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Beginning of Partitioned Annuity Payments

From a procedural standpoint, two things must occur before partition payments may begin. First, the annuity must be in pay status. Second, the partition must be fully processed by the agency.

Note: The agency will process partitions at any time, and it is common for a partition to be in place many years before the railroad employee is even considering retirement.

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Additional Considerations

Divisible Components
The agency will apply a valid partition award to the sum of all of the divisible components which make up the employee's monthly annuity, unless the court order specifies otherwise.

If the parties wish to restrict the award to only one divisible component, the parties must specifically state which divisible component the parties wish to divide.

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Requirements for a Compliant Partition Order

The agency will honor a decree of divorce, legal separation, annulment or a related, court-approved property settlement that complies with the agency’s regulations. See 20 C.F.R. pt. 295.

The key provisions of the regulations are as follows:

Final Decree
The decree or order must be final and issued in accordance with the laws of the jurisdiction of that court and which provides for the division of property. 20 C.F.R. § 295.2.

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Agency Partition Approval Process

While the agency will honor a compliant decree of divorce, legal separation, annulment or a related, court-approved property settlement, the agency’s Office of General Counsel must review and approve the document before the agency will process the property division. See 20 C.F.R. §295.4.

Note: Any provision of an order that attempts to divide an employee's Tier I component or that requires payment of a divorced spouse benefit or a survivor benefit under the RRA will be disregarded. Any provision contrary to the RRA will also be disregarded.

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Funding of Railroad Retirement Annuities

Railroad employees and employers pay employment taxes under the Railroad Retirement Tax Act to fund the annuities. See 26 U.S.C. §§ 3201-3241.

Railroad retirement taxes are not held in individual employee accounts. A railroad employee’s length of service and earnings from covered railroad employment determine the amount of the annuity.

Note: The agency cannot establish a separate account for the share of the employee’s future annuity awarded as property to a separated/former spouse.

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The Railroad Retirement Annuity

The Railroad Retirement Act (RRA) replaces the Social Security Act for the rail industry. It provides monthly annuities to rail employees based on age and service or on disability. The Railroad Retirement Board, an independent federal agency, administers the RRA.

An employee’s railroad retirement annuity is a monthly benefit with several components. There are restrictions on which components are divisible.

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Purpose

This is a guide to dividing railroad retirement annuities in a divorce, annulment, or legal separation. This guide explains how to properly divide (partition) an annuity to comply with the agency’s legal requirements.

This publication is not a guide for private rail industry employer pension plans.

You may send any questions or comments about the information in this guide to:

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Attorney's Guide to the Partition of Railroad Retirement Annuities

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OMB Bulletin No. 07-02

Agency Good Guidance Practices

OMB Bulletin No. 07-02 sets forth guidance to be followed by agencies in issuing significant guidance documents and economically significant guidance documents. The Bulletin also requires that certain information concerning significant and economically significant guidance documents be provided on an agency's website. That information is provided below.

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Residual Lump-Sum

If it appears you may be entitled to a residual lump-sum, please read this part of the booklet thoroughly. It will provide information which you will need to understand the residual lump-sum.

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