Applying for an Annuity

Applications for railroad retirement or survivor benefits are generally filed at one of the RRB’s field offices, or with a traveling RRB representative at a customer outreach program service location or by telephone and mail. The agency 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.

Railroad employees can also get estimates of their future annuities over the Internet. Employees can access this service by visiting www.rrb.gov and clicking on Benefit Online Services for directions on establishing an RRB Internet Services account.

Persons applying for railroad retirement benefits will be automatically enrolled in the U.S. Treasury’s Direct Deposit Program, which electronically transfers Federal payments into an individual’s checking or savings account. Beginning May 2011, applicants without bank accounts will be enrolled in Treasury’s Direct Express program, which electronically transfers payments to an individual’s Direct Express-issued debit card. Enrollment waivers are available only under very limited conditions.

Applicants for railroad retirement and 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 online at www.rrb.gov.

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. Information will be recorded and stored electronically and all proofs will be promptly returned.

Applicants for disability annuities are required to submit supporting medical information. 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, or age 62 in the case of reduced annuities. 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.

The retroactivity of a retirement annuity application is limited to 1 year for disability annuities and 6 months for full age annuities. There is generally no retroactivity for reduced age annuities.

Any social security benefits due the retired employee or family member which begin after 1974 are paid through the RRB. 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 step-child 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.

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.

Right of Appeal

Persons who believe that their claims have not been adjudicated correctly may ask for reconsideration from the RRB unit that denied the claim. If not satisfied with that review, the applicant may appeal to the RRB’s Bureau of Hearings and Appeals.

Further appeals can be carried to the three-member Board itself, and beyond the Board to Federal courts. The RRB’s field office personnel will explain these appeals procedures and the time limits on filing appeals to those seeking reconsideration of their claims.

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.

If Requirements for Benefits Are not Met

Retirement annuities are not payable by the RRB unless the employee has 60 months of creditable service after 1995 or 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 60 months of creditable service after 1995 or 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.

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.

The tier I tax on employees has been reduced to 5.65 percent in 2011. The employer rate is 7.65 percent in 2011. The tier II tax on employees is 3.90 percent. The tier II tax rate on rail employers, rail labor organizations and rail employee representatives is 12.10 percent in 2011. An employee representative is a labor official of a noncovered labor organization who represents employees covered under the Acts administered by the RRB.

Tier II taxes on both employers and employees are based on the ratio of certain asset balances to the sum of benefits and administrative expenses (the average account benefits ratio). Depending on the average account benefits ratio, tier II taxes for employers range between 8.20 percent and 22.10 percent, while the tier II tax rate for employees is between 0 and 4.90 percent.

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.

(See Table 3 in IB-2 Facts for more information.)

Dual Tax Payments

Since 1975, 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 insurance 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 1951-1974 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 Payments

A lump sum, approximating railroad retirement tier II payroll taxes deducted from separation or severance payments, may be paid upon retirement to employees meeting minimum service requirements, or their survivors, to the extent the separation or severance payments did not yield additional railroad retirement service or earnings credits. The lump-sum provision applies to separation and severance payments made after 1984.

Federal Income Tax on Railroad Retirement Benefits

The tier I portion of a railroad retirement annuity that is actually equivalent to a social security benefit is treated as a social security benefit for Federal income tax purposes. Depending on the amount of other income received in the taxable year, a portion of these benefit payments may be subject to Federal income tax.

Tier I benefits exceeding social security benefits, such as retirement benefits payable between ages 60 and 62, and many occupational disability annuities, plus the tier II portion of railroad retirement annuities, vested dual benefits, and supplemental annuities paid by the RRB are treated like private pensions for Federal income tax purposes. The Railroad Retirement Act specifically exempts benefits paid by the RRB from State and local income tax.

The RRB and the Social Security Administration issue tax information statements to annuitants each January. In the absence of a request not to withhold, taxes are withheld from U.S. citizens or residents whose railroad retirement benefits in excess of the social security equivalent level total more than certain annual threshold amounts. Any amounts withheld during the taxable year are reflected on the annual statements.

Service and Earnings Records

The RRB maintains a record of all covered railroad service and creditable earnings after 1936. The information is recorded under the employee’s social security account number used by the employer to report service and compensation to the RRB.

Additional service months may be deemed in some cases where an employee does not actually work in every month of the year. For additional service months to be deemed, the employee’s compensation for the year, up to the tier II maximum, must exceed an amount equal to 1/12 of the tier II maximum multiplied by the number of service months actually worked. The excess amount is then divided by 1/12 of the tier II maximum; the result, rounded up to a whole number, yields the number of deemed service months. The employee must be in an employment relation (on an approved leave of absence) with a covered railroad employer, or be an employee representative, during a deemed service month. An employee may never be credited with more than 12 service months in any calendar year.

Except for benefits paid for on-the-job injuries, sickness benefits are subject to tier I railroad retirement taxes if paid within 6 months after the month in which the employee last worked. They are credited as compensation for tier I benefits, but are not credited as service months.

Military Service

Military service may be credited towards retirement benefits under certain conditions. To be creditable as compensation under the Railroad Retirement Act, service in the U.S. Armed Forces must be preceded by railroad service in the same or preceding calendar year. With the exceptions noted, the employee must also have entered active military service when the United States was at war or in a state of national emergency or have served in the Armed Forces involuntarily.

The war and national emergency periods that affect current entitlements are:

• September 8, 1939, to June 14, 1948.
• December 16, 1950, to September 14, 1978.
• August 2, 1990, to date as yet undetermined. 

If military service began during a war or national emergency period, any active duty service the employee was required to continue in beyond the end of the war or national emergency is creditable, except that voluntary service extending beyond September 14, 1978, is not creditable. Railroad workers who voluntarily served in the Armed Forces between June 15, 1948, and December 15, 1950, when there was no declared national state of emergency, can be given railroad retirement credit for their military service if they performed railroad service in the year they entered or the year before they entered military service, and if they returned to rail service in the year their military service ended or in the following year and had no intervening nonrailroad employment.

Employees with military service are encouraged to contact the RRB well in advance of retirement regarding required proof of military service.

Form BA-6

Each year, employees receive a Certificate of Service Months and Compensation (Form BA-6) from the RRB. This statement provides a current and cumulative record of railroad service and compensation. It includes deemed service months, separation allowances and severance payments as well as miscellaneous compensation, such as taxable sickness payments. It also includes cumulative amounts of railroad retirement payroll taxes paid by the employee over and above social security equivalent payroll taxes and creditable military service if previously reported to the RRB.

The BA-6 form should be carefully reviewed for accuracy. Employees can view their individual railroad retirement records of service months and compensation via the Board’s website. This service, called “Service and Compensation History,” can be accessed by visiting www.rrb.gov and clicking on  Benefit Online Services.

If an employee disagrees with the information shown on the BA-6 form, he or she should write to the RRB as early as possible. The law limits to 4 years the period during which corrections can be made. All letters concerning BA-6 forms must show the employee’s social security number and should be addressed to: