104 Funding of Railroad Retirement Annuities Railroad employees and employers pay employment taxes under the
Railroad Retirement Tax Act (RRTA) (26 U.S.C. ยงยง 3201-3241) to fund payment of
railroad retirement annuities. The taxes paid are credited to trust funds from
which annuities are paid. RRTA taxes are analogous to contributions under the
Federal Insurance Contributions Act (FICA). The Internal Revenue Service
collects RRTA taxes just as it collects FICA and other federal taxes. Like FICA
contributions, properly collected RRTA taxes are not refundable.
104.01 "Valuation" and Railroad Retirement Annuities
Railroad retirement
taxes are not credited to individual employee "accounts" that accrue value over
time as an independent monetary asset. Rather, an employee's monthly annuity
rate is computed solely on the basis of his or her length of service and
earnings in covered employment. Therefore, it is impossible to segregate or
establish a separate account for the share of the employee's future annuity
awarded as property to a spouse/former spouse. A court order that divides an
employee's "account" instead of his or her retirement annuity will
not be valid
under the RRA.
104.02 Status of Railroad Retirement Tax as Marital Asset The amount of
taxes paid by an individual employee under the RRTA is not a marital or
community property asset available for division by court order.
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