The residual lump-sum is the means by which railroad employees and their survivors are guaranteed to receive at least as much in benefits as the employee paid in railroad retirement taxes for the years 1937 through 1974. A residual lump-sum is not taxable for Federal income tax purposes.
The amount of the residual lump-sum equals the amount of the railroad retirement taxes paid by the employee prior to 1975 plus an allowance for interest.
The gross residual amount is reduced by: