When an employee or former employee in the railroad industry faces divorce, a key issue is how the parties will divide retirement benefits available to the rail employee under federal law. Whether the parties are negotiating a marital settlement agreement or facing a court trial in their divorce, the final agreement or order must comply with the Railroad Retirement Act or RRA and its detailed regulations.RRA annuities are also divisible in a legal separation or annulment.

Railroad employee retirement

Instead of paying into Social Security and earning Social Security retirement and disability benefits, people who work within the railway industry pay into a special rail fund and earn similar benefits, which are administered by the Railroad Retirement Board or RRB, a federal government agency.

RRA benefits may include, depending on an individual’s work history:

  • Tier 1 benefits are payments based on earnings and work histories in the rail industry and in other jobs subject instead to the Social Security Act. Tier 1 benefits are never subject to division in a state court divorce. If a Nebraska court orders division of Tier 1 benefits between divorcing spouses, the RRB will not enforce it.
  • Tier 2 benefits are based only on earnings and work history within the railroad industry. Since September 1983, Tier 2 annuities are subject to division of property between the worker and an ex-spouse in a state divorce decree.
  • A small monthly supplemental annuity may be subject to division.
  • In a few cases, workers who in 1974 were insured under both the Social Security Act and the RRA are eligible for a vested dual benefit component subject to division.

Important requirements

Federal law has specific, detailed requirements that Nebraska state courts must follow in dividing eligible RRA benefits. Some of these requirements are:

The court order must be a final order of divorce.

  • RRA benefits must be awarded as part of marital property division and not characterized as alimony.
  • The decree must specify that the portion of RRA benefits awarded to the ex-spouse be paid to him or her by the RRB, not by the beneficiary rail worker.
  • A certified copy of the Nebraska divorce decree must be sent to the RRB’s Chicago Office of General Counsel.

Other issues

If the rail-employee spouse dies before the other ex-spouse, the ex-spouse will continue to receive his or her share of benefits, unless the divorce decree ordered that they stop at the covered employee’s death.

In certain circumstances, the ex-spouse may begin receiving his or her share of benefits before the railway employee is actually eligible or after his or her death. The rail employee must have worked 10 years in the industry before 1996 or five years after 1995 and both ex-spouses must be at least 62 (or the rail-employee spouse, if deceased, would otherwise have been at least 62).

A divorcing spouse who worked in the rail industry may also have earned a private pension or other retirement plan through his or her rail employer. The RRB has no jurisdiction over private pensions. Those retirement benefits would be subject to Nebraska’s equitable division standard for property division, which means that private pensions would be divisible to the extent they are marital property.

Separate from RRA annuities subject to partition, a divorced spouse or a divorced spouse whose rail-employee ex-spouse has died may be separately eligible for an auxiliary benefit under the RRA. Divorced spouse or surviving divorced spouse annuities are not subject to division in a state divorce decree.

The intersection between federal RRA retirement and disability benefit law and Nebraska state divorce law occupies a complicated space. An experienced family lawyer can answer questions and provide guidance to anyone facing divorce in which RRA benefits may be at issue.