Railroad Retirement System (TIER 2) The Railroad Retirement Act is the federal law which provided retirement and disability benefits for railroad employees. The act divides benefits into two segments known as Tier l and Tier ll. Tier l benefits are calculated the same way Social Security is determined and are Not Divisible by a court order. The Tier ll portion is divisible and can be compared to retirement benefits earned by individuals that work in the private sector. The Railroad Retirement Board will honor an order if it meets the following:

1. It must provide for the division of the employee’s benefits as part of a final disposition of property as opposed to an award of spousal support.

2. It has to obligate the Railroad Retirement Board to make direct payments to the Alternate Payee, rather than the employee.

3. It may not divide the Tier l benefit. The board may divide the Tier ll Annuity and three additional components as follows:

A. Vested Dual Benefit Payments - If an employee had qualified for both a railroad retirement and social security before 1975 and has certain vesting the employee can receive an additional annuity amount that would be the dual benefit payable prior to 1975.

B. Supplemental Annuity - This annuity is under $50 per month and depends upon years of service.

C. Overall Minimum Increase - If the annuity is smaller than the amount the employee could receive under Social Security if the railroad employment were covered by Social Security the employee could receive an increase to make up the difference.

4. The award must be a percentage or a dollar amount.

In addition to the above, the board must receive a certified copy of the order and the Alternate Payee (Former Spouse) must complete an Agreement of Former Spouse and an Electronic Funds Transfer Statement prior to payment.

Understanding the Railroad Retirement System

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