Understanding Railroad Retirement Benefits
Dividing retirement benefits for railroad employees can be a complex process, especially due to the unique nature of railroad retirement plans.
The Division Process
Dividing railroad retirement plans during a divorce involves a series of steps that require careful consideration of both federal regulations and the specific provisions of the railroad retirement system. Here's an overview of the process:
1. Identify Applicable Benefits
Railroad retirement benefits consist primarily of two tiers:
- Tier I Benefits: Similar to Social Security, these benefits are based on earnings and can be divided as part of the divorce settlement.
- Tier II Benefits: Specific to railroad employees, these benefits provide additional income and are also subject to division.
2. Determine Marital Property
Identify which portion of the retirement benefits is considered marital property. Generally, benefits accrued during the marriage are subject to division, while benefits earned before the marriage or after separation may be excluded.
3. Valuation of Benefits
- Assess the Value: Obtain documentation regarding the employee's earnings history, years of service, and estimates of both Tier I and Tier II benefits. This may require contacting the Railroad Retirement Board (RRB) for accurate figures.
- Present Value Calculation: Determine the present value of the retirement benefits to facilitate a fair division.
4. Prepare Legal Documents
- Qualified Domestic Relations Order (QDRO): Although railroad retirement benefits do not require a traditional QDRO like other retirement plans, a specific court order is needed to divide these benefits. This order should clearly outline how the benefits will be divided and may require precise language as specified by the RRB.
5. Negotiate the Settlement
- Mediation or Negotiation: Work with your attorney to negotiate the terms of the divorce settlement, including the division of retirement benefits. This may involve discussions about how benefits will be split, including any necessary adjustments for future payouts.
6. File the Court Order
- Submit the prepared court order to the appropriate court for approval. The order must comply with federal regulations governing railroad retirement benefits.
7. Implementation of the Order
- Once the court order is approved, submit it to the Railroad Retirement Board. They will process the order and implement the division of benefits according to the terms outlined in the court order.
8. Ongoing Management
- After the benefits are divided, it's essential to stay informed about any changes in the status of the retirement benefits, such as adjustments due to retirement age, disability, or changes in employment status.
Contact Thilges Bernhardt & Isaacs, Attorneys at Law, LLC
If you have any further questions or need a Railroad Plan divided, contact us at 913-491-4400 or fill out our online form. We serve clients in Johnson County, Kansas, Jackson County, Missouri, the Kansas City metropolitan area, and surrounding parts of Kansas and Missouri.