Policy and Systems

Definition Of An Annuity Unpaid At Death

An annuity unpaid at death is any annuity payments which were due a railroad retirement annuitant and, for any reason, were not paid before the annuitant died. This includes any check which was returned to the RRB because the annuitant died before cashing it. An annuity unpaid at death is taxable for Federal income tax purposes. For further information concerning the taxability of an annuity unpaid at death, refer to the booklet TB-85 Information About the Taxation of Railroad Annuities.

There are two types of unpaid annuities.

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Annuities Unpaid At Death

If it appears you may be entitled to an annuity unpaid at death, please read this part of the booklet thoroughly. It will provide information which you will need to understand annuities unpaid at death.

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Person Eligible For Monthly Benefits May Receive A Residual Lump-Sum Instead of Monthly Benefits

If there are no survivor benefits currently being paid by either the RRB or the Social Security Administration and the only benefits which will become payable in the future are benefits for a widow(er) or parent, the widow(er) or parent, if under age 60, can waive the right to ever receive monthly benefits based on the employee's railroad work in order to allow the residual lump-sum to be paid.

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People Eligible To Receive The Residual Lump-Sum

A residual lump-sum is paid according to the following priorities:

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Definition Of A Residual Lump-Sum

The residual lump-sum is the means by which railroad employees and their survivors are guaranteed to receive at least as much in benefits as the employee paid in railroad retirement taxes for the years 1937 through 1974. A residual lump-sum is not taxable for Federal income tax purposes.

The amount of the residual lump-sum equals the amount of the railroad retirement taxes paid by the employee prior to 1975 plus an allowance for interest.

The gross residual amount is reduced by:

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When A Lump-Sum Death Payment is Not Payable

The "1937 Act" or "1981 Amendment" lump-sum death payment cannot be paid if there is any survivor of the employee who is eligible for a railroad retirement annuity in the month the employee died.

In addition, a lump-sum death payment can only be paid if an application is filed by the second anniversary of the employee's death. If no application for the lump-sum death payment or a monthly benefit is received by that date, the lump-sum death payment cannot be paid.

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People Eligible To Receive A 1981 Amendment Lump-Sum Death Payment

A "1981 Amendment" lump-sum death payment is payable only to the widow(er) who was living in the same household with the employee at the time of the employee's death.

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When The 1937 Act Lump-Sum Death Payment Can Be Paid Directly To The Funeral Home

There are two situations in which the lump-sum death payment can be paid to the funeral home:

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People Eligible to Receive A 1937 Act Lump-Sum Death Payment

If the employee was survived by a widow(er) who was living with the employee, the entire lump-sum death payment is paid to the widow(er).

If no widow(er) qualifies and all of the employee's funeral expenses have not been paid, the lump-sum death payment is paid to the funeral home. If the unpaid funeral home expenses are greater than the lump-sum death payment, the entire lump-sum death payment is paid to the funeral home.