Service Month Defined A service
month is any calendar month, or any part of a calendar month, that an employee
receives compensation for services performed for a railroad employer; or a
period of lost time for which an employee receives compensation; or a period of
time credited to an employee for military service. Service also includes deemed
service months except for the purposes of qualifying for normal unemployment or
sickness benefits under the RUIA.
Year of Service Defined
An individual’s entitlement to benefits and the amount of such benefits are
determined, in part, on the individual’s years of service. A year of service is
twelve calendar months, consecutive or otherwise, in each of which an employee
has rendered service, actual or constructive, to one or more employers for
compensation, or has received pay for time lost. Fractions of years are taken at
their actual value.
Service Months Reported by Employers
Under the Railroad Retirement Act (RRA), there are two methods for crediting
service months to an employee record: the service is reported to the RRB by the
employer or the service is deemed by the RRB. A service month is reported for a
calendar month in which an employee actively or constructively rendered
compensated service or received pay for time lost for an identifiable period of
absence from active service. Constructively performing service means that the
employee is not actively working, but is being paid under a plan whose
construction or legal interpretation yields the same result as actively
performing work. A paid vacation period is the primary example of constructive
service.
View presentation on Vacation and Service Months
Work Requirement for Service Month
There is no minimum time worked or compensation amount required, for a month
of service. A service month should be reported for every month in which service
is rendered for compensation regardless of the amount of service or the amount
of compensation.
Service Month and Earnings Maximum
A service month should be reported for every month in which service was
performed regardless of when the maximum creditable compensation bases are
attained. If an employee works in all twelve months of the year but reaches the
Tier I creditable earnings base in October, the employer should credit the
employee with twelve months of service, not ten. If applicable, twelve months of
RUIA compensation would also be credited.
Deemed Service Months
The RRB will credit deemed service months directly to an employee's record.
Service months are deemed when an employee does not have all twelve months
reported in the year, but has sufficient Tier II compensation and has an
employment relationship in months not reported.To determine the maximum number
of deemed months for an employee for a year, 1) multiply the number of reported
service months by 1/12 the annual Tier II maximum compensation for the year; and
2) subtract this product from the reported Tier II compensation. If the result
is zero or negative, no deemed months are possible. If the result is a positive
amount,3) divide by 1/12 the Tier II maximum compensation; and 4) round up to a
whole number.This is the maximum or potential number of deemed service months.
The actual number of deemed months depend on whether the employee has an
employment relation in the months not worked.
Military Service
A period of military service, which meets specific conditions, may also be
credited as service months for railroad retirement purposes. Creditable military
service, however, is outside the scope of an employer’s reporting
responsibilities.
Employment Relation and Service Months
Both reported and deemed service may only be credited for a month in which an
employment relation exists with a railroad employer. In other words, service can
only be reported for a month in which an individual was an employee. When a
person becomes a former employee, for whatever reason, the employment relation
ends and service cannot be credited after that month.
Additional Information
See Chapter 2 of this Part for information about how an employee's employment
relationship effects crediting of service months. See Part IV Chapter 1 for
information on the options for reporting creditable compensation, whether on an
earned or paid basis, and how this relates to reporting service months.See
Part IV Chapter 4 for a discussion on
service months and vacation pay in lieu of vacation taken.
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