Railroad Retirement Board
Reporting Events That Can Affect
Railroad Retirement Benefits
November 2007
Rights to benefits under the Railroad Retirement Act also
carry responsibilities for reporting events that may affect the payment of
these benefits to the employee or to members of the employee’s family. If these events are not reported, benefit
overpayments can occur that have to be repaid, sometimes with interest and
penalties.
Events that can affect the payment of a railroad retirement
annuity and result in overpayments if not promptly reported include:
The following questions and answers describe how these
events affect railroad retirement benefits and what should be done to prevent
overpayments.
1. How can the award of
social security benefits result in a railroad retirement annuity overpayment?
The tier I portion of a railroad retirement annuity is based
on both the railroad retirement and social security credits acquired by an
employee and reflects what social security would pay if railroad work were
covered by social security. Tier I
benefits are, therefore, reduced by the amount of any actual social security
benefit paid on the basis of non-railroad employment, in order to prevent a
duplication of benefits based on the same earnings.
The tier I dual benefit reduction also applies to the
annuity of an employee qualified for social security benefits on the earnings
record of another person, such as a spouse.
And, the tier I portion of a spouse or survivor annuity is reduced for
any social security entitlement, even if the social security benefit is based
on the spouse’s or survivor’s own earnings.
These reductions follow principles of social security law which, in
effect, limit payment to the higher of any two or more benefits payable to an
individual at one time.
Since 1975, if a railroad retirement annuitant is also
awarded a social security benefit, the Social Security Administration
determines the amount due, but a combined monthly dual benefit payment should,
in most cases, be issued by the Railroad Retirement Board (RRB) after the
railroad retirement annuity has been reduced for the social security benefit.
A person should notify the RRB when he or she files for
social security benefits. If the Social
Security Administration begins paying benefits directly to a railroad
retirement annuitant without the RRB’s knowledge, an overpayment will
occur. This frequently happens when a
railroad employee’s spouse or widow(er) is awarded social security benefits not
based on the employee’s earnings.
Also, annuitants who are receiving their social security
benefits directly from the Social Security Administration must notify the RRB
if their social security benefits are subsequently increased for any reason
other than annual cost-of-living increases, such as a recomputation to reflect
post-retirement earnings. As such
recomputations are usually retroactive; they can result in substantial
overpayments.
While social security benefit information is provided to the
RRB as a result of routine information exchanges between the RRB and the Social
Security Administration, it will generally not be provided in time to avoid
such a benefit overpayment.
2. What other types of
benefit payments, besides social security benefits, require dual benefit
reductions in a railroad retirement annuity?
For employee’s first eligible for a railroad retirement
annuity and a Federal, State or local government pension after 1985, there may
be a reduction in tier I for receipt of a public pension based, in part or in
whole, on employment not covered by social security or railroad retirement
after 1956. This also applies to certain
other payments not covered by social security, such as payments from a
non-profit organization or from a foreign government or a foreign
employer. However, it does not include
military service pensions, payments by the Department of Veterans Affairs, or
certain benefits payable by a foreign government as a result of a totalization
agreement between that government and the
The tier I portion of a spouse or widow(er)’s annuity may
also be reduced for receipt of any Federal, State or local pension separately
payable to the spouse or widow(er) based on her or his own earnings. The reduction generally does not apply if the
employment on which the public pension is based was covered under the Social
Security Act throughout the last 60 months of public employment. (This 60-month requirement is being phased in
over a 5-year period ending
If an employee is receiving a disability annuity, tier I
benefits for the employee and spouse may, under certain circumstances, be
reduced for receipt of workers’ compensation or public disability benefits.
If annuitants become entitled to any of the above payments,
they should promptly notify the RRB. If
there is any question as to whether a payment requires a reduction in an
annuity, an RRB field office should be contacted.
3. Can earnings cause
railroad retirement overpayments?
Unreported post-retirement work and earnings in non-railroad
employment are a major cause of overpayments in railroad retirement
annuities. Like social security
benefits, railroad retirement tier I benefits and vested dual benefits paid to
employees and spouses, plus tier I, tier II, and vested dual benefits paid to
survivors, are subject to earnings deductions if post-retirement earnings
exceed certain exempt amounts, which increase annually.
These earnings deductions do not apply to those who have
attained full social security retirement age.
Full retirement age for employees and spouses ranges from age 65 for
those born before 1938 to age 67 for those born in 1960 or later. Full retirement age for survivor annuitants
ranges from age 65 for those born before 1940 to age 67 for those born in 1962
or later.
For those under full retirement age throughout 2007, the
exempt earnings amount is $12,960. For
those under full retirement age throughout 2008, the exempt earnings amount
will be $13,560. For beneficiaries
attaining full retirement age in 2007, the exempt earnings amount is $34,440
for the months before the month full retirement age is attained. For beneficiaries attaining full retirement
age in 2008, the exempt earnings amount will be $36,120 for the months before
the month full retirement age is attained.
For those under full retirement age throughout a calendar
year, the earnings deduction is $1 in benefits for every $2 of earnings over
the exempt amount. For those attaining
full retirement age during a calendar year, the deduction is $1 for every $3 of
earnings over the exempt amount in the months before the month full retirement
age is attained.
Annuitants who work after retirement and expect that their
earnings for a year will be more than the annual exempt amount must promptly
notify the nearest RRB field office and furnish an estimate of their expected
earnings. This way their annuities can
be adjusted to take the excess earnings into consideration and prevent an
overpayment. Annuitants whose original
estimate changes significantly during the year, either upwards or downwards,
should also notify the RRB.
Retired employees and spouses, regardless of age, who work
for their last pre-retirement non-railroad employer are also subject to an
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. Retired employees and spouses should
therefore promptly notify the RRB if they return to employment for their last
pre-retirement non-railroad employer, or if the amount of their earnings from
such employment changes.
A spouse benefit is subject to reductions 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 any other post-retirement employment. (Effective
4. How do post-retirement
earnings affect disability annuities?
Special restrictions limiting earnings to $700 per month in
2007 and $730 per month in 2008, exclusive of disability-related work expenses,
apply to disabled railroad retirement employee annuitants.
In addition, any work performed by a disabled annuitant may
be considered an indication of an individual’s recovery from disability,
regardless of the amount of earnings.
Therefore, any earnings by a disability annuitant must be reported
promptly to avoid potential overpayments.
These disability work restrictions apply until the disabled
employee annuitant attains full retirement age.
This transition is effective no earlier than full retirement age even if
the annuitant had 30 years of service.
Also, a disabled employee annuitant who works for his or her last pre-retirement
non-railroad employer would be subject to the additional earnings deduction
that applies in these cases.
5. What effect does railroad
work have on an annuity?
No railroad retirement annuity is payable for any month in
which an employee, spouse or survivor annuitant performs compensated service
for a railroad or railroad union. This
includes local lodge compensation totaling $25 or more for any calendar month,
and work by a local lodge or division secretary collecting insurance premiums,
regardless of the amount of salary.
6. What should be done when a
railroad retirement annuitant dies?
The RRB should be notified immediately upon the death of any
retirement or survivor annuitant.
Payment of a railroad retirement annuity stops upon an annuitant’s death
and the annuity is not payable for any day in the month of death. This is true regardless of how late in the
month death occurs and there is no provision for prorating such a payment. Any payments received after the annuitant’s
death must be returned. The sooner the
RRB is notified, the less chance there is of payments continuing and an
overpayment accruing. The RRB would also
determine whether any survivor benefits due are payable by the RRB or the
Social Security Administration.
7. What are some other events
that can affect payments to auxiliary beneficiaries, such as spouses and
widow(er)s?
A spouse or divorced spouse must immediately notify the RRB
if the railroad employee upon whose service the annuity is based dies. A spouse must notify the RRB if her or his
marriage ends in divorce or annulment and a widow(er) or divorced spouse must
notify the RRB if she or he remarries.
Also, benefits paid to spouses, widow(er)s and surviving
divorced spouses that are based on the beneficiary caring for an unmarried
child of the employee are normally terminated by the RRB when the child attains
age 18 (16 for a surviving divorced spouse) or if a disabled child over age 18
(16 for a surviving divorced spouse) recovers from the disability. Therefore, the RRB must be notified if the
child leaves the beneficiary’s care or marries.
Benefits are also payable to an unmarried child age 18 in
full-time attendance at an elementary or secondary school or in approved home
schooling until the student attains age 19 or the end of the school term in
progress when the student attains age 19..
(In most cases where a student attains age 19 during the school term,
benefits are limited to the two months following the month age 19 is
attained.) These benefits will be
terminated earlier if the student marries, graduates, or ceases full-time
attendance. Therefore, the RRB must be
notified promptly to prevent an overpayment.
8. Can an annuitant contest a
decision that he or she has been overpaid?
Annuitants who believe a decision regarding a benefit
overpayment is incorrect may ask for reconsideration and/or waiver of the
overpayment. If not satisfied with the
initial review, the annuitant may appeal to the RRB’s Bureau of Hearings and
Appeals. Further appeals can be carried
to the three-member Board itself, and beyond the Board to Federal courts.
Annuitants are told about these appeal rights any time a
decision is made regarding a benefit overpayment.
9. How can an annuitant find
out if an event might affect his or her railroad retirement benefit payments?
Annuitants should contact the nearest field office of the
RRB for information. In any situation,
the best rule is “If in doubt, report.”
Annuitants can find the address and phone number of the RRB
office serving their area by calling the automated toll-free RRB Help Line at
1-800-808-0772. They can also get this
information from the agency’s Web site at www.rrb.gov. Most RRB offices are open to the public from
Public Affairs 312-751-4777
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