The Railroad Retirement Act provides retirement, survivor, unemployment, and sickness benefits to railroad workers and their families when the workers have spent a substantial portion of their careers in the railroad industry.

The Railroad Retirement Board (RRB), which is an independent agency in the executive branch of the United States government, was created in 1935 to administer this social insurance program.

The Railroad Retirement Act divides railroad benefits into two independent annuity levels, which are called Tier I and Tier II. Tier I pays basic retirement payments for those with 10 or fewer years of service; Tier II pays additional sums to retirees on the basis of their length of service for those with more than 10 years of service.

The RRB and the Social Security Administration oversee the programs for the Railroad Retirement Plan. The two governing bodies are separate, but they often overlap and exchange credits in the administration of the two tiers.

Tier I gives workers basic credits that can be used in either the Railroad Retirement System or the Social Security system. Tier I applies Social Security formulas to calculate payments but uses Railroad Retirement ages and service periods. RRB calculates a Tier I annuity like a Social Security benefit. The annuity is based on railroad retirement credits and any nonrailroad Social Security credits the worker has acquired. Put simply, a Tier I annuity pays what Social Security would pay if the railroad work has been covered under that plan. As a result, Tier I payments are reduced by the amount of any Social Security benefit paid on the basis of a worker’s nonrailroad employment, so that no benefits are duplicated. No one receives full benefits from both the Railroad Retirement and Social Security systems. Payment from Railroad Retirement (Tier I) cancel any payment the retiree might receive from Social Security and vice versa.

Workers who have served at least 10 years and those who have served at least five years as of 1995 are eligible for Tier I benefits.

Tier I benefits are not marital property. Like Social Security, Tier I benefits cannot be transferred by a court order, so they are not divisible in a divorce.

The Tier II annuity is based on railroad retirement credits only, and it rewards workers for longer service. The added benefits are similar to benefits earned by workers in ERISA-qualified programs. Tier II is available to workers meeting the age and service requirements of Tier I retirees who worked additional months beyond the normal contracted months of a salaried railroad job. Tier II is also available to workers who maintain what is called a “current connection” with the railroad industry. Current connection requirements mean working for at least 12 months in the last 30 months before making a claim. Workers with at least 30 years of service are eligible for full pensions at age 60. Workers with less than 30 years service are eligible for partial annuities at age 62 and full benefits at age 65, 66 or 77, depending on birth year. Tier II benefits are marital property, and the RRB honors a divorce decree, legal separation or annulment that is

• a decree “in accordance with the laws of jurisdiction”;
• has statutory authority under the Railroad Retirement Act;
• provides for the final disposition of property as opposed to an award of spousal support;
• makes direct payments to the spouse (because the decree must obligate the RRB rather than the employee);
• divides the “non-Tier I“ benefit only;
• sets forth the award. “The decree may state the award as a percentage, dollar amount, or a fraction of the employee’s benefit subject to division;
• provides a copy must be sent to the Deputy General Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, Ill 60611; and
• provides that the former spouse must sign an agreement.

In additional to the Tier II benefits, three other parts of the participant’s benefits are marital property and may be divided in the event of a divorce. They are

• the vested dual benefit: paid to a worker who qualified for dual benefit under the Railroad Retirement Plan and Social Security before 1975 and who meets certain vesting requirements;
• the supplemental annuity: in addition to the Tier II annuity and the vested dual benefit, a participant may also receive the supplemental annuity, which ranges from $25 to $43 per month depending on the years of service;
• the overall minimum increase: A participant who may receive less than he would have received under Social Security may receive what is called the overall minimum increase.

The court order dividing Tier II benefits may not be called a QDRO. It must be called a Qualifying Court Order to Divide Railroad Retirement Benefits.

Railroad Retirement also provides workers with unemployment and sickness benefits, for which there are no analogous benefits in Social Security.

Railroad retirement disability pensions may be divided as marital property, and payments may continue to the former spouse after the death of the employee.