Dividing BERS Benefits in Divorce: A Complete Guide to DROs, Tiers, TDA Accounts, and Protecting the Marital Share

Tier 1 generally applies to older legacy members who joined before July 1, 1973.

Key features from a divorce perspective include:

• Generally generous benefit structure compared with later tiers
• Vesting after 5 years
• Annuity Savings Fund component with member contributions credited at stated interest
• Retirement eligibility rules that may allow retirement at age 55 with sufficient service, with certain plan-specific variations
• Potentially valuable legacy benefits depending on plan election history

Tier 1 cases often involve long marriages, older members, and significant pension value. If the member is already retired, the order also has to line up with the payment option already elected.

Tier 2 generally covers members entering between July 1, 1973 and July 26, 1976.

Key points:

• Vesting after 5 years
• Final average salary based on highest 3 consecutive years, subject to statutory caps on spikes
• Annuity-related components may still matter
• Benefit design is still more favorable than later tiers in many cases

Tier 3 in BERS is narrow and transitional. In practice, many Tier 3 issues are analyzed through rules that largely track later-tier treatment. It is less common, but you still need to confirm the member’s actual status rather than assuming they are Tier 4 or Tier 6.

Tier 4 covers a large share of long-term active and recently retired BERS members.

Important Tier 4 divorce issues include:

• Vesting after 5 years
• Final average salary generally based on highest 3 consecutive years, subject to anti-spiking rules
• Different retirement pathways, including 62/5, 57/5, and in some cases 55/25-type structures depending on eligibility
• Early retirement reductions can materially reduce the actual payment stream

This is a big deal for DRO drafting. If the member retires early and takes a reduced benefit, the alternate payee’s share under a standard shared-payment order is typically reduced too unless the order uses language protecting against that result.

Tier 6 is the current active tier for newer members.

Important Tier 6 issues include:

• Vesting after 5 years
• Full retirement age generally tied to later retirement eligibility than older tiers
• Early retirement reductions can be steep
• Final average earnings rules changed in recent years, including movement from a 5-year to a 3-year measure for certain retirements after 2024, along with compensation/overtime limitations
• Employee contribution rates vary based on salary bands

For divorce work, Tier 6 has two practical effects:

• The pension may be less valuable than older tiers for similarly situated employees.
• Sloppy drafting about retirement assumptions can overstate or understate what the marital portion is worth.

The alternate payee’s share is commonly expressed as:

50% × (service credit earned during the marriage ÷ total service credit at retirement) × retirement benefit

That can be adjusted if the parties agreed to a different percentage, but 50% of the marital portion is the standard starting point in many cases.

Assume:

• Marriage date: January 1, 2005
• Divorce commencement date: January 1, 2020
• Member had 3 years of service before marriage
• Member retires with 28 total years of service
• Monthly pension at retirement: $5,600

Marital service = 15 years

Total service at retirement = 28 years

Marital fraction = 15/28

Alternate payee’s monthly share if awarded 50% of marital portion:

50% × 15/28 × $5,600 = $1,500 per month

That is the basic idea. But in real BERS cases, the actual result can change depending on whether the order is tied to the actual retirement allowance, a hypothetical normal retirement allowance, or some other negotiated approach.

Most New York governmental pension orders are effectively structured as shared payment arrangements. That means the alternate payee generally does not get to start benefits independently before the member retires. Instead, the alternate payee receives a share if and when the member’s benefit becomes payable under the plan and the order.

That’s why retirement timing language matters so much.

Before drafting, figure out:

• Is the member definitely in BERS?
• What tier are they in?
• Are they active, vested and deferred, or already retired?
• Is there a TDA account?
• Is there any claim for pre-retirement death benefit, post-retirement survivorship, or both?
• Are there outstanding loans or other offsets that could affect the ultimate payment?

The order should identify the parties, the member, the alternate payee, the plan, and the benefit formula. But that’s just the start. A BERS DRO also needs to say what happens with retirement options, death benefits, TDA assets, and other contingencies.

Eva’s research indicates BERS will review a draft DRO as a courtesy before court execution. That is smart to use. Sending a draft for review can prevent the classic mess where the parties get a signed order, submit it, and then find out the plan rejects it.

Once the order is signed by the court, the parties need to submit the executed/certified order to BERS using its current submission process. Based on the research file, BERS uses a DocUpload portal for document submission, and draft review questions may still route through the designated BERS email contact.

BERS reviews the submitted order for compliance and then administers benefits according to the order and plan rules.

The point here is simple: the divorce judgment is not self-executing against the retirement system. If no acceptable DRO gets entered and submitted, the plan is not going to freestyle this for you.

A vague clause awarding a share of “retirement benefits” may not be enough to divide the BERS Tax Deferred Annuity. If the parties intend to divide the TDA, the order should explicitly identify the TDA and specify:

• the valuation date,
• the percentage or dollar amount,
• whether gains/losses after the valuation date are included,
• and what form of transfer or distribution is permitted.

If the parties do not want to divide the TDA, that exclusion should also be explicit.

Under New York law and plan practice, divorce can affect prior beneficiary designations. If the former spouse is supposed to remain protected for a pre-retirement death benefit, the DRO must say so clearly.

If the order is silent, the former spouse may assume they are protected when they are not. That is how people end up in ugly post-death litigation, and nobody needs that circus.

If the alternate payee needs continuing protection after the member retires and later dies, the order may need to require a specific retirement option or survivorship election. Without that, the member could potentially retire under an option that maximizes the monthly benefit during life but leaves the former spouse exposed after death.

This is especially important in long marriages where the alternate payee is relying on future retirement income for real support.

If the member retires early under a reduced-benefit pathway, a standard shared-payment formula may reduce the alternate payee’s share too. That may be intended, or it may be completely against the settlement’s economics.

A careful drafter considers whether to:

• share the actual reduced benefit, or
• protect the alternate payee using a hypothetical normal retirement concept.

If you don’t confront that issue, the default result may not match what the parties thought they negotiated.

If there is an outstanding plan loan or some other reduction affecting the pension stream, the DRO should address whether the alternate payee shares in that reduction. Otherwise, the alternate payee can get hit by a member-side decision they never controlled.

If pension payments can be suspended or altered because a retiree returns to covered employment or because of plan-specific rules, the order should account for that possibility. Government plans do not always behave like private pensions, and the administration can get technical fast.

A BERS DRO should not speak in generic terms if the member’s retirement rules are tied to a specific tier/program such as 57/5, 62/5, or Tier 6 retirement ages. Those details affect when the benefit becomes payable and whether early retirement penalties are in play.

For certain education employees, service credit can be prorated based on days or hours worked. That matters if the marriage overlapped periods of part-time or substitute service. A sloppy marital numerator can distort the whole Majauskas fraction.

• Does the Majauskas numerator run from marriage to commencement, or to some different agreed date?
• Is the alternate payee sharing the actual retirement benefit or a hypothetical normal retirement benefit?
• If the member retires early with a reduction, who eats that reduction?
• If the member dies before retirement, is the alternate payee protected through a pre-retirement death-benefit clause?
• If the member retires, must they elect an option preserving the alternate payee’s rights after death?

• Is the TDA included at all?
• What is the valuation date?
• Are gains and losses included after that date?
• Is the division a percentage, a flat dollar amount, or another formula?
• What rollover/distribution rights will the alternate payee have?

• Is draft review being obtained from BERS before court submission?
• Are the parties using the correct plan name and current submission path?
• Does the order clearly distinguish between the pension and the TDA so administration doesn’t get muddy?

If those questions are not answered in the drafting, the order is not done. It’s just typed.

No. BERS is a governmental retirement system, so division is typically handled by DRO, not an ERISA QDRO.

Yes. The marital portion of a BERS pension can be divided in divorce under New York equitable distribution principles, commonly through a Majauskas-style formula.

No. The TDA is a separate benefit/account and should be explicitly addressed if the parties want it divided.

No. BERS is a separate retirement system. Do not assume NYCERS templates, forms, or procedures will fit a BERS case.

That depends on the order and the applicable benefit structure. If the former spouse is supposed to receive protection through a pre-retirement death benefit, the DRO needs to say that clearly.

An early retirement election can reduce the monthly benefit. Unless the order says otherwise, the alternate payee may share in that reduced amount. That is one of the biggest drafting issues in BERS cases.

Potentially, depending on the plan’s options and the order’s language. If survivor protection is part of the deal, it should be built into the DRO and coordinated with the retirement option election.

Because the tier affects retirement age, vesting, formulas, reductions, and earnings calculations. Those variables affect both the value of the benefit and when the alternate payee may receive it.

Confusing the plan with another New York retirement system or failing to address the TDA and survivorship issues explicitly. That’s the kind of avoidable mistake that turns a settlement into a fight later.