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 RRB 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 with RRB online accounts can get estimates of their future annuities through the RRB's website. Employees can access this service by visiting Benefit Online Services. Instructions for establishing an online account are available by clicking on the link for requesting a Password Request Code (PRC) found in that same section.
Persons applying for railroad retirement benefits will be required to enroll in either the Direct Deposit Program, which electronically transfers payments into individuals' checking or savings accounts, or the U.S. Department of the Treasury's Direct Express program, which electronically transfers Federal payments to an individual's Direct Express-issued debit card. Enrollment waivers are available only under very limited conditions.
Applicants for railroad retirement or 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 on our website.
To expedite filing, applicants should contact an RRB 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 and should have as much medical documentation and information available as possible at the time of filing. 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 with 30 years of service, or age 62 in the case of reduced annuities with less than 30 years of service. 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.
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 stepchild of the employee must provide 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.
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.
Railroad retirement or health insurance benefit payments can be made to a representative payee for a beneficiary if it would best serve the interests of the beneficiary. Payments made in this way are generally for a child, or an adult incapable of using the benefits in his or her own interest. The representative payee must use the benefits for the beneficiary's best interest. The benefits are generally used to provide for basic needs. The representative payee must report events which could affect the payment of the benefits and be able to account for the benefits.
If Requirements for Benefits are not Met
Retirement annuities are not payable by the RRB unless the employee has 5 years (60 months) of creditable service after 1995 or 10 years (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 5 years (60 months) of creditable service after 1995 or 10 years (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 and employer is 7.65 percent in 2015. The tier II tax on employees is 4.90 percent, while the tier II tax rate on rail employers, rail labor organizations and rail employee representatives is 13.10 percent in 2015. An employee representative is a labor official of a non-covered labor organization who represents employees covered under the Acts administered by the RRB.
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.
Table 3. 2015 Regular Railroad Retirement Taxes
||Maximum annual taxable earnings
|Employees and Employers
Annual regular taxes on employees earning $118,500
|*The tier I tax rate is divided into 6.20 percent for railroad retirement and 1.45 percent for Medicare hospital insurance. The 2015 maximum earnings base for railroad retirement is $118,500, and the Medicare hospital insurance tax is applied to all earnings. Consequently, employee and employer contributions continue to be made at the 1.45 percent rate, even after the employee has earned $118,500.
|An additional 0.9 percent in hospital insurance taxes (2.35 percent in total) applies to an individual's income exceeding $200,000, or $250,000 for a married couple filing a joint tax return. While employers will begin withholding the additional Medicare tax as soon as an individual's wages exceed the $200,000 threshold, the final amount owed or refunded will be calculated as part of the individual's Federal income tax return.
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 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 1951-74 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 payment, equal to the individual's railroad retirement tier II payroll taxes deducted from separation or severance payments, will be paid upon retirement to employees meeting minimum service requirements, or their survivors, to the extent that the separation or severance payments did not yield additional tier II railroad retirement service credits. The lump-sum provision applies to separation and severance payments made after 1984.
Federal Income Tax and Railroad Retirement Benefits
The tier I portion of a railroad retirement annuity equivalent to a social security benefit based on comparable earnings is treated as a social security benefit for Federal income tax purposes. The amount of these benefits that may be subject to Federal income tax, if any, depends on the beneficiary's income.
Tier I benefits exceeding social security benefits, such as retirement benefits payable between ages 60 and 62, and some occupational disability annuities, plus the tier II portions 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 issues 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.
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.
Representative payees.--Each person who is paid on behalf of another periodically receives a questionnaire. The purpose of the questionnaire is to determine whether the beneficiary is still living, how much of the benefits were used for support of the beneficiary and how any savings were invested.
Disability annuitants.--Disability annuitants receive a notice annually reminding them of their obligation to report all events which may affect their continuing entitlement to a disability annuity. They must notify the RRB if they perform any work (including self-employment). They must also notify the RRB if their doctor tells them their condition has improved and they are able to work.
If a disability annuitant had substantial earnings, his or her physical condition is reviewed in order to determine whether or not there was a recovery from the disability. Notices are sent annually until the annuitant reaches full retirement age.