divorces, and the videos below feature our answers to the most common queries.
Handling Two Pensions When Both Parties Are Unsure on Retirement
In some divorce cases, spouses are close in age and each has a pension plan, but both are unsure about the date that they’ll want to retire. In this circumstance, the first spouse would face the difficulty of receiving only half of his or her retirement payments and receiving none of the former spouse’s.
One option might be a separate interest pension, allowing each party to receive a share of both pensions when he or she elects to retire. If the pensions are roughly equivalent in value, each party may simply waive the right to the other’s pension. If the pensions are not equivalent, an expert can evaluate both and provide counsel on options for dividing them.
When Will I Receive My Share of the Pension?
There are two types of defined benefit plans to consider in this situation: shared pensions and separate interest pensions. If your spouse has a shared pension, you are only entitled to receive benefits once your spouse retires. If your spouse has a separate interest plan, then either party can receive his or her share as soon as the participant is eligible to retire.
My Ex-Spouse Is Refusing to Retire to Avoid Shared Pensions
Sometimes one party will attempt to retaliate against a former spouse by refusing to retire, blocking a spouse from a share in a pension or other retirement investment. In this case, you could go to a judge and ask for an order mandating a retirement age. You could also request spousal maintenance payments in lieu of pension payments starting on the date your spouse becomes eligible for retirement and continuing until your spouse retires.