NYSLRS, as a governmental plan, has discretion to reject a DRO. Orders that are vague, contain inconsistent or contradictory provisions, or are contradictory to plan requirements or New York State law, will be rejected. Reasons for rejection may include:
- Qualified Status — References to a qualified status, the Employee Retirement Income Security Act (ERISA), the Retirement Equity Act of 1984 and certain provisions of the Internal Revenue Code (IRC) must be deleted from any proposed or final DRO.
- Assignment — NYSLRS members are prohibited from assigning retirement benefits (RSSL Section 110). A distribution may be made following the specific direction of the court only.
- Earliest Retirement Age — The earliest date benefits will be paid to a member or an ex-spouse is the member’s actual date of retirement. Benefits cannot begin at the member’s earliest eligible retirement age. The laws of the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) that provide for pension distributions at the earliest eligibility age do not apply to governmental plans such as NYSLRS.
- Lump Sum Distribution — NYSLRS cannot accept references to lump sum distributions. NYSLRS benefits are paid monthly and, unless the member is in a special 20- or 25-year retirement plan that allows for a partial lump sum distribution, a lump sum distribution is not possible.
- Surviving Spouse Language — NYSLRS cannot accept references to treating the ex-spouse as a surviving spouse. The provisions of Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) that create benefits on behalf of a surviving spouse do not apply to governmental plans such as NYSLRS. We recognize no special interest in the status of “surviving spouse.”
- Separate Accounts — NYSLRS does not maintain separate accounts for members and ex-spouses. NYSLRS assets are held for investment purposes in the Common Retirement Fund. Upon retirement, a member’s pension benefit is calculated according to their retirement plan and the amount necessary to pay the pension is transferred to the pension reserve fund. The pension benefit and any distributions taken in favor of the ex-spouse are then paid monthly from the pension reserve fund. There is no statutory authority to establish a separate account for an ex-spouse.
- Ex-spouse Beneficiary Designation — There is no provision in the RSSL for an ex-spouse to designate a beneficiary or to elect a method of payment. The qualifications and rights of membership are established by statute (RSSL Article 2, Title 5). The RSSL does not give NYSLRS authority to grant the rights and privileges of membership to a third party.
- Spousal Consent — Unlike private pension plans, governmental plans are not required to obtain a spouse’s consent to the waiver of benefits.
- Renunciations — The beneficiary under a pop-up pension payment option election may not renounce their beneficiary status to prematurely recalculate the retiree’s pension benefit to the Single Life Allowance Option.
- Option Elections — If a member is already retired at the time a DRO is submitted to NYSLRS and the member’s pension payment option election at the time of retirement did not violate a pre-existing court order or agreement, their option election is irrevocable. NYSLRS cannot accept a DRO requiring the member to designate the ex-spouse as a beneficiary under a different option election. In addition, if an existing DRO requires the member to name an ex-spouse as an option beneficiary, NYSLRS cannot accept a subsequent DRO requiring the member to name a different beneficiary or elect a different option.