Introduction
Here is important information for individuals receiving
an employee or spouse annuity under the Railroad Retirement
Act about how work and earnings affect benefits.
A railroad retirement
annuity is not payable for any month in which you work for
a railroad or railroad labor organization. This rule
applies to all beneficiaries, including retired employees
and their spouses, regardless of age or amount of earnings.
You can work for a nonrailroad
employer and still receive retirement benefits from
the Railroad Retirement Board (RRB). However, your benefits
will be reduced if you earn over certain limits and are
under full retirement age (FRA). Once you attain FRA, there
are no Tier 1 and vested dual benefit deductions because
of earnings. However, if you work for your last pre-retirement
nonrailroad employer, your benefits may be reduced, regardless
of the amount of your earnings or your age.
What are the Year 2009
Earnings Limits?
Like social security benefits, railroad retirement Tier
I benefits and vested dual benefits paid to retired employees
and their spouses are reduced if you are under FRA, work,
and earn over a certain exempt amount. FRA extends from
age 65 for beneficiaries born before 1938, to age 67 for
those born in 1960 and later.
If you are under FRA in all of 2009, you can earn up to
$14,160 in 2009 with no reduction in your railroad retirement
benefits. If you earn more than that, $1 in benefits is
withheld for every $2 you earn over $14,160.
If you attain FRA in 2009, you can earn up to $37,680 in
the months before you reach FRA with no reduction in your
railroad retirement benefits. If you earn more than that
amount, $1 in benefits is withheld for every $3 you earn
over $37,680.
If you also receive monthly social security benefits, your
social security benefits are reduced if you earn more than
the exempt amount, but your Tier I railroad retirement benefits
are not reduced because of your earnings.
Summary of Earnings
Limits 2007 - 2009
A summary of the annual earnings exempt
amounts and the special one-year monthly exempt amounts is shown below.
Remember that these limits apply to earnings deductions in Tier I
benefits and vested dual benefits paid to retired employees and their
spouses. |
2009 |
$14,160 |
$1,180 |
$37,680 |
$3,140 |
2008 |
$13,560 |
$1,130 |
$36,120 |
$3,010 |
2007 |
$12,960 |
$1,080 |
$34,440 |
$2,870 |
An earnings
test applies in the calendar year in which a beneficiary
attains FRA, but only to the months prior to the month
the beneficiary reaches FRA. |
Special One-Year
Rule
A special rule applies to earnings for one year, usually
the first year of retirement, if you are under FRA. Under
this rule, you can receive a full annuity for any month
you are "retired" and your monthly earnings do
not exceed a certain limit, regardless of your annual earnings.
In 2009, a person under FRA is considered retired if monthly
earnings do not exceed $1,180. For example, John Smith retires
at age 62 on August 25, 2009. He made $15,000 through August.
He begins a part-time job in September. He earns $600 per
month. Although his earnings for the year exceed the year
2009 limit of $14,160, Mr. Smith will receive his full railroad
retirement annuity for September through December because
his earnings in those months are less than $1,180, the special
one-year monthly exempt amount. Beginning in 2010, only
the yearly limits will apply to Mr. Smith because he will
have already used his special one-year rule eligibility.
Work for Your
Last Pre-Retirement Nonrailroad Employer
If you are a retired railroad employee or the spouse of
a retired employee, part of your annuity is subject to earnings
deductions if you work for your last pre-retirement nonrailroad
employer. Your Tier II benefits and supplemental annuity,
if any, are reduced $1 for every $2 in earnings from your
last pre-retirement nonrailroad employer, subject to a maximum
reduction of 50 percent. The reduction applies regardless
of the amount of your earnings or your age.
A retired employee's work for a last pre-retirement
nonrailroad employer can also cause a reduction in the spouse's
Tier II benefits.
Here's an example of how the reduction works. Mr. Jones,
a retired railroad employee, has a monthly Tier II benefit
of $300, and no supplemental annuity. He earns $400 each
month from work for his last pre-retirement nonrailroad
employer. His monthly Tier II benefits are reduced to $150.
Although the reduction for his earnings is calculated to
be $200, the reduction is limited to 50 percent of his Tier
II benefits.
What Earnings Count?
If you work for someone else, your
gross wages count when we calculate your earnings deductions.
If you are self-employed, we count only your net earnings
from self-employment. We count your earnings from both railroad
and non-railroad employment to determine if you earned over
the annual exempt amount. We do not count non-work income
such as investment earnings, interest, pensions, gifts,
inheritances, and capital gains.
Reporting Your Earnings
In most cases, we calculate how
much to reduce your annuity because of your earnings based
on either the earnings estimate you gave us when you applied
for benefits, or on reports submitted by employers to the
Social Security Administration. You do not have to report
your earnings to us unless:
- You stop working;
- You start working and expect to earn more than the
annual exempt amount;
- Your employment is not covered under the Social Security
Act (i.e., FICA taxes are not deducted from your pay);
- You work for a railroad or railroad labor organization;
- You return to work for your last pre-retirement nonrailroad
employer; or
- We ask for a report of your earnings.
Contact the nearest RRB office at any time during the year
if you think we are either withholding too much or too little
from your benefits because of your earnings. Failure to
report as directed may result in the application of penalties.
Remember to count your gross earnings, including salaries,
wages, commissions, and bonuses before any deductions. Count
net earnings from self-employment.
Note: There are
special rules that apply to individuals who receive railroad
retirement disability benefits. They must report all work
to the RRB. In addition, a railroad retirement disability
annuity is not payable for any month in which the annuitant
earns $770 or more, after deducting disability related expenses.
Contact the nearest office of the RRB for additional information.
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