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BenefitsLink > Q&A Columns >

Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

Difference Between Tier 1 and Tier 2

(Posted January 27, 2014)

Question 1104: What is the difference between Tier 1 and Tier 2? I'm a divorced ex-wife (married 24 years); my ex-husband is a railroad worker who has 31 years of service (age 58-1/2). Our divorce decree specifies 50% of his retirement benefits come to me, provided I do not remarry, which I have not done.

Answer: Most Railroad retirement Annuities have two components: Tier 1 and Tier 2.

Tier 1 basically is a Social Security-type benefit that is based on earnings, whether for an employer covered by Railroad Retirement or an employer covered by Social Security. It is reduced by any Social Security benefits actually received. It cannot be divided by a divorce decree.

Tier 2 is more like a private pension; it is based only on earnings from the rail industry. It is not reduced for Social Security or Public pensions. It can be divided in a property settlement pursuant to a divorce.


Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.


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