Neither a regular annuity, a supplemental annuity, nor a spouse 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. However, service for less than $25 a month to a local lodge will not prevent payment of the annuity for that month.
Retired employees and spouses who work for their last pre-retirement nonrailroad employer are subject to an earnings deduction. 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. These reductions continue after full retirement age. Work that begins on the same day as the annuity beginning date is not last pre-retirement nonrailroad employment.
Retired employees and spouses who have not yet attained full social security retirement age, which ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, may also be subject to additional earnings deductions for any earnings, in or outside the rail industry, that exceed certain exempt amounts. The tier I and vested dual benefits of these employee and spouse annuities are subject to deductions if earnings exceed the exempt amounts applicable to social security beneficiaries. Prior to the calendar year in which full social security retirement age is attained, the deduction is $1 in benefits for every $2 of annual earnings exceeding an exempt amount ($16,920 in 2017).
If the employee or spouse has a tier I reduction for social security benefits, the tier I benefit is not reduced for excess earnings.
In the first year in which an employee subject to these earnings deductions is both entitled to an annuity and has a non-work month, full tier I and vested dual benefits can be paid for those months in which the employee had low earnings or did not have substantial self-employment, no matter what total earnings for the year were. A non-work month is one in which the employee neither earns over 1/12 of the annual exempt amount nor has substantial self-employment. Non-work months can be claimed in only one calendar year, which need not necessarily be the first year of entitlement.
In the calendar year in which an individual attains full social security retirement age, deductions of $1 are made in tier I and vested dual benefits for every $3 earned in excess of an exempt amount ($44,880 in 2017), but only counting those earnings in the months prior to the month full retirement age is attained. These tier I and vested dual benefit deductions stop effective with 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 some stocks, bonds, or other investments are not generally considered earnings for this purpose.
Annuitants under full retirement age who work after retirement and expect that their earnings for a year will be more than the annual exempt amount must promptly notify the RRB and furnish an estimate of their expected earnings in order to prevent an overpayment and penalties. They should also notify the RRB if their original estimate changes significantly.
Retired employees and spouses who return to work for a railroad or for their last pre-retirement nonrailroad employer must notify the RRB, regardless of earnings or age.
A spouse annuity 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 post-retirement employment.
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 annuity is not payable for any month in which the divorced 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 former spouse are at least age 62, and the employee is fully insured under the Social Security Act using combined railroad and social security earnings.
Disability Work Restrictions
If an annuity is based on disability, there are certain work restrictions that can affect payment, depending on the amount of earnings. The annuity is not payable for any month in which the disabled employee annuitant works for an employer covered under the Railroad Retirement Act. The annuity is not payable for any month in 2017 in which the disabled employee annuitant earns more than $910 in any employment or net self-employment, exclusive of disability-related work expenses. Withheld payments will be restored if earnings for the year are less than $11,375 after deduction of disability-related work expenses. Failure to report such earnings could involve a significant penalty charge.
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 nonrailroad employer.
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 work activity must be reported promptly to avoid overpayments, which are recoverable by the RRB and may also include penalties.