Updated November 8, 2026. Quick answer: The New York State and Local Retirement System is a governmental plan outside the federal QDRO rules, so a divorce divides a member’s pension through a Domestic Relations Order (DRO) that NYSLRS has approved, together with proof of divorce. The common formula gives the ex-spouse one-half of the part of the pension earned during the marriage. Payments cannot start until the member retires, and the ex-spouse cannot take a cash payout or roll the monthly benefit over.
What the order is called and what governs it
NYSLRS says: “As a governmental plan, NYSLRS is exempt from the provisions of the Employee Retirement Income Security Act (ERISA), the Retirement Equity Act of 1984 and the Internal Revenue Code (IRC) that provide for Qualified Domestic Relations Orders (QDROs)”. On the legal basis: “The State Court of Appeals determined that NYSLRS benefits that are acquired during a marriage are marital property, and subject to equitable distribution upon a member’s divorce, pursuant to Domestic Relations Law Section 236”. In practice: “NYSLRS must have an approved DRO on file, and proof of divorce, to make direct pension payments to an ex-spouse of a member.”
How the share is measured
“This formula provides an ex-spouse with one-half of the part of a member’s pension that was earned during the marriage.” NYSLRS also says: “An ex-spouse may be entitled to a portion of a retiree’s cost-of-living adjustment (COLA), not as an option beneficiary, but as part of the overall distribution from the retiree’s monthly retirement benefit while the retiree is still living.”
What cannot be divided or set up
“NYSLRS does not maintain separate accounts for members and ex-spouses.” And: “Ex-spouses cannot obtain a cash payout of their portion of the pension benefit, and they are not permitted to roll over their monthly benefit into a tax-deferred retirement account”.
When payment starts
“An ex-spouse cannot collect benefits until the member retires and their pension payments have begun.”
The member’s option at retirement
“The member cannot change their pension payment option or, for joint allowance options, their option beneficiary, once the retirement is effective”. One option works differently for an ex-spouse: “Unlike the joint allowance options described above, the Special Joint Allowance continues to pay the ex-spouse the same amount they had been receiving before the member’s death.”
If the ex-spouse dies
“If an ex-spouse dies prior to the member’s retirement, the DRO on file is vacated (nullified). NYSLRS must calculate the member’s future pension benefit without regard to equitable distribution.” “If an ex-spouse dies after the member retires, NYSLRS will stop payments to the ex-spouse after receiving a copy of the certified death certificate.”
Taxes
“According to the Internal Revenue Code, equitable distribution payments to the ex-spouse are taxable. NYSLRS will issue a 1099-R form to the ex-spouse for taxable payments made during the prior calendar year.”
Drafting
“While it’s use is not required, a DRO prepared using our form will be given priority review.”
Federal tax on a divorce-order payment
IRS Publication 575 describes the federal rule for a payment under a QDRO: “A spouse or former spouse who receives part of the benefits from a retirement plan under a QDRO reports the payments received as if they were a plan participant”. The Form 5329 instructions list the early-distribution exception for “Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (doesn’t apply to IRAs)”. Whether your system’s order is treated as a QDRO for these purposes is a question for a tax preparer; the exception is explained on the Form 5329 exception code 06 page.
What the documents read for this page do not settle
- The New York statutes NYSLRS cites (Domestic Relations Law section 236 and the Retirement and Social Security Law sections) were not read directly; the page relies on NYSLRS’s own citations.
- The NYSLRS pages read for this page print no dollar fee for reviewing or filing a DRO.
- They describe no separate-interest option: payments are made as a deduction from the member’s benefit.
- Most of the NYSLRS divorce pages carry a February 2023 revision date, so check them for changes before you draft.
Common mistakes
- Assuming a federal-style QDRO will work. NYSLRS says it is exempt from the QDRO provisions and requires an approved DRO.
- Planning on a cash payout or rollover for the ex-spouse. NYSLRS does not allow either.
- Expecting to change the member’s option after retirement. NYSLRS says the member cannot.
Related: NYSLRS retirement decisions, the QDRO checklist before you sign, and shared interest versus separate interest.
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Answer againSources
- Office of the New York State Comptroller, New York State and Local Retirement System, The Domestic Relations Order: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Determining the Ex-spouse’s Share: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Cost-of-Living Adjustment: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Avoiding a Rejected DRO: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, The Ex-spouse’s Payments: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Pension Payment Option Election: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Death of the Ex-Spouse: www.osc.ny.gov
- Office of the New York State Comptroller, New York State and Local Retirement System, Draft a DRO Using the NYSLRS Template: www.osc.ny.gov
- Internal Revenue Service, Publication 575, Pension and Annuity Income (for 2025 returns): www.irs.gov
- Internal Revenue Service, Instructions for Form 5329: www.irs.gov
Read from the primary documents linked above on November 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.