The Railroad Retirement Board (RRB) pension has two components: Tier I, which is the functional equivalent of Social Security and Tier II with, for some long-term employees, a small supplement to Tier II.
Tier I, just like Social Security, cannot be divided by court order. Only the Tier II and supplement are divisible.
In addition to the RRB Tiers I and II, some MTA workers will receive a benefit from the MTA Defined Benefit Pension Plan. Payments from the MTA pension will be offset, dollar for dollar, by payments from the RRB Tier II benefits to the extent the RRB Tier II benefits were earned through MTA employment. For example, if the MTA Defined Benefit Pension Plan estimate shows a monthly benefit of $1500, and the Tier II benefit is $500, the employee will only be entitled to $1,000/month from the MTA, since that is the difference between the Tier II benefit and the MTA benefit. Because of this offset, you should use the same formula for each plan.
RRB Tier II (and supplement, if applicable) will be paid for the former spouse’s lifetime unless the divorce decree specifies otherwise.
In contrast, the MTA Defined Benefit Plan will only make payments for the life of the employee, although the employee can be ordered to elect a survivor annuity for the former spouse at retirement. Note, however, that the survivor annuity will be based on the entire pension at retirement, prior to reduction for any amount assigned by QDRO. Possible survivor options are a 25% survivor annuity; 50% survivor annuity, 75% survivor annuity and 100% survivor annuity The guaranteed periods are a life annuity (based on the employee’s life) with a minimum period of 5 years or 10 years, meaning the employee will receive an annuity for his lifetime, but if he dies in fewer than 5 or 10 years, payments will be made to his named beneficiary/ ies for the remainder of the 5 or 10 year term. If the employee is remarried when he retires, his then-current spouse would have to waive survivor benefits before the employee can elect survivor benefits for a former spouse.
Here is wording to consider if dividing the pensions equally as of the date of divorce. In this example, husband is the railroad worker: It is your responsibility to make sure that the terms you eventually use in the separation agreement fit the circumstances and are appropriate for your client.
Railroad Retirement Board (RRB) Pension:
The Wife is assigned 50% of the Husband’s Railroad Retirement Board Tier II (and supplements if any) pension earned as of the date of divorce. ((Note: Because the assigned benefit is calculated using a valuation date prior to retirement, the Railroad Retirement Board will not calculate cost of living adjustments.) Payments will be made for the wife’s lifetime, and will not be affected by Husband’s life or death. If Wife dies first, future payments will be restored to Husband..
Metro North Defined Benefit Pension Plan
The Wife is assigned 50% of the Husband’s MTA Defined Benefit Pension Plan (MTA Pension) earned as of the date of divorce, with a proportionate share of cost of living adjustments.
The parties understand that payments from the MTA pension will commence when Husband’s payments commence, and unless survivor benefits are elected at retirement, payments will end on the first death. In any event, if Wife dies first, future monthly payments will revert to the Husband. [If survivor benefits are to be assigned, you must specify the form of benefit and how the cost will be allocated.]
It is your responsibility to make sure that the terms you eventually use in the separation agreement fit the circumstances and are appropriate for your client.
Updated June 2022