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QDRO Briefs Newsletter No. 10

State of New York
Family Law Attorneys
Majauskas Formula

Defined Benefit Plans:


In July 1983 the Supreme Court of New York rendered its decision in the Majauskas case. In short, the Court’s decision was to confirm that (1) vested, unmatured pension benefits were marital property to the extent they were earned during the marriage and (2) that the proper formula for determining the benefits to be awarded to a non-participant spouse was based on the benefits accrued at retirement, not as of the date of divorce. This type of approach is sometimes referred to as a "coverture formula". This formula is used in some of the other states as well as New York.


The term coverture formula generally refers to the following formula:


No. of months married during


Participation in a plan X Accrued benefit at retirement


No. of months of participation


In a plan at retirement


The pension plan that was the subject matter of the Majauskas case was the New York State Policemen’s and Firemen’s Retirement System. This plan is a non-qualified defined benefit plan. Benefits under that plan, like most non-qualified defined benefit plans, commence only at the date a participant elects to commence benefits, even if benefits under the plan can be assigned to a former spouse. Since most qualified defined benefits allow a former spouse to commence benefits prior to a participant’s commencement of benefits, it could be argued that the method of apportioning benefits under Majauskas case are not appropriate for assignments related to qualified defined benefit plans.


It can be argued that this formula provides for inflation protection to an alternate payee since the accrued benefit will likely increase faster than the coverture fraction decreases, in most cases. It can also be argued that this formula awards benefits to a former spouse that are earned after the date of marriage, for the same reason.


However, one of the big disadvantages to an alternate payee in utilizing this formula is that an alternate payee may not commence benefits until the participant retires because that is the only time the benefit under the Majauskas formula can be determined.


There are numerous situations where this may not be advantageous to an alternate payee, even though there appears to be a clear advantage, that is, the increased benefits over a frozen formula. Consider the use of a coverture formula in the following circumstances:


1. The long-term health of the alternate payee is in question;


2. The alternate payee’s short-term financial condition is in question;


3. The plan provides for a lump-sum distribution; or


4. The plan benefits revert to the participant or actuarially terminate upon the death of the alternate payee if alternate payee dies before commencement of benefits.


In either of these situations, it is clear that if the alternate payee had an opportunity to commence benefits at the earliest date allowed under the plan, it would be in the alternate payee’s best interest.


There is a way to modify the coverture formula (Majauskas formula) so that the alternate payee (1) is afforded inflation protection during the period of time after the date of divorce and (2) is provided an option to commence benefits prior to the participant’s commencement of benefits. Consider the following modified formula:




No. of months married during


Participation in a plan X Accrued benefit determined at the


No. of months of participation alternate payee elects to commence


In a plan at the date alternate payments


payee elects to commence






This modified coverture appears to be more appropriate for use in apportionment of benefits under a qualified defined benefits plan than does the Majauskas formula and does not necessarily conflict with the principals set forth in the Majauskas case.


The advantages of using this modified formula clearly outweigh using the coverture formula for alternate payees, in most cases. Participants will also see that using this formula has advantages. This formula can be used in most qualified defined benefit plans. However, it cannot be used in most non-qualified defined benefit plan, including the New York State Policemen’s and Firemen’s Retirement System.


Defined Contribution Plans:


Majauskas formula is not appropriate for use in assignments related to defined contribution plans, qualified or non-qualified.