This is the first installment of a six-part blog series focused on the Railroad Retirement Act (RRA). You can read the full series here.
The Railroad Retirement Act (RRA) is a federal statute that provides unique benefits for railroad workers. The 1974 Amendment to the RRA resulted in an annuity benefit system that is comprised of two main benefit components, generally referred to as Tier I and Tier II benefits. In addition, railroad employees may qualify for additional annuity components (which are described below). Under the RRA, railroad employees and employers pay taxes under the Railroad Retirement Tax Act (RRTA), which are in lieu of, but similar to FICA contributions.
A railroad employee’s monthly annuity rate is computed based upon length of service and earnings during their employment. As a result, an RRA annuity cannot be segregated, nor can a separate account be established, as property to a former spouse. (Note: an order dividing an employee’s “account” instead of “retirement annuity” is not valid under the RRA). Moreover, the RRB cannot furnish the present value of future benefits although an estimate can be computed based upon an employee’s service and earnings. However, the RRB does issue annual statements (BA-6 Forms) that reflect the employee’s creditable railroad service and compensation.
If you or your spouse have been railroad employees and thus may be eligible for a RRA annuity, it is strongly recommended that you speak to a legal professional to ensure that these unique benefits are properly accounted for and distributed incident to a divorce.