Refer to Form G-77, How Earnings Affect Payment of Survivor Annuities, for the annual earnings exempt amounts.
The term "annual earnings exempt amount" means the amount of money you can earn in a year without losing part of your annuity.
You may lose part of your annuity if you earn more than the annual earnings exempt amount in a year. An annuitant who has attained full retirement age (FRA) is not affected by this provision. See Introduction for a definition of full retirement age.
There is also a "monthly earnings exempt amount" which is 1/12 of the "annual earnings exempt amount." The "monthly earnings exempt amount" applies only in the first year in which:
- you are entitled to an annuity; and
- you have a "nonwork" month.
A "nonwork" month is one in which:
- you do not work; or
- you work but earn less than the "monthly earnings exempt amount"; or
- you work in self-employment but do not perform "substantial services."
Example: A widow's annuity began 8-1-2000. She earned $40,000 before her retirement in July. Because she was entitled to an annuity and had nonwork months in 2000 (August through December), 2000 is the widow's grace year. The monthly earnings test allows payment of her annuity August through December, even though her earnings of $40,000 would have caused deductions under the annual earnings test.
To determine whether you perform "substantial services" in self-employment, the RRB considers:
- the amount of time you devote to the business;
- the type of business;
- the type of service performed; and
- how all this compares to the work you did before you applied for your annuity.
When you figure your annual earnings, count all earnings from employment and self-employment for the entire year.
Earnings from employment include all wages, salaries, vacation pay, commissions, bonuses, fees, tips and retroactive wage increases. The cash value of any goods or services (such as meals or living quarters) furnished you for services performed are also counted as earnings from employment. Count all amounts before any payroll deductions for taxes, social security, insurance premiums and so on.
Earnings from self-employment mean your net income (profit after deduction of allowable business expenses) for the year.
Do not include as earnings any money which you receive for any reason other than work, such as:
- interest from savings;
- income from investments-stocks, bonds, real estate; gifts;
- inheritances; or
- pensions or other retirement payments.
In the calendar year you attain full retirement age, for every $3.00 you earn over the "annual earnings exempt amount," up to the month you attain full retirement age, $1.00 is deducted from your annuity. If you have not attained full retirement age, for every $2.00 you earn over the "annual earnings exempt amount" in a calendar year, $1.00 is deducted from your annuity.