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Quality Reporting Service Center

 

 

 
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Office Email
QRSC@rrb.gov
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(312) 751-4992

Chapter 08: Separation/Severance Payments and Dismissal Allowances

Chapter 08: Separation/Severance Payments and Dismissal Allowances

 

Separation/Severance and Dismissal Allowances are Creditable Compensation

Payments that result from the abolition of an employee's job may be known as separation, severance, termination, coordination, dismissal, continuation, or guarantee payments or allowances. By whatever name they are called, they constitute creditable and taxable compensation. The regulations of the Railroad Retirement Board (RRB) distinguish between separation or severance allowances and dismissal allowances. These two types of payments are creditable in different ways.

  • Read more about Chapter 08: Separation/Severance Payments and Dismissal Allowances

Chapter 07: Pay for Time Lost

Chapter 07: Pay for Time Lost

 

Pay for Time Lost Defined

 

  • Read more about Chapter 07: Pay for Time Lost

Chapter 05: Vacation Pay

Chapter 05: Vacation Pay

 

Chapter Overview

The instructions in this chapter are intended only to provide information on correct reporting of service and compensation in various vacation pay situations. Some examples may not be applicable to every employer.

Vacation Taken

Vacation compensation may be credited to the actual vacation period or may be credited when paid. It is assumed that only current employees with employment rights can actually take a vacation.

  • Read more about Chapter 05: Vacation Pay

Chapter 04: Selected Fringe Benefits

Chapter 04: Selected Fringe Benefits

 

Group Term Life Insurance

The cost of coverage of group term life insurance greater than $50,000 is considered compensation under the RRA to the extent that it is included in the gross income of an employee and subject to railroad retirement tax. The cost of group term life insurance with respect to periods within an employment relationship is treated the same as ordinary compensation creditable for both Tier I and Tier II purposes. See Internal Revenue Code (IRC) section 79 for detailed information.

  • Read more about Chapter 04: Selected Fringe Benefits

Chapter 03: Delegate Service and Other Exclusions to Creditable Compensation

Chapter 03: Delegate Service and Other Exclusions to Creditable Compensation

 

Payments Not Considered Creditable Compensation

The following payments made to an employee by an employer are not considered creditable compensation under the RRA and the RUIA, and therefore should NOT be reported to the RRB:

  • Read more about Chapter 03: Delegate Service and Other Exclusions to Creditable Compensation

Chapter 02: RUIA Compensation and Multiple Employers

Chapter 02: RUIA Compensation and Multiple Employers

 

Prorating RUIA Contributions Among Multiple Employers

  • Read more about Chapter 02: RUIA Compensation and Multiple Employers

Chapter 01: Regular Earnings

Chapter 01: Regular Earnings

 

Regular Earnings Definition

Regular earnings are payments made for services rendered as an employee. This includes payments to part-time and seasonal employees, as well as regular earning paid to employees who are not working due to illness, injury, or pregnancy. Any payment made through the regular payroll system is presumed to be regular earnings. Regular earnings are creditable as follows:

  • Read more about Chapter 01: Regular Earnings

Chapter 13: Selected Fringe Benefits

Chapter 13: Selected Fringe Benefits

 

Group Term Life Insurance

The cost of group term life insurance is considered compensation under the Railroad Retirement Act to the extent that it is included in the gross income of an employee and subject to Railroad Retirement tax. The cost of group term life insurance with respect to periods within an employment relationship is treated the same as ordinary compensation creditable for both Tier I and Tier II purposes.

Group Term Life Insurance Reported on an Earned Basis

  • Read more about Chapter 13: Selected Fringe Benefits

Chapter 12: Exclusions to Creditable Compensation

Chapter 12: Exclusions to Creditable Compensation

 

Payments That Are Not Considered Creditable Compensation

The following payments paid to an employee by an employer are not considered creditable compensation under the Railroad Retirement Act and the Railroad Unemployment Insurance Act:

  • Read more about Chapter 12: Exclusions to Creditable Compensation

Chapter 11: Compensation for Multiple Employers

Chapter 11: Compensation for Multiple Employers

 

Tier Compensation

Employers should report Tier I and Tier II compensation up to the annual maximums regardless whether the employee worked for another employer either concurrently or in a different period in that year. An employer must treat an employee as solely its employee for reporting purposes.

The total compensation reported by all employers for an individual may exceed the annual maximum creditable by law. In that situation, the Railroad Retirement Board automatically adjusts the account to reflect the annual maximum creditable compensation.

  • Read more about Chapter 11: Compensation for Multiple Employers

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