Prepared by Public Affairs 312-751-4777
Retirees, and those planning retirement, should be aware of the
railroad retirement laws governing benefit payments to annuitants who work after
The following questions and answers describe these railroad retirement work
restrictions and earnings limitations on post-retirement employment, and how
these rules can affect retirees engaging in self-employment.
1. What are the basic railroad retirement
work restrictions and earnings limitations that apply to post-retirement work?
Neither a regular railroad retirement annuity (whether based on age and service
or on disability) nor a supplemental annuity is payable for any month in which a
retired employee, regardless of age, works for an employer covered under the
Railroad Retirement Act, including labor organizations. This is true even if
only one day's service is performed during the month and includes local lodge
compensation totaling $25 or more for any calendar month. Also, work by a local
lodge or division secretary collecting insurance premiums, regardless of the
amount of salary, is railroad work which must be stopped.
A spouse annuity is not payable for any month in which the employee's annuity is
not payable, or for any month in which the spouse, regardless of age, works for
an employer covered under the Railroad Retirement Act. (A divorced spouse can
receive an annuity even if the employee has not retired, provided they have been
divorced for at least 2 years, the employee and divorced spouse are at least age
62, and the employee is fully insured under the Social Security Act using
combined railroad and social security earnings. A court-ordered partition
payment may be paid even if the employee is not entitled to an annuity provided
that the employee has 10 years of railroad service or 5 years after 1995 and
both the employee and former spouse are 62.) A survivor annuity is not payable
for any month the survivor works for an employer covered under the Railroad
Retirement Act, regardless of the survivor's age.
Also, like social security benefits, railroad retirement tier I benefits and
vested dual benefits paid to employees and spouses, and tier I, tier II and
vested dual benefits paid to survivors are subject to deductions if an
annuitant's earnings exceed certain exempt amounts.
These earnings deductions do not apply to those who have attained full social
security retirement age. Full retirement age for employees and spouses ranges
from age 65 for those born before 1938 to age 67 for those born in 1960 or
later. Full retirement age for survivor annuitants ranges from age 65 for those
born before 1940 to age 67 for those born in 1962 or later. Deductions for all
annuitants, however, remain in effect for the months before the month of full
retirement age during the calendar year of attainment. (The attainment of full
retirement age does not mean an annuitant can return to work for an employer
covered under the Railroad Retirement Act. As explained above, no annuity is
payable for any month in which the annuitant works for a railroad employer,
regardless of the annuitant's age).
2. What are the current exempt earnings
amounts for those annuitants subject to earnings limitations?
For those under full retirement age throughout 2011, the exempt earnings amount
is $14,160. For beneficiaries attaining full retirement age in 2011, the exempt
earnings amount is $37,680 for the months before the month full retirement age
For those under full retirement age throughout the year, the earnings deduction
is $1 in benefits for every $2 of earnings over the exempt amount. For those
attaining full retirement age in 2011, the deduction is $1 for every $3 of
earnings over the exempt amount in the months before the month full retirement
age is attained.
Earnings received for services rendered, plus any net earnings from
self-employment, are considered when assessing deductions for earnings.
Interest, dividends, certain rental income or income from stocks, bonds, or
other investments are not generally considered earnings for this purpose.
Additional deductions are assessed for retired employees and spouses who work
for their last pre-retirement nonrailroad employer and special restrictions
apply to disability annuitants.
3. What are the additional deductions
applied to the annuities of retired employees and spouses working for their last
pre-retirement nonrailroad employer?
Such employment will reduce tier II benefits and supplemental annuity payments,
which are not otherwise subject to earnings deductions, by $1 for each $2 of
earnings received subject to a maximum reduction of 50 percent. The deductions
in the tier II benefits and supplemental annuities of individuals who work for
pre-retirement nonrailroad employers apply even if earnings do not exceed the
tier I exempt earnings limits. Also, while tier I and vested dual benefit
earnings deductions stop when an annuitant attains full retirement age, these
tier II and supplemental annuity deductions continue to apply after the
attainment of full retirement age. Work that begins on the same day as the
annuity beginning date is not last pre-retirement nonrailroad employment.
4. Can a retired employee's earnings also
reduce a spouse's benefit?
A spouse benefit is subject to reductions not only for the spouse's earnings,
but also for the earnings of the employee, regardless of whether the earnings
are from service for the last pre-retirement nonrailroad employer or other
5. What are the special earnings
restrictions applied to disabled employee annuitants?
A disability annuity is not payable for any month in 2011 in which the disabled
employee annuitant earns more than $780 in any employment or net
self-employment, exclusive of disability-related work expenses. If a disabled
employee annuitant's earnings in a year (after deduction of disability-related
work expenses) exceed the annual limit, the annuity is not payable for the
number of months derived by dividing the amount by which those earnings exceed
the annual limit by the amount of the monthly limit. Any resulting fraction of a
month equal to or greater than one-half (0.5) is rounded up, increasing the
number of months in which the annuity is not payable by one. For example, a
disabled employee annuitant earns $12,800 in 2011, which is $3,050 over the 2011
annual limit of $9,750. Dividing $3,050 by $780 yields 3.91. As .91 is more than
one-half, the annuitant would lose 4 months of benefits.
These disability work restrictions cease upon a disabled employee annuitant's
attainment of full retirement age. This transition is effective no earlier than
full retirement age even if the annuitant had 30 years of service. Earnings
deductions continue to apply to those working for their last pre-retirement
If a disabled employee annuitant works before full retirement age, this may also
raise a question about the possibility of that individual's recovery from
disability, regardless of the amount of earnings. Consequently, any earnings
must be reported promptly to avoid overpayments, which are recoverable by the
RRB and may also include significant penalties.
6. Do the special earnings restrictions
listed in question 5 apply to disabled widow(er) and disabled child annuitants?
The earnings restrictions listed in question 5 do not apply to disabled
widow(er)s under age 60 or to
disabled children. However, the annuity of an unmarried disabled widow(er)
technically becomes an age annuity when the widow(er) attains age 60. Therefore,
regular annual earnings test restrictions apply beginning with the month the
widow(er) attains age 60 and ending with the month before the month the widow(er)
attains full retirement age.
All earnings in the year age 60 is attained are considered in determining excess
earnings for that year. However, work deductions may apply only beginning with
the month the widow(er) attains age 60.
Also, if a disabled widow(er) works before full retirement age, this may also
raise a question about the possibility of that individual's recovery from
disability, regardless of the amount of earnings. Therefore, any earnings must
be reported promptly to avoid overpayments, which are recoverable by the RRB and
may also include significant penalties.
7. After becoming entitled to a railroad
retirement annuity, a retired employee is thinking of becoming a self-employed
contractor or consultant, and might be providing services for a railroad or last
pre-retirement nonrailroad employer. How would this affect his or her railroad
It depends on whether or not the Railroad Retirement Board (RRB) considers the
employee to be truly engaging in self-employed contracting or consulting, or
whether the RRB considers him or her to be functioning as an employee, and if
so, who the RRB considers to be the actual employer for railroad retirement
If a retiree is considered to be functioning as a self-employed contractor or
consultant, his or her annuity is subject to tier I and vested dual benefit
earnings deductions for net self-employment earnings.
However, if a retiree is considered to be functioning as an employee of a
railroad or railroad labor organization, rather than as a self-employed
contractor or consultant, the retiree's annuity would be subject to suspension.
If the retiree is considered the employee of a nonrailroad employer, the
retiree's annuity would be subject to earnings deductions for nonrailroad wages,
and to additional deductions if he or she is considered to be working for a last
pre-retirement nonrailroad employer.
RRB determinations on contracting or consulting services take into account
multiple factors which could be evaluated differently depending on the
circumstances of the individual situation. Since no single rule covers every
case, anyone requiring a determination as to whether contractor or consultant
service is valid self-employment should contact the RRB for a determination well
in advance of making a commitment so as to be sure of the effect on benefit
8. How can individuals get more information
about these railroad retirement work restrictions and earnings limitations?
Claimants with questions about railroad retirement work restrictions and
earnings limitations should contact an
RRB office by calling
1-877-772-5772. Claimants can also find the address of the RRB office serving
their area and get information about their claims and benefit payments by
calling this toll-free number. Most RRB offices are open to the public from 9:00
a.m. to 3:30 p.m., Monday through Friday, except on Federal holidays. Field
office locations can also be found by visiting www.rrb.gov.