Railroad employees and employers pay employment taxes under the Railroad Retirement Tax Act (RRTA) (26 U.S.C. §§ 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.