Policy and Systems

When Sickness Benefits are Taxable

Sickness benefits paid under the Railroad Unemployment Insurance Act, with the exception of sickness benefits paid for an on-duty injury, are considered income for Federal income tax purposes. Each year, the RRB sends railroad employees Form W-2, Wage and Tax Statement, showing the amount of sickness benefits paid during the preceding calendar year. The amount shown on Form W-2 is the amount of benefits payable before deduction of Tier I railroad retirement tax. The amount includes benefits payable but withheld to offset a debt to the RRB.

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Employer Rights

The Railroad Unemployment Insurance Act requires the RRB to notify your base year employer(s) each time you file a claim for benefits, and to give the employer(s) an opportunity to submit information relevant to your claim before the RRB makes an initial determination on the claim. The RRB must also notify your employer each time benefits are paid to you. Your employer may appeal the decision to pay benefits. The appeal does not prevent the timely payment of benefits. However, you may be required to repay benefits if the appeal is successful.

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Employee Rights

Reconsideration - If you do not agree with any decision denying you benefits or with an overpayment decision, you may request reconsideration. Your request must be in writing and should explain why you disagree. If you request reconsideration, your request must be received at an office of the RRB within 60 days of the date of the letter notifying you of the adverse decision. Be sure to sign your name and include your social security number on your request.

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Reconsideration and Waiver

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Definition Of A Lump-Sum Death Payment

A lump-sum death payment is meant to help defray the costs of the employee's burial expenses. It can only be paid to a widow(er) who was living with the employee when he or she died or to the person who paid all or part of the employee's burial expenses. The lump-sum death payment cannot be paid if anyone is eligible for monthly survivor benefits in the month of the employee's death. A lump-sum death payment is not taxable for Federal income tax purposes.

There are two different types of lump-sum death payments.

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What Happens If The Employee Does Not Meet The Requirements

If the employee does not meet the requirements described in the section, Requirements The Employee Must Have Met, the RRB cannot pay you a lump-sum death payment. However, the Social Security Administration (SSA) may be able to pay you if you are the widow(er) who was living in the same household as the employee. Your application will be transferred to that agency.

A lump-sum death payment can be paid by either the RRB or SSA but not by both, even though the employee may have received payments from both agencies.

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Requirements The Employee Must Have Met

The Railroad Retirement Board (RRB) can pay a lump-sum death payment only if the employee:

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Lump-Sum Death Payment

If it appears that you may be entitled to a lump-sum death payment, please read this part of the booklet thoroughly. It will provide information which will help you understand what a lump-sum death payment is and when one can be paid.

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Lump-Sum Death Payment, Residual Lump-Sum, Annuities Unpaid at Death

Introduction

Refer to this booklet if it appears you may be entitled to one or more of the following benefits:

Lump-Sum Death Payment
Residual Lump-Sum
Annuities Unpaid At Death
Railroad Tax Refund

The sections in the booklet explain:

The different types of benefits.
The requirements that must be met before each payment can be made.

The booklet also contains information about:

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Personal Injury Settlements

You may receive benefits for any kind of injury or illness whether it occurs on or off the job; but if you are paid a settlement or collect damages as a result of the injury or illness, the amount of your benefits must be refunded to the RRB. This is true regardless of a State's "no-fault" law. The RRB will normally notify the liable party, and the person or company making the settlement or paying the damages usually reimburses the RRB for the amount due. However, if the RRB is not reimbursed in full at the time of settlement, you may have to repay benefits to the RRB.

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