October, 2004 – Railroad Retirement
Press Releases
(Forward from Tom Dwyer)
The Railroad Retirement Board has issued two releases important to
railroad retirees come
Take note that those widow(er)s
whose annuities are being paid under the Railroad Retirement and Survivors
Improvement Act of 2001 are not receiving annual cost-of-living adjustments
until their annuity amount is exceeded by the amount that would have been paid
under prior law, counting all interim cost-of-living increases otherwise
payable. Some 33 percent of the
widow (er)s on the RRB rolls are being paid under the 2001 law. In other
words some 67 percent of retirees on the rolls will receive COLA increases on
Also take note of the second
release on earning limitations for those retirees who may still be working.
Railroad
Retirement Benefit Increases
(Press Release No. 1)
Most railroad retirement annuities, like social security benefits, are scheduled to increase in January 2005 on the basis of the rise in the Consumer Price Index (CPI) during the 12 months proceeding October 2004.
Cost-of-living increases are calculated in both the tier I and tier II benefits included in a railroad retirement annuity. Tier I benefits, like social security benefits, will increase by 2.7 percent, which is the percentage of the CPI rise. Tier II benefits will increase by 0.9 percent, which is 32.5 percent of the CPI rise. The vested dual benefit payments and supplemental annuities also paid by the Railroad Retirement Board are not adjusted for the CPI rise.
In January 2005, the average regular railroad retirement employee annuity will increase $35 a month to $1,692 and the average of combined benefits for an employee and spouse will increase $48 a month to $2,390. For those aged widow(er)s eligible for an increase, the average annuity will increase $21 a month to $884. However, widow(er)s whose annuities are being paid under the Railroad Retirement and Survivors' Improvement Act of 2001 are not receiving annual cost-of-living adjustments until their annuity amount is exceeded by the amount that would have been paid under prior law, counting all interim cost-of-living increases otherwise payable. Almost 33 percent of the widow(er)s on the Board's rolls are being paid under the 2001 law.
If a railroad retirement or survivor annuitant also receives a social security or other government benefit, such as a public service pension or another railroad retirement annuity, the increased tier I benefit is reduced by the increased government benefit. However, tier II cost-of-living increases are not reduced by increases in other government benefits. If a widow(er) whose annuity is being paid under the new law is also entitled to an increased government benefit, her or his annuity may decrease. However, the total amount of the combined railroad retirement widow(er)'s annuity and other government benefits will not be less than the total payable before the cost-of-living increase and before increased Medicare premium deductions.
For those beneficiaries covered by Medicare, the basic Part B premium generally deducted from monthly benefits increases from $66.60 to $78.20 in 2005.
In late December the Railroad Retirement Board will mail notices to all annuitants providing a breakdown of the annuity rates payable to them in January 2005.
Retiree
Earnings Limits to Rise
(Press Release No. 2)
Those railroad retirement annuitants subject to earnings restrictions can earn more in 2005 without having their benefits reduced, as a result of increases in earnings limits indexed to average national wage increases.
Like social security benefits, some railroad retirement benefit payments are subject to deductions if an annuitant's earnings exceed certain exempt amounts. These earnings restrictions apply to those who have not attained full social security retirement age, which ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later.
For those under full retirement age throughout 2005, the exempt earnings amount rises to $12,000 from $11,640 in 2004. For beneficiaries born in 1940 and attaining full retirement age in 2005 (age 65 and 6 months), the exempt earnings amount, for the months before the month full retirement age is attained, rises to $31,800 in 2005 from $31,080 in 2004.
For those under full retirement age, the earnings deduction is $1 in benefits for every $2 of earnings over the exempt amount. For those attaining full retirement age in 2005, the deduction is $1 for every $3 of earnings over the exempt amount in the months before the month full retirement age is attained.
When applicable, these earnings deductions are assessed on the tier I and vested dual benefit portions of railroad retirement employee and spouse annuities, and the tier I, tier II, and vested dual benefit portions of survivor benefits.
All earnings received for services rendered, plus any net earnings from self-employment, are considered when assessing deductions for earnings. Interest, dividends, certain rental income or income from stocks, bonds, or other investments are not considered earnings for this purpose.
Retired employees and spouses, regardless of age, who work for their last pre-retirement non-railroad employer are also subject to an additional earnings deduction, in their tier II and supplemental benefits, of $1 for every $2 in earnings up to a maximum reduction of 50 percent. This earnings restriction does not change from year to year and does not allow for an exempt amount.
A spouse benefit is subject to reduction not only for the spouse's earnings, but also for the earnings of the employee, regardless of whether the earnings are from service for the last pre-retirement non-railroad employer or other post-retirement employment.
Special work restrictions applicable to disability annuitants do not change in 2005.
Regardless of age and/or earnings, no railroad retirement annuity is payable for any month in which an annuitant (retired employee, spouse or survivor) works for a railroad employer or railroad union.
U.S. Railroad
Retirement Board
Office of Public Affairs
844 North Rush Street
Posted: