Railroad Pensions and Divorce

railroad pension divorceRecently, the Western District of the Missouri Court of Appeals had an opportunity to clarify to what extent a family court may consider the railroad pension benefits of a spouse as marital property subject to division.

In Wilborn v. Wilborn, husband began working for the railroad nine years prior to his marriage to wife.  He became vested in his retirement benefits after seven-and-a-half years of employment.  Consequently, all of his pension benefits accrued during marriage were vested and would normally be considered marital property subject to division.

However, federal law governs pensions of railroad under the Railroad Retirement Act of 1974.  Husband contended that section 231m of the Act excludes pension benefits from division by state court divorce proceedings.  The language and U.S. Supreme Court case on which husband relied predated important amendments to the Act that specifically allowed pension benefits to be considered marital property subject to division during a divorce.  The Act recognizes two categories of benefits – Tier I benefits, which resemble social security payments, and Tier II benefits, which function like traditional pension plans.  Under the amendments to the Act, Tier II benefits are subject to marital division.

In evaluating the claim of wife, the Western District upheld the trial court finding all $19,967 of the pension accumulated during the marriage as marital property subject to division.  In so doing, the Western District followed the trend of other courts considering this issue and the legislative movement that has classified federal pension benefits as subject to division in divorce.

Now wife will have to protect her interest in husband’s pension plan by securing a Qualified Domestic Relations Order (QDRO), acceptable by the administrator of the railroad pension and signed by the court, that will set aside her marital interest in the pension as her separate property that she can access when husband becomes eligible to claim benefits.

The Wilborn case demonstrates once again how very complicated the landscape is for pension benefits in divorce, and how important it is to have an attorney with experience in handling these types of benefits in order for both the pensioner and the former spouse to receive adequate protection and full entitlement to property under the law.

If you have questions about railroad retirement benefits and divorce, contact our St. Louis divorce attorneys – we can help.