Applying for
an Annuity
Applications for railroad retirement or survivor benefits are generally filed at
one of the Board's field offices, or with a traveling Board representative at a
customer outreach program service location or by telephone and mail. The Board
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 terminates
either before the annuity beginning date or before the end of the 3-month period. 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 can also get estimates of their future annuities over the
Internet. Employees can access this service at
Benefit Online Services
for directions on
establishing an RRB Internet Services account.
Persons applying for railroad retirement benefits will be automatically enrolled
in the U.S. Treasury’s Direct Deposit Program, which electronically transfers
Federal payments into individuals’ checking or savings accounts. However, Direct
Deposit waivers are available to individuals who state that Direct Deposit would
cause a hardship, and to individuals without bank accounts.
Applicants for railroad retirement and survivor benefits can check with a
Board field office as to when they can expect their first payment.
Customer service standards and progress reports are available in field offices
and online at www.rrb.gov.
To expedite filing, applicants should contact their local Board 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. They are sometimes asked to take a special medical examination
given by a doctor designated by the Board.
An annuity is effective as of the first full month throughout which the employee
and/or spouse is age 60, or age 62 in the case of reduced annuities. 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 Railroad Retirement Board. Even though the
Board processes payment, the Social Security Administration is responsible for
all adjudication.
For Survivors:
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 furnish
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.
Monitoring Retirement and Survivor Benefit
Payments
Under several monitoring programs now in effect, the Board 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.
Right of Appeal
Persons who believe that their claims have not been adjudicated correctly may
ask for reconsideration from the Board unit that denied the claim. If not
satisfied with that review, the applicant may appeal to the Board’s Bureau of
Hearings and Appeals.
Further appeals can be carried to the three-member Board itself, and beyond the
Board to Federal courts. The Board’s field office personnel will explain these
appeals procedures and the time limits on filing appeals to those seeking
reconsideration of their claims.
Garnishment/Property Settlements
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.
If Requirements for Benefits Are not Met
Retirement annuities are not payable by the Board unless the employee has 60
months of creditable service after 1995 or 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 60 months of creditable service after 1995 or 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 rail employers and employees is 7.65% in 2009. The tier II tax
on employees is 3.90%. The tier II tax rate on rail employers, rail labor
organizations and rail employee representatives is 12.10% in 2009. An employee
representative is a labor official of a noncovered labor organization who
represents employees covered under the Acts administered by the Railroad
Retirement Board.
Tier II taxes on both employers and employees are based on the ratio of certain
asset balances to the sum of benefits and administrative expenses (the average
account benefits ratio). Depending on the average account benefits ratio,
tier II taxes for employers range between 8.20% and 22.10% while the tier II tax
rate for employees is between 0% and 4.90%.
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.
(See Table 3 in IB-2 Facts for more
information.)
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 Railroad Retirement Board sickness insurance 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 1951-1974
exceeded a maximum annual amount creditable under the Railroad Retirement Act.
Eligible employees will receive their refunds from the Board 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, approximating railroad retirement
tier II payroll taxes deducted from separation or severance payments, may be
paid upon retirement to employees meeting minimum service requirements, or their
survivors, to the extent the separation or severance payments did not yield
additional railroad retirement service or earnings credits. The lump-sum
provision applies to separation and severance payments made after 1984.
Federal Income Tax on Railroad Retirement
Benefits
The tier I portion of a railroad retirement annuity that is actually equivalent
to a social security benefit is treated as a social security benefit for Federal
income tax purposes. Depending on the amount of other income received in the
taxable year, a portion of these benefit payments may be subject to Federal
income tax.
Tier I benefits exceeding social security benefits, such as retirement benefits
payable between ages 60 and 62, and many occupational disability annuities, plus
the
tier II portions of railroad retirement annuities, vested dual benefits, and
supplemental annuities paid by the Board are treated like private pensions for Federal income tax purposes. The Railroad Retirement Act
specifically exempts benefits paid by the Board from State and local income tax.
The Railroad Retirement Board and the Social Security Administration issue 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.
Service and Earnings Records
The Railroad Retirement Board maintains a record of all covered railroad service
and creditable earnings after 1936. The information is recorded under the
employee's social security account number used by the employer to report service
and compensation to the Board.
Additional service months may be deemed in some cases where an employee does not
actually work in every month of the year. For additional service months to be
deemed, the employee's compensation for the year, up to the tier II maximum,
must exceed an amount equal to 1/12 of the tier II maximum multiplied by the
number of service months actually worked. The excess amount is then divided by
1/12 of the tier II maximum; the result, rounded up to a whole number, yields
the number of deemed service months. The employee must be in an employment
relation (on an approved leave of absence) with a covered railroad employer, or
be an employee representative, during a deemed service month. An employee may
never be credited with more than 12 service months in any calendar year.
Except for benefits paid for on-the-job injuries, sickness benefits are subject
to tier I railroad retirement taxes if paid within 6 months after the month in
which the employee last worked. They are credited as compensation for tier I
benefits, but are not credited as service months.
Military Service
Military service may be credited towards retirement benefits under certain
conditions. To be creditable as compensation under the Railroad Retirement Act,
service in the U.S. Armed Forces must be preceded by railroad service in the
same or preceding calendar year. With the exceptions noted, the employee must
also have entered active military service when the United States was at war or
in a state of national emergency or have served in the Armed Forces
involuntarily.
The war and national emergency periods that affect current entitlements are:
- September 8, 1939, to June 14, 1948.
- December 16, 1950, to September 14, 1978.
- August 2, 1990, to date as yet undetermined.
If military service began during a war or national emergency period, any active
duty service the employee was required to continue in beyond the end of the war
or national emergency is creditable, except that voluntary service extending
beyond September 14, 1978, is not creditable. Railroad workers who voluntarily
served in the Armed Forces between June 15, 1948, and
December 15, 1950, when there was no declared national state of emergency, can
be given railroad retirement credit for their military service if they performed
railroad service in the year they entered or the year before they entered
military service, and if they returned to rail service in the year their
military service ended or in the following year and had no intervening
nonrailroad employment.
Employees with military service are encouraged to contact the Board well in
advance of retirement regarding required proof of military service.
Form BA-6
Each year, employees in the industry receive a
Certificate of Service Months and
Compensation (Form BA-6) from the Board. This statement is important
because it provides both a current and cumulative record of an employee's
railroad service and compensation. It includes deemed service months, separation
allowances and severance payments as well as miscellaneous compensation, such as
taxable sickness payments. It also includes the cumulative amounts of railroad
retirement payroll taxes paid by the employee over and above social security
equivalent payroll taxes, and reflects creditable military service if the
service has previously been reported to the Board.
The BA-6 form should be
carefully reviewed to make sure that it is correct. Employees can view their
individual railroad retirement records of service months and compensation via
the Board’s Web site. This service, called “Service and Compensation History,”
can be accessed by visiting Benefit
Online Services. This electronic alternative does not replace Form
BA-6 but makes the same information available online.
If an employee disagrees with the information shown on the BA-6 form, he or she
should write to the Board as early as possible. The law limits to 4 years the
period during which corrections can be made. All letters concerning BA-6 forms
must show the employee's social security number and should be addressed to:
Protest Unit - CES
Railroad Retirement Board
844 North Rush Street
Chicago, Illinois 60611-2092
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