An employee's railroad retirement annuity is a monthly benefit comprised of several components. As described below, there are restrictions as to which components a court may characterize as property and subsequently distribute between the parties.
Non-divisible Tier I Component
The tier I component of an employee's annuity is calculated by applying the benefit formula in section 215 of the Social Security Act (42 U.S.C. § 415) to the employee's earnings record. For this purpose, an employee's earnings record includes both rail industry earnings and any earnings from employment covered by the Social Security Act. Tier I is the same benefit amount that the Social Security Act would provide if the employee's railroad employment had been covered under that Act.
IMPORTANT: Section 14 of the RRA (45 U.S.C. § 231m) specifically exempts the tier I component from property division and the RRB will not honor a property division that attempts to divide the tier I component.
Divisible Annuity Components
In addition to the non-divisible tier I component, an employee's annuity includes a tier II component and may also include certain other components, as described below. The RRA does not prohibit allocation as property the following annuity components:
- Tier II component. An employee's tier II component is based solely upon rail industry service and earnings. It is calculated under section 3(b) of the RRA.
- Supplemental annuity. An employee who completes 25 years of railroad service and who had railroad service before 1981 may receive a supplemental annuity under section 2(b) of the RRA. If payable, the amount of a supplemental annuity ranges from $23 to a maximum of $43 per month.
- Vested dual benefit. The vested dual benefit is an additional amount available to railroad employees who meet certain vesting requirements and are fully insured under both the RRA and the Social Security Act prior to 1975.
- Overall minimum increase. In some cases, an employee's annuity under the RRA may be less than the amount he or she could receive under the Social Security Act if rail industry employment were covered by that Act. The annuity may be increased so that the employee receives at least as much as he or she would receive under the Social Security Act. The amount of this increase is divisible.
Note.— Of the above divisible components, the tier II component, supplemental annuity, and vested dual benefit may continue to be paid as a partition award after the death of the employee. The overall minimum increase, however, is not payable as part of a partition award after the death of the employee.