VIDEO: Divorce and Railroad Retirement: What You Need To Know

Transcript:

Welcome everyone to the Railroad Retirement Whiteboard. My name is John McNamara with Highball Advisors. And today, we're gonna talk about divorce and the railroad retirement kind of guide. Not a great subject, but, you know, something that's part of life for some people. So I though I'd just go through some of the ramifications and some of the impacts it might have on your retirement assets. So let's walk through it. Right, so if you're going through a divorce or you've been divorced, what you have is what a Qualified

Domestic Relations Order is. That basically means, okay, we're gonna split some retirement assets, and what is splitable, if that's a word, what can get, you know, moved between you and your spouse? So there's certain items that fall under what they call a QDRO, Qualified Domestic Relations Order.

Your Tier 2 can get split, that part of the annuity, right? You have Tier 1, Tier 2, so Tier 2 can get split. Your 401k is also under the Qualified Domestic Relations Order. And finally, if you have a Defined Pension, that can also be put in the QDRO. What cannot be is your Tier 1. That is not up to QDRO. That does not go into any divorce proceedings. All right, so you have

the, breaks down two ways, you got the left side, the QDRO's, that's where you're going to be transferring assets, and the non is the Tier 1. So let's talk about what happens with the Tier 1. So with Tier 1, the way they do it is they set up a divorce annuity for railroaders, right? So if you're a spouse of a railroader, you can qualify, if you meet certain requirements, for a divorce annuity. So let's just walk through those requirements for a divorce annuity. First, you gotta be married to a railroader for 10 consecutive years. You have to divorce a railroader. That's kind of straight

forward, but it's a requirement. And then not currently married. So if the divorcee remarries, then they can't qualify for a divorce annuity. Railroader must be 62. So you can't take the divorce annuity until you've reached the age of 62. And remember, that's early retirement, so you're gonna be taking

a reduced divorce annuity if you take annuity payments at 62. Or they also put in here 60 or 30, right? So you might say, well, oh, you know, my ex-spouse is 60 and 30, why can't I take it at 60? You can't because if the

railroader's still working at 60, you won't be able to take it until the railroader has hit the age of 62. Now, if the railroader retires at 60, then you're eligible for the divorce annuity, assuming you've reached the age of 62. Social security can't be greater than the railroader, right? So if you can get social security payments, let's say you've been working and your social security payout would actually be greater than the divorce annuity,

you would take social security and you don't get a divorce annuity. Right, no double dipping. All right, next one is not entitled to another railroader's annuity. So if you remarry to another railroader, and you're eligible for that annuity, you know, a spouse annuity, you can't also get a divorce annuity, right? Once again, the whole double dipping, that's a no-go. And then finally, you must be divorced two years if not in retirement. So if you're in retirement and you get divorced, you can get the divorce annuity right away. Otherwise, you're gonna have to wait two years after your divorce is finalized before you can be actually eligible for the divorce annuity. So that's kind of the quick layout of the divorce and railroad retirement, right? And the reason why this is important for the divorced railroaders

is this part here, the QDRO is having a significant impact on your railroad retirement assets. You know, what do you want to do in retirement? So it's very important to plan for that because, like I said, it's gonna make retirement a little more difficult when you're splitting up those assets. So very important to reach out to somebody, get some planning help on that, you know, talk to your advisor or your planner, or you can reach out to me and we can discuss some strategies to protect and grow some of that money that you'll need in retirement. Tier 1, obviously, you don't have to worry about.

So I hope you enjoyed this video. Please subscribe to my YouTube channel. I've been getting some great comments from some of you railroaders on the retirement videos I'm putting up. I really appreciate that. It makes it worthwhile. Like I said, subscribe to my YouTube channel. In the mean time, stay safe, stay on track, and take care. So long, bye.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved.