Question 989: Regarding the Tier 2 benefit -- the spouse of a rail worker gets a benefit in an amount that is 45% of the amount the railroad worker gets. Upon divorce, though, the now ex-spouse loses his or her benefit, but as part of a divorce order or settlement can get the RRB to pay him or her part of the railroad worker's Tier 2 benefit, thereby reducing the amount of the monthly payment to the rail worker. Seems to me that the rail worker is the loser in terms of money, not the ex-spouse. Is this correct?
Answer: Yes, but remember that as part of a divorce, most courts will divide the married couple's "marital" property into two equal shares. If the rail worker was married for most or all of his or her career, it is likely that the entire amount of the Tier 2 benefit is considered to be such property (rather than being the rail worker's "separate" property), so it is common for the ex-spouse to be awarded a share of it (e.g., 50%).
Also, in some states, "property" (including pensions) earned or acquired during a marriage is considered "community property," and is by definition considered to be owned jointly by the spouses, and hence would be divided equally in a divorce.
Basically, the 45% spouse benefit provided under the federal laws that define the Railroad Retirement program is limited by those laws to the spouse, who is no longer a spouse within the meaning of those laws once a divorce is finalized.