The Railroad Retirement Board (RRB) defines back pay as a retroactive pay increase. Back pay is commonly seen when a new contract is negotiated between railroad employers and employees. The following questions and answers address some of the most common inquiries the RRB has received about back pay included in new railroad union contracts that went into effect in late-2022.
- 1) Who is responsible for reporting back pay to the RRB?
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Railroad employers are required to report any adjustments to compensation, including back pay.
- 2) How is the back pay credited?
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Employers have the option to report back pay on either a Paid or Earned basis. Compensation reported on a Paid basis is credited to the year it is paid; compensation reported on an Earned basis is credited to the payroll period in which it was earned. If an employer reports back pay using a Paid basis method of reporting, but an employee would prefer to have the compensation credited to the payroll period in which it was earned, employees can request that the employer instead report using an Earned basis method of reporting. Employees can make this request either directly with their employer, or they can make the request through the RRB by filling a Form G-70, Protest of Record of Service Months and Compensation. Requests to change the reporting method must be made within four years of when the compensation was reported. Employers are required to grant the request to change the reporting from a Paid to Earned basis.
- 3) Will annuity rates increase due to additional payroll taxes withheld from the back pay? If so, when should annuitants expect to see any applicable increases?
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Whether an annuity rate will increase depends on each employee’s specific situation. If the back pay would increase the amount of compensation reported for the year(s) it was reported, it could result in a retroactive increase to an employee’s annuity rate. The RRB adjusts annuities for newly reported compensation in June of each year.
- 4) If back pay is received after my annuity beginning date, will it result in the loss of railroad retirement benefits?
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No. In this instance, retired employees have not returned to compensated service with a railroad employer. Any back pay amounts reported after an employee’s annuity beginning date will be allocated back to the annuity beginning date.
- 5) Does back pay count as earnings against the annual earnings limit for annuitants?
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Yes. The back pay does count as earnings against the annual earnings limit for annuitants.
- 6) Is it possible to request a refund of the tier I and tier II taxes withheld from my back pay?
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Railroad employees can only request a refund if excess tier I or tier II taxes were withheld for a given year. There are currently no other provisions of the Railroad Retirement Tax Act that allow for a refund of taxes paid. Please contact the Internal Revenue Service for additional questions regarding tier taxes.
- 7) Does back pay need to be reported on unemployment or sickness claim forms?
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If the back pay is related to service prior to the period when an individual became unemployed or sick, it does not need to be reported on claim forms.
- 8) Can the RRB help if I did not receive back pay I thought I was entitled to?
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No. The RRB does not mediate pay disputes between employees and their railroad employers. Please contact your employer or union with any questions regarding back pay.