Can My Pension or 401k Be Taken in a Divorce
I won’t keep you in suspense. The answer is yes, but there are ways to minimize the impact. When facing a divorce in New York, one of the most pressing concerns for many individuals is the division of assets—including pensions and 401k type accounts. If you have worked for years to build your retirement savings, you may wonder whether your pension and retirement accounts are at risk during a divorce. The answer lies in how New York law treats marital property and equitable distribution.
How Pensions and 401(k)s Are Treated in a New York Divorce
New York follows the principle of equitable distribution, meaning that marital property is divided fairly—but not necessarily equally—between spouses. Under this legal framework, pensions, 401(k)s, and other retirement benefits earned during the marriage are considered marital property and are subject to division.
However, the portion of a pension or 401(k) accumulated before the marriage or after the commencement of a divorce action is considered separate property and remains with the individual who earned it.
Determining the Marital Portion of a Pension and 401(k)
To determine how much of a pension is subject to division, courts often use the Majauskas Formula, derived from a key New York case, Majauskas v. Majauskas. The formula is:
Marital Share = (Years of Service During Marriage / Total Years of Service) x Pension Benefit.
For 401(k) accounts, the process is similar, but instead of using years of service, the court will examine the account balance and contributions made during the marriage to determine the marital portion.
How Pensions and 401(k)s Are Divided
Retirement accounts can be divided in different ways, including:
Qualified Domestic Relations Order (QDRO): This court order directs the pension or 401(k) plan administrator to allocate a portion of the account to the ex-spouse when benefits are paid out.
Offset Approach: One spouse may keep their entire pension or 401(k) while compensating the other with an equivalent value of marital assets (e.g., a larger share of the home or savings accounts).
Lump-Sum Buyout: In some cases, the spouse entitled to a portion of the retirement account may agree to receive a lump-sum payment instead of waiting for future distributions.
Can You Protect Your Pension or 401(k) in a Divorce?
Even though pension or 401k is considered a marital asset, which may be divided in a divorce, all is not lost. Negotiating a fair settlement can help you retain a larger portion or perhaps all of it. A skilled divorce attorney can explore options such as trading other assets, structuring payments, or arguing for a more favorable distribution based on your marital and financial circumstances.
Contact Leggett Legal, PLLC for Expert Guidance
Navigating the division of pensions, 401(k)s, and other assets in a divorce can be complex. At Leggett Legal, PLLC, we have the experience to protect your financial interests and secure the best possible outcome.
If you have questions about how your pension or 401(k) may be affected by divorce, contact us today for a consultation.
📞 Call us at 646-389-3841
📧 Email kenyoneleggett@gmail.com
Let us help you through this process with confidence and clarity.
