Applying for an Annuity
Applications for railroad retirement or survivor benefits are generally filed at one of the RRB's field offices, with a traveling RRB representative at a customer outreach program service location, or by telephone and mail. The RRB accepts applications up to 3 months in advance of an annuity beginning date, which allows the agency to complete the processing of most new claims by a person's retirement date. An employee can be in compensated service while filing a disability application provided that the compensated service is not active service and terminates within 90 days from the date of filing. When an employee files a disability application while still in compensated service, it will be necessary for the employee to provide a specific ending date of the compensation. Compensated service includes not only compensation with respect to active service performed by an employee for an employer, but also includes pay for time lost, wage continuation payments, certain employee protection payments, and any other payment for which the employee will receive additional creditable service.
Retroactivity of a retirement annuity application is limited to one year for disability annuities and 6 months for full age annuities. There is generally no retroactivity for reduced age annuities.
Railroad employees with RRB online accounts can get estimates of their future annuities by visiting Benefit Online Services. Instructions for establishing an online account are available by clicking on the link for requesting a Password Request Code (PRC) in that same section.
Persons applying for railroad retirement benefits will be required to enroll in either the Direct Deposit program, which electronically transfers payments into an individual's checking or savings account, or the U.S. Department of the Treasury's Direct Express program, which electronically transfers Federal payments to an individual's Direct Express-issued Debit MasterCard®. Enrollment waivers are available only under very limited conditions.
Applicants for railroad retirement-survivor benefits can check with an RRB field office as to when they can expect their first payment. Customer service standards and progress reports are available in field offices and on the RRB's website.
To expedite filing, applicants should contact an RRB field office for a pre-retirement consultation. Certain documents are required when filing a railroad retirement annuity application, such as:
For employees and spouses:
- Proof of an employee's age.
- Proof of any military service.
- Proof of marriage if the spouse is eligible or will shortly become eligible for a spouse annuity. A divorced spouse must furnish proof of divorce from the employee.
- Proof of the spouse's or divorced spouse's age.
- Proof of a child's relationship and age, if the spouse is applying for an annuity based on caring for the employee's child.
- Notice of any social security benefit award or other social security claim determination.
- Information about any public service pension for which the applicant qualifies.
- Banking information for Direct Deposit of benefit payments.
The best proof of age is a certified copy of a civil or church document recorded at or close to the time of birth. The best proof of marriage is a certified copy of the public or church record or the original marriage certificate. A divorced spouse would be expected to furnish a certified copy of the final divorce decree. Proof of military service may be a certificate of discharge, or any official military record that shows the dates of service.
Employees are encouraged to file proofs of age, and especially of any military service, well in advance of retirement in order to expedite the annuity application process and avoid delays resulting from inadequate proofs.
Applicants for disability annuities are required to submit supporting medical information and should have as much medical documentation and information available as possible at the time of filing. They are sometimes asked to take a special medical examination given by a doctor designated by the RRB.
An annuity is effective as of the first full month throughout which the employee and/or spouse is age 60 with 30 years of service, or age 62 in the case of reduced annuities with less than 30 years of service. An annuity is effective the first day of the month full retirement age is attained in the case of unreduced annuities with less than 30 years of service.
Any social security benefits due the retired employee or family member which begin after 1974 are paid through the Railroad Retirement Board. Even though the RRB processes payment, the Social Security Administration is responsible for all adjudication.
For survivors:
A widow(er) must furnish proof of age, proof of marriage, and proof of the employee's death. A surviving divorced spouse must furnish proof of divorce from the employee. If applying for a disability annuity, the widow(er) must also provide supporting medical evidence. A parent must furnish proof of relationship to the employee and proof of support from the employee.
If children are eligible for benefits, proof of the relationship and age of each child is needed. If a child is over age 18 and disabled, supporting medical evidence is required. Eighteen-year-old students must provide proof of full-time elementary or high school attendance. A stepchild of the employee must furnish proof of dependency on the employee.
Retroactivity of a survivor annuity application is 1 year for disabled widow(er)s and 6 months for full retirement age widow(er)s, mothers (fathers), children, and parents. Retroactivity for widow(er)s ages 60-61 is 6 months if it does not increase the age reduction (this does not apply to surviving divorced spouses or remarried widow(er)s). Otherwise, there is generally no retroactivity for reduced age widow(er)s' annuities. Lump-Sum death benefit applications must be filed within 2 years after the death of the employee. There is no time limit on filing for a residual payment.
Garnishment/Property Settlements
Garnishment
Certain percentages of an employee, spouse or survivor annuity may be subject to legal process (i.e., garnishment) to enforce an obligation for child support and/or alimony payments.
Property settlements
Employee tier II benefits, vested dual benefits, and supplemental annuities are subject to court-ordered property settlements in proceedings related to divorce, annulment, or legal separation. Tier I benefits are not subject to property settlements.
Representative Payees
Railroad retirement or health insurance benefit payments can be made to a representative payee for a beneficiary if it would best serve the interests of the beneficiary. Payments made in this way are generally for a child, or an adult incapable of using the benefits in his or her own interest. The representative payee must use the benefits for the beneficiary's best interest. The benefits are generally used to provide for basic needs. The representative payee must report events which could affect the payment of the benefits and be able to account for the benefits.
If Requirements for Benefits are not Met
Retirement annuities are not payable by the RRB unless the employee has at least 5 years (60 months) of creditable service after 1995 or 10 years (120 months) of service at any time. Service includes any creditable military service.
Survivor annuities are not payable unless the employee had a current connection with the railroad industry and either 5 years (60 months) of creditable service after 1995 or 10 years (120 months) of service at any time.
In either of the above circumstances, if the requirements are not met, the employee's railroad retirement credits are transferred to the Social Security Administration and treated as social security credits. Benefits paid by that agency would accordingly take into account both railroad and social security covered earnings.
The Railroad Retirement Act does not allow a former railroad employee to withdraw his or her retirement taxes. Like social security taxes, railroad retirement taxes are not refundable unless retirement tax withholding has exceeded annual maximums
Duration of Benefits
For practical purposes, the average duration of monthly benefits to retired employees is measured by the life expectancies of the beneficiaries at the time their benefits begin, which take into account their age, sex, and other factors. A non-disabled male employee retiring today at age 60 may expect to receive his annuity for 22.4 years, on the average, while a female age annuitant retiring at age 60 has a life expectancy of 25.6 years.
Table 6.-- Duration of Benefits
| Retired male employee |
| 60 |
22.4 |
| 65 |
18.2 |
| 70 |
14.3 |
| Retired female employee |
| 60 |
25.6 |
| 65 |
21.1 |
| 70 |
17.0 |
| Disabled annuitant1 |
| 60 |
17.7 |
| Spouse1 |
|
| 60 |
25.5 |
| 65 |
21.2 |
| 70 |
17.2 |
| Aged widow(er)1 |
| 60 |
23.2 |
| 65 |
19.0 |
| 70 |
15.4 |
| |
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1 For both sexes combined.
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Railroad Retirement Taxes
By law, railroad retirement tier I payroll taxes are coordinated with social security taxes and increase automatically when social security taxes rise. Employees and employers pay tier I taxes which are the same as social security taxes. In addition, both employees and employers pay tier II taxes to finance railroad retirement benefit payments over and above social security levels. (A table of tax rates for every year since 1937 is available online.)
The tier I tax on employees and employers is 7.65 percent in 2017. The tier II tax on employees is 4.90 percent, while the tier II tax rate on rail employers, rail labor organizations, and rail employee representatives is 13.10 percent in 2017. An employee representative is a labor official of a non-covered labor organization who represents employees covered under the Acts administered by the Railroad Retirement Board.
Railroad retirement taxes apply to earnings on an annual basis. The amounts of earnings subject to these taxes are determined annually on the basis of national wage levels.
Table 7-- 2017 Regular Railroad Retirement Taxes
| Tier I |
| Employees & Employers |
7.65% * |
$127,200 |
| Tier II |
| Employees |
4.90% |
$94,500 |
| Employers |
13.10% |
$94,500 |
| |
Annual regular taxes
on employees earning $127,200 |
| |
Tier I |
Tier II |
Total |
| Employees |
$9,730.80 |
$4,630.50 |
$14,361.30 |
| Employers |
$9,730.80 |
$12,379.50 |
$22,110.30 |
| |
| *The tier I tax rate is divided into 6.20 percent for railroad retirement and 1.45 percent for Medicare hospital insurance. The 2017 maximum earnings base for railroad retirement is $127,200, and the Medicare hospital insurance tax is applied to all earnings. Consequently, employee and employer contributions continue to be made at the 1.45 percent rate, even after the employee has earned $127,200. |
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| An additional 0.9 percent in hospital insurance taxes (2.35 percent in total) applies to an individual's income exceeding $200,000, or $250,000 for a married couple filing a joint tax return. While employers will begin withholding the additional Medicare tax as soon as an individual's wages exceed the $200,000 threshold, the final amount owed or refunded will be calculated as part of the individual's Federal income tax return. |
Dual Tax Payments
Railroad employees who also worked for a social security-covered employer in the same year may, under certain circumstances, receive a tax credit equivalent to any excess social security taxes withheld.
Employees who worked for two or more railroads in a year, or who had tier I taxes withheld from their RRB sickness benefits in addition to their railroad earnings, may be eligible for a tax credit of any excess tier I or tier II railroad retirement taxes withheld. Employees who had tier I taxes withheld from their supplemental sickness benefits may also be eligible for a tax credit of any excess tier I tax. Such tax credits may be claimed on an employee's Federal income tax return.
Employees who worked for two or more railroads, or had both railroad retirement and social security taxes withheld from their earnings, should see Internal Revenue Service publication 505, Tax Withholding and Estimated Tax, for information on how to figure any excess railroad retirement or social security tax withheld.
Dual Railroad Retirement-Social Security Taxes Paid, 1951-74
An employee with 10 or more years of railroad service who is not entitled to a vested dual benefit payment may be entitled to a refund of excess social security taxes if his or her combined taxable earnings from the railroad retirement and social security systems in any year in the period 1951-74 exceeded a maximum annual amount creditable under the Railroad Retirement Act. Eligible employees will receive their refunds from the RRB at retirement without applying for them. In the event an employee should die before receiving the refund, payment will be made to the employee's survivors.
Separation or Severance Allowances
A separation (or severance) allowance is compensation paid to an employee who relinquishes job rights to obtain the payment. This compensation is credited under the Railroad Retirement and Unemployment Insurance Acts to either the month last worked or, if later, the month in which the employee relinquishes his or her employment relationship. It is important to note that no additional service months can be credited after the month rights are relinquished.
Frequently, separation allowances are made in a single payment to an employee. If this election is made, consideration should be given to the individual's income tax obligations for that year because the lump-sum payment will be added to any other wages paid to the employee in that year.
Occasionally, employees will elect to have their separation allowances paid to them in monthly or periodic payments. If this option is selected, the individual needs to be aware that these payments, like lump-sum separation allowances, will be subject to tier I, tier II, and Medicare tax rates up to the annual maximum earnings bases in effect when the compensation is paid--even though no additional service months can be credited after the month rights are relinquished.
All compensation subject to tier I payroll taxes will be considered in the computation of a railroad retirement annuity, regardless of the type of separation allowance selected. To the extent that a separation allowance does not yield additional tier II railroad retirement service credits, a lump-sum payment equal to the individual's railroad retirement tier II payroll taxes deducted will be paid to employees meeting minimum service requirements at retirement or to their survivors. The lump-sum provision applies to separation and severance payments made after 1984.
Dismissal allowances differ from separation allowances in that dismissal allowances are monthly compensation allowances made to employees who retain job rights, unlike separation allowances where job rights are relinquished. Dismissal allowances are considered compensation and are creditable under the Railroad Retirement and Unemployment Insurance Acts to the month for which they are allocated.
Federal Income Tax and Railroad Retirement Benefits
Regular railroad retirement annuities consisting of tier I, tier II, and vested dual benefit components have been subject to United States Federal income tax since 1984. Supplemental annuities have been subject to Federal income tax since 1966.
Because railroad retirement annuities are not taxable by States, according to the Railroad Retirement Act, the Railroad Retirement Board will not withhold State income tax.
Annuitants are taxed under either U.S. citizen rules or nonresident alien rules. Most nonresident aliens receiving annuities from the RRB are citizens of Canada.
In most cases, part of a railroad retirement annuity is treated like a social security benefit for income tax purposes, while other parts of the annuity are treated like private pensions for tax purposes. Most annuitants are sent two tax statements from the Railroad Retirement Board each January, even though they receive only a single annuity payment each month.
The part of a railroad retirement annuity equivalent to a social security benefit based on comparable earnings is treated for Federal income tax purposes the same way as a social security benefit. The amount of these benefits that may be subject to Federal income tax, if any, depends on the annuitant's income. (To determine if any amount of the social security equivalent benefit is taxable, annuitants should refer to IRS publication 915, Social Security and Equivalent Railroad Retirement Benefits.) If part of the benefit is taxable, how much is taxable depends on the total amount of an annuitant's benefit payments and other income. Usually, the higher that total amount, the greater the taxable part of an annuitant's benefit.
Generally, up to 50 percent of an annuitant's social security equivalent benefit will be taxable. However, up to 85 percent of these benefits can be taxable if either of the following situations applies.
- The total of one-half of an annuitant's social security equivalent benefit payments plus all his or her other income is more than $34,000 ($44,000 if a beneficiary is married filing jointly).
- An annuitant is married filing separately and lived with his or her spouse at any time during the year.
An annuitant can choose to have Federal income taxes withheld from the social security equivalent benefit portion of his or her tier I amount by filing IRS Form W-4V, Voluntary Withholding Request, at any RRB office. IRS Form W-4V is available from Internal Revenue Service offices. The RRB does not withhold taxes from this portion of an annuity unless IRS Form W-4V is filed.
Railroad retirement annuity payments exceeding social security equivalent payments, including any vested dual benefits and supplemental annuities, are all treated like private pensions for Federal income tax purposes. In some cases, primarily those in which early retirement benefits are payable to retired employees and spouses between ages 60 and 62, some occupational disability benefits, and other categories of unique railroad retirement entitlements, the entire annuity may be treated like a private pension. This is because social security benefits based on age and service are not payable before age 62, social security disability benefit entitlement requires total disability, and the Social Security Administration does not pay some categories of beneficiaries paid by the Railroad Retirement Board.
Annuitants who wish to have Federal income taxes withheld from the portions of their annuity over and above social security equivalent benefits must complete a tax withholding election on Form IRS W-4P, Withholding Certificate For Railroad Retirement Payments, and send it to the RRB.
An annuitant is not required to file Form IRS W-4P. If that form is not filed, the RRB will withhold taxes only if the combined portions of an annuity payment over and above social security equivalent benefits equal or exceed an annual threshold amount. In that case, the RRB withholds taxes as if the annuitants were married and claiming three allowances.
Additional information on the tax treatment of railroad retirement benefits can be found in IRS Publication 525, Taxable and Nontaxable Income, Publication 575, Pension and Annuity Income, and Publication 939, General Rule for Pensions and Annuities.
For More Information
The Railroad Retirement Board's toll-free telephone service provides customers with easy access to the agency's field office representatives. In addition, through automated menus available 24 hours a day, beneficiaries can find the address for the RRB field office serving their area and listen to special announcements about the agency's benefit programs. They can also request a replacement Medicare card, a letter showing their current monthly benefit rate, a replacement tax statement for the most recently completed tax year, or a statement of creditable railroad service and compensation. Information on unemployment-sickness claims is also available.
Many of these same features are available through Benefit Online Services. In addition, information about benefit requirements, customer service standards, and other topics of interest is available on our website where publications can be viewed and downloaded.
Monitoring Retirement and Survivor Benefit Payments
Under several monitoring programs now in effect, the RRB maintains contact with retirement and survivor beneficiaries in order to ensure the reporting of events which would require suspension or termination of monthly benefits. The records of beneficiaries are also checked with the Social Security Administration because annuities may be affected by nonrailroad earnings and because entitlement to social security benefits affects the amount of all annuities.
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The RRB maintains contact with beneficiaries.
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Beneficiary records are checked with the Social Security Administration.
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Representative payees must complete a questionnaire regarding the beneficiary.
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Disability beneficiaries are obligated to report all events which may affect entitlement.
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The RRB conducts State wage checks for disability cases.
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Representative payees
Each person who is paid on behalf of another periodically receives a questionnaire. The purpose of the questionnaire is to determine whether the beneficiary is still living, how much of the benefits were used for support of the beneficiary, and how any savings were invested.
Disability annuitants
Disability annuitants receive a notice annually reminding them of their obligation to report all events which may affect their continuing entitlement to a disability annuity. They must notify the RRB if they perform any work (including self-employment). They must also notify the RRB if their doctor tells them their condition has improved and they are able to work.
If a disability annuitant had substantial earnings, his or her physical condition is reviewed in order to determine whether or not there was a recovery from the disability. Notices are sent annually until the annuitant reaches his or her full retirement age.
| The Right to Appeal |
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A railroad worker, spouse, or survivor whose application for a benefit under the Railroad Retirement Act is denied, or one who is dissatisfied with the decision, has the right of appeal; that is, he or she may ask for a reconsideration of the decision. The notification letter sent to the applicant at the time of the original award or denial of the claim informs him or her of the right to appeal.
An individual has 60 days, from the date of the initial notice of a decision on his or her claim, to file a written statement requesting reconsideration from the RRB unit that denied the claim. This step is mandatory before a decision may be appealed to the RRB's Bureau of Hearings and Appeals. In cases involving overpayments, requests for waiver of recovery of the overpayment must be filed within 60 days of the date of the overpayment notice. In such cases, recovery of the overpayment will be deferred and a personal conference may be held, if requested. A request for waiver received after 60 days will be considered but will not defer collection of the overpayment, and any amount of the overpayment recovered prior to the date on which the waiver request is filed will not be subject to waiver.
An individual has 60 days from the date of the reconsideration or waiver decision to file an appeal with the RRB's Bureau of Hearings and Appeals, a bureau independent of the units responsible for reconsideration decisions. The Bureau of Hearings and Appeals may, if necessary, further investigate the case and obtain reports through the RRB's field representatives, designated medical examiners, and others who may be in a position to furnish information pertinent to the appellant's claim. If the appeal involves questions of fact, the appellant has the right to request an oral hearing. If one is held, it may be conducted in the RRB office closest to the appellant's home. In some cases, video-conferencing or phone hearings are held.
If an appellant is not satisfied with the Bureau of Hearings and Appeals' decision, he or she may appeal to the three-member Board within 60 days from the date on which notice of the Bureau of Hearings and Appeals' decision is mailed. The three-member Board will base its decision on the evidence before the hearings officer and ordinarily will not accept additional evidence or conduct a hearing. An appellant who is not satisfied with the Board's final decision may apply for a review of the case by a U.S. Circuit Court of Appeals. The petition for review must be filed within one year after notice of the three-member Board's decision has been mailed to the appellant.
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