INFORMATIONAL CONFERENCE

HANDBOOK 2017

Presented by 

Office of the Labor Memb

U.S. Railroad Retirement Boa

A union officer's guide to

railroad retirement benefi
U.S. Railroad Retirement Board

Mission Statement

The Railroad Retirement Board’s mission is to administer retirement/

survivor and unemployment/sickness insurance benefit programs for 

railroad workers and their families under the Railroad Retirement Act and 

the Railroad Unemployment Insurance Act. These programs provide income protection during old age and in the event of disability, death or temporary unemployment and sickness. The Railroad Retirement Board also 

administers aspects of the Medicare program and has administrative responsibilities under the Social Security Act and the Internal Revenue Code.

In carrying out its mission, the Railroad Retirement Board will pay 

benefits to the right people, in the right amounts, in a timely manner, and 

will take appropriate action to safeguard our customers’ trust funds. The 

Railroad Retirement Board will treat every person who comes into contact 

with the agency with courtesy and concern, and respond to all inquiries 

promptly, accurately and clearly.

Cover photos courtesy of (from top left, counterclockwise): photographer Mike Danneman 

captured a machinist in action; The Metropolitan Transportation Authority of the State of 

New York (MTA) revealed progress made by weekend workers via their online photostream; 

photographer Ron Flanary snapped conductor Darrell Cody, now retired, on the job. 

••••
RAILROAD RETIREMENT 

AND UNEMPLOYMENT 

INSURANCE SYSTEMS

U.S. RAILROAD RETIREMENT BOARD

Office of the Labor Member

844 North Rush Street

Chicago, Illinois 60611-1275

www.rrb.gov

HANDBOOK
Welcome to our 2017 Informational Conference Program. 

You are an essential part of our efforts to 

help railroad workers and their families understand the many important benefits available to 

them under the Railroad Retirement and Railroad Unemployment Insurance Acts, and we 

greatly appreciate you being here today.

This year we mark the 60th anniversary of 

the RRB’s Informational Conference Program, 

which was started by the Office of the Labor 

Member back in 1957. Since then, it has provided a valuable platform for keeping union 

officers up-to-date on the benefits available 

under the railroad retirement system. Thousands of railroad labor representatives have 

attended these conferences over the years and 

have achieved a much better understanding of the 

provisions and financing of the railroad retirement 

and unemployment insurance systems, and of the administrative organization of 

the RRB. In turn, they have helped make our administration of these programs 

more effective by passing on to their fellow railroad employees the information 

they acquire at these conferences.

During this conference, some of our field managers will describe and discuss 

the benefits available under the agency’s retirement-survivor, unemploymentsickness, and Medicare programs. I encourage you to meet and get to know our 

representatives here today and those in the RRB offices in your local areas. They 

are experts on these programs and will be happy to help you with any railroad 

retirement questions or problems you may have.

Walter A. Barrows

Introduction
Today you will also receive various informational materials that describe the 

RRB’s programs in detail. Please take the time to read this material so that you will

be knowledgeable about the benefits available to railroad workers and their families. 

The RRB counts on you to help keep your fellow union members informed of these 

benefit provisions, so keep your Informational Kit handy as a source of reference 

when questions arise. Please know that you have an important role in ensuring that 

each and every railroad employee, retiree, and dependent receives the benefits to 

which he or she is entitled, and we are grateful for your invaluable assistance.

Again, thank you very much for your interest in the Informational Conference 

Program, and for taking the time to meet with us here today. 

Walter A. Barrows

Labor Member
1 Development of the Railroad Retirement System 1

The Railroad Retirement Acts of 1934 and 1935 2

The Railroad Retirement Act of 1937 

 and Later Amendments 3

The Railroad Retirement Act of 1974 8

1981 Amendments 10

The 1983 Railroad Retirement Solvency Act 13

Legislation Enacted 1985-2000 15

The Railroad Retirement and Survivors’ 

 Improvement Act of 2001 18

Court Decisions, Legislation Enacted 2006-2015 21

Employment, Payrolls, and Tax Collections 22

2 Provisions of the Railroad Retirement Act 23

Creditable Service and Earnings 26

Employee and Spouse Annuities 27

	 Survivor Benefits	 43

Retirement and Survivor Information 54 

Employee and Spouse Annuity Formula Components 68

Survivor Annuity Formula Components 78

3 Financing of the Railroad Retirement System 83

Payroll Taxes 84

Financial Interchange 86

Investments 87

Borrowing from General Revenues Related

 to the Financial Interchange 88

Appropriations from General Revenues 88

	 Taxation of Railroad Retirement Benefits	 91	

Financial Position of the Railroad Retirement System 91

Financial Report 93

Tax Tables 96

Contents
4 Health Insurance for the Aged and Disabled 101

Legislative Background 101

Eligibility 102

Part A and Part B Enrollment 103

	 Explanation of Hospital Insurance Benefits	 104

	 Explanation of Medical Insurance Benefits	 106

Medicare Plan Choices 109

Medicare Prescription Drug Coverage (Part D) 111

5 Development of the Railroad

Unemployment Insurance System 115

The Railroad Unemployment Insurance Act of 1938

 and Later Amendments 116

The Technical and Miscellaneous Revenue Act of 1988 120

The Railroad Unemployment Insurance 

 Amendments Act of 1996 123

	 Employment and Benefits	 124

6 Provisions of the Railroad Unemployment 

Insurance Act 125

Benefit Provisions	 125

	 Disqualifications	 132

Free Placement Service 133

Payments 133

	 Claiming Unemployment Benefits	 134

	 Claiming Sickness Benefits	 135

7 Financing Unemployment and Sickness Insurance 143

Contributions 143

Railroad Unemployment Insurance Account 145

Financial Report 147

8 Administration of the Railroad Retirement System 149

Administration 149

	 Keeping Beneficiaries Informed	 153

Program Integrity 154

Index 157

 

Contents
1

Development of the 

Railroad Retirement System

1

Private pension plans originated in the railroad industry in 1874 when the first 

formal industrial pension plan in North America was established. By 1927, over 

80 percent of all railroad employees in the United States worked for employers who 

had formal plans in operation, but only a small proportion of employees ever received 

benefits under these plans. The pension plans had a number of serious defects. They 

generally paid inadequate benefits and had limited provisions for disability retirement. 

Credits could not be transferred freely from employer to employer, and the employers 

could terminate the plans at will. With few exceptions, the plans were inadequately 

financed and could not withstand even temporary difficulties.

The Great Depression of the early 1930s led to movements for retirement plans 

on a national basis because few of the nation’s elderly were covered under any type of 

retirement plan. Railroad employees were particularly concerned because the private 

Why a separate railroad retirement system?

● Private pension plans originated in the railroad industry.

● By the 1930s, employment conditions had deteriorated.

● Many older workers in railroad industry.

● Railroad retirement system broadened existing programs 

under uniform national plan.
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railroad pension plans could not keep up with the demands made upon them by 

the general deterioration of employment conditions and by the great accumulation of older workers in the industry. While the social security system was in the 

planning stage, railroad workers sought a separate railroad retirement system 

which would continue and broaden the existing railroad programs under a uniform 

national plan. The proposed social security system was not scheduled to begin 

monthly benefit payments for several years and would not give credit for service 

performed prior to 1937, while conditions in the railroad industry called for immediate benefit payments based on prior service.

Legislation was enacted in 1934, 1935, and 1937 to establish a railroad retirement system separate from the social security program legislated in 1935. Such 

legislation, taking into account the particular circumstances of the rail industry, 

was not without precedent. Many laws pertaining to rail operations and safety had 

already been enacted since the Interstate Commerce Act of 1887. Since passage 

of the Railroad Retirement Acts of the 1930s, numerous other railroad laws have 

subsequently been enacted.

THE RAILROAD RETIREMENT ACTS 

OF 1934 AND 1935

The Railroad Retirement Act of 1934 set up the first retirement system for 

nongovernmental workers in this country to be administered by the Federal Government. However, the Act was declared unconstitutional by a Federal district 

court, and this decision was sustained by the Supreme Court. The Railroad Retirement and Carriers’ Taxing Acts of 1935 were enacted to avoid the constitutional 

difficulties encountered by the 1934 Act. However, these Acts were also challenged in the courts, and a Federal district court held that neither the employees 

nor their employers could be compelled to pay railroad retirement taxes. The 

court, however, did not prohibit the payment of benefits, and the Railroad Retirement Board (RRB) began awarding annuities in July 1936 under the provisions of 

the 1935 Act.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 3

While an appeal was pending, railroad management and labor, at the request 

of President Roosevelt, formed a joint committee to negotiate their differences. 

The result was a memorandum of agreement which led to the Railroad Retirement 

and Carriers’ Taxing Acts of 1937 establishing the railroad retirement system. The 

pensions of retired employees on the railroads’ private pension rolls were transferred to the RRB’s rolls with pension reductions restored. The benefit payments 

of almost 50,000 pensioners were taken over by the RRB in July 1937. There 

followed an immediate reduction in both the number of employed and unemployed older railroad workers. By the end of 1938, the number of workers age 65 

and over in active railroad service was less than one-half of the number two years 

earlier. Almost 100,000 employees had retired under the system by that date, 

80 percent of them under the nondisability provisions.

THE RAILROAD RETIREMENT ACT OF 1937 

AND LATER AMENDMENTS

The 1937 Act set up a staff retirement plan which provided annuities to aged 

retired employees based on their creditable railroad earnings and service. The 

amounts of retirement annuities awarded were directly related to the employee’s 

earnings and length of service, with a maximum of $120 a month. Creditable earnings were limited to a maximum of $300 a month, while no more than 30 years of 

service could be credited when service before 1937 was counted. Annuities could 

be paid at age 65 or later, regardless of length of service, or at ages 60-64 (on a 

reduced basis) after 30 years of service.

The conditions for paying annuities based on disability were severely restricted. The disability had to be total and permanent and 30 years of service were 

required for full annuities. Employees could receive disability annuities at ages 

60-64 after less than 30 years of service, but on a reduced basis. 

The Act made little provision for dependents of deceased employees and no 

provision for spouse annuities. A survivor could receive a lump sum equal to 
4 2017 INFORMATIONAL CONFERENCE HANDBOOK

4 percent of the employee’s creditable earnings after 1936, less any annuity 

payments already made. In addition, a retiring employee could elect to receive a 

reduced annuity in order to provide an annuity to his surviving spouse.

The system was financed by a schedule of taxes beginning with 2.75 percent 

each on employers and employees applicable to the first $300 of monthly compensation.

Amendments to the 1937 Act

Numerous amendments after 1937 increased benefits and added, to what began as a staff retirement system, social insurance features similar to those provided by the social security system.

The first significant sets of amendments were enacted in 1946 and 1951. By 

initiating coordination in certain areas with the social security system, they laid 

the foundation for the evolution of the system’s present structure. Amendments 

enacted in 1946 added survivor benefits to the railroad retirement system which 

were similar to those provided under social security coverage, but approximately 

25 percent higher.

These amendments also introduced the first step of coordination with the 

social security system by dividing jurisdiction over individual survivor benefits 

between the RRB and the Social Security Administration. Benefits to survivors 

were thereafter based on combined railroad retirement and social security earnings 

credits.

Provisions for annuities based on occupational disability—a staff retirement 

feature—were also established by the 1946 amendments. The provision for occupational disability annuities recognized that employees who were not totally 

disabled could be prevented from earning a living because they could not perform 

their regular railroad jobs. The 1946 amendments also reduced the service requirements for total disability annuities, making it possible for comparatively young 

disabled employees to receive benefits.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 5

In addition, the amounts of disability retirement annuities were increased 

through the elimination of the reduction for employees with less than 30 years 

of service and the extension of new minimum provisions of the law to annuities 

based on disability. In 1954, annuities were provided for disabled children of deceased employees. And in 1968, disabled widows ages 50-59 were added to those 

who could receive benefits.

In 1951 amendments added annuities for the spouses of retired railroad employees. This legislation completed the addition of social insurance features to the 

railroad retirement system and expanded the coordination of the railroad retirement and social security systems.

Provision was made for social security to assume jurisdiction of benefits for 

employees not having at least 10 years of railroad service, and a minimum guaranty was provided to ensure that railroad retirement benefits would be no less than 

the benefit, or additional benefit, the social security system would have paid on 

the basis of the railroad service involved. In addition, a financial interchange was 

established between the two systems to apportion the costs of benefits and taxes, 

related to railroad service, on an equitable basis.

In 1965 provision was made to coordinate the railroad retirement tax base and 

tax rate with those of the social security system. This provision and the existing 

provisions for the financial interchange served as an operating vehicle through 

which the Medicare program was easily extended in 1965 to railroad employees 

and members of their families, on the same basis as it was provided for social 

security beneficiaries. The addition of a strictly staff benefit for career employees 

was provided in 1966 in the form of supplemental railroad retirement annuities.

By 1970 amendments to the Act provided for regular annuities of more than 

double the amount provided under the original formula. The amounts of earnings 

creditable and taxable were $650 a month in 1970 compared with $300 originally. 

Tax rates had substantially increased in order to finance the new types of benefits, 

the increases in benefit amounts and other liberalizations in the program. The rate 

of regular railroad retirement taxes, still divided equally between employees and 
6 2017 INFORMATIONAL CONFERENCE HANDBOOK

employers in 1971, was 9.95 percent on each as compared with 3.5 percent in 

1946.

The annuities being paid in 1970 included a general benefit increase of 

15 percent provided in that year following a social security benefit increase of 

15 percent. In the following two years of an inflationary spiral in the national 

economy, social security and railroad retirement benefits were again substantially 

increased, by 10 percent in 1971 and 20 percent in 1972. However, these three increases were provided for railroad retirement annuities on a temporary basis only. 

The costs of making these three increases, aggregating 51.8 percent, permanent 

without adequate financing would have jeopardized the solvency of the system. 

Congress directed that a Commission on Railroad Retirement be formed to study 

the railroad retirement system and its financing for the purpose of recommending 

to Congress changes in the system that would ensure adequate benefit levels on an 

actuarially sound basis.

The preliminary recommendations of management and labor for revision of 

the railroad retirement system, recorded in a Memorandum of Understanding, 

were enacted by the Congress in 1973. The major provisions, which reflected 

components of an industry-wide wage settlement, effected a redistribution of 

railroad retirement taxes and earlier retirement as follows. Generally effective 

October 1, 1973, employee and employer tax rates under the Railroad Retirement 

Tax Act were revised so as to reduce the employee rate to the percentage rate 

paid by employees in social security-covered employment, with the employer 

absorbing the difference so that total tax income to the program was maintained at 

the level in effect before the change. Employee rates consequently were lowered 

from 10.60 percent of creditable earnings to 5.85 percent; employer rates correspondingly increased from 10.60 percent to 15.35 percent. Effective July 1, 1974, 

all employees at least 60 years of age and having 30 years or more of creditable 

railroad service could retire without their annuities being subject to reduction for 

retirement before age 65. Under previous law, only female employees were granted this advantage.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 7

Major changes in the law were recommended in the Commission’s 1972 

report as its basic solution to the 

serious problems of the system. Essentially, these involved a proposed restructuring of the railroad retirement system 

with two separate tiers of benefits, 

tier I being a social security-type benefit 

and tier II a supplemental staff benefit. 

In addition, the Commission recommended a phase-out of dual railroad 

retirement-social security benefits with 

some protection for the vested rights to 

such benefits already acquired by employees.

Under the 1937 Act, an individual 

engaging in covered employment under 

both the Railroad Retirement Act and 

the Social Security Act was entitled to 

benefits under both Acts, assuming he 

or she met at least the minimum requirements for benefit eligibility. By the 

early 1970s, approximately 40 percent 

of all beneficiaries on the RRB’s rolls 

were also receiving social security 

benefits. Because of certain duplications 

in their dual benefits, considered 

a windfall element, the total of their benefits from both systems averaged more 

than the annuities of railroad employees 

who worked in the rail industry exclusively, and who had paid proportionally 

higher retirement taxes for the purpose 

of receiving higher benefits. At the same 

time, dual benefits were a cost to the 

railroad retirement system because 

they reduced the system’s income from 

its financial interchange with the social 

security system. (By the mid-1970s, the 

costs to the railroad retirement system 

of dual benefits exceeded $450 million 

per year and would have been a major 

factor in bankrupting the railroad retirement system if allowed to continue. 

The cumulative total loss to the system 

by 1974 had been about $4 billion.) 

Upon the release of the Commission’s report, Congress ordered that 

representatives of employees and representatives of carriers negotiate mutual 

recommendations for a restructuring 

of the railroad retirement system which 

would put it on a sound financial basis, 

taking into account the report and recommendations of the Commission on 

Railroad Retirement.

Commission 

on Railroad 

Retirement

Report
8 2017 INFORMATIONAL CONFERENCE HANDBOOK

THE RAILROAD RETIREMENT ACT OF 1974

The Railroad Retirement Act of 1974, reflecting the basic principles of the 

Commission Report and incorporating the subsequent management-labor agreement, was enacted on October 16, 1974.

Two-tier Formulas 

The 1974 Act provided a first tier formula yielding amounts equivalent to 

social security benefits, taking into account both railroad retirement and nonrailroad social security credits. A second tier 

formula, based on railroad service exclusively, provides benefits comparable to 

those paid over and above social security benefits by other industrial pension 

systems. The total annuity yielded by the 

tier formulas continued traditional levels 

of railroad retirement benefits and reflected the three cost-of-living increases 

aggregating 51.8 percent, which had been 

provided between 1970 and 1972 on a 

temporary basis.

Dual Benefit Phase-out 

The 1974 Act eliminated duplications in dual railroad retirement-social 

security benefits for new hires and individuals not vested as of December 31, 

1974, under both programs. Dual benefits for vested employees were protected 

through provision for payment of an amount in their annuities referred to as a 

vested dual benefit. However, such vested dual benefit amounts were not allowed 

to increase because of any social security or railroad credits earned after 

December 31, 1974.

For career employees, vesting was defined as having 10 years of railroad service on December 31, 1974, and, in addition, having enough quarters of coverage 

1974 Act 

Features

● Two-tier benefit formula

● Phase-out of vested dual 

benefits

● Cost-of-living increases

● Benefit improvements
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 9

under the social security program to be entitled to a benefit at age 62 if no further 

social security credits were acquired after December 31, 1974.

Vesting for employees who had fully qualified for benefits under both systems 

but had left the industry prior to 1974 presented a difficult problem. The 1974 Act 

favored employees who had remained in the railroad industry more than those 

who left railroad employment. Accordingly, active or long-term employees in the 

railroad industry, in a sense, were placed in the same situation as employees who 

had already retired, while former employees were made subject to more stringent 

requirements. The resulting vesting provisions were subsequently tested in the 

courts and upheld by the U.S. Supreme Court in 1980.

Cost-of-living Increases

The 1972 amendments to the Social Security Act introduced provisions for 

cost-of-living adjustments in social security benefits on the basis of changes in the 

Consumer Price Index. Under the two-tier plan, the first tier railroad retirement 

benefit increases automatically the same way social security benefits increase. 

Four separate tier II cost-of-living adjustments were provided during the six-year 

period commencing January 1, 1975. (A fifth increase was provided in subsequent 

legislation.)

Benefit Improvements 

The 1974 Act also provided improvements in existing benefits. The initial 

agreement of labor and management had enabled employees to retire on or after 

July 1, 1974, on unreduced annuities if they met the eligibility requirements of 

attaining age 60 and completing 30 years of service. But an employee could not 

receive a supplemental annuity until age 65 nor could a spouse receive a spouse 

annuity until the employee reached age 65. The Act revised the eligibility requirements for these benefits so that they were coordinated directly with the employee 

annuity requirements. Under the 1937 Act, the vast majority of widows and other 

survivors received benefits based upon 110 percent of the comparable social 

security benefit, and the resulting amount was generally felt to be inadequate in 

relation to the level of other railroad benefits. The 1974 Act survivor formula increased the calculation basis to 130 percent from the former 110 percent.
10 2017 INFORMATIONAL CONFERENCE HANDBOOK

Financing 

It was anticipated that the changes in the benefit formulas, the reduction in 

dual benefits, higher investment earnings, plus provisions for additional funds 

from the Federal Government to pay the phase-out costs of dual benefits, together 

would place the railroad retirement system on a reasonably sound basis. However, 

the cost estimates made at that time did not anticipate the resurgence of substantial inflation in the latter part of the decade, which led to a recurrence of financial 

difficulties for the railroad retirement system.

With regard to financing the phase-out costs of dual benefits, the joint management-labor committee initially proposed that the cost of vested dual benefit 

payments be paid out of the social security trust funds, as this element was basically a social security benefit. However, Congress concluded that the cost should 

be borne by the General Treasury. It was thought that it would be unfair to impose 

this cost upon current and future employees who would not (except where vested rights are involved) be permitted to receive dual benefits upon retirement, or 

upon the railroads since the excess benefit arose out of nonrailroad employment 

performed by these individuals. Payment out of the General Treasury was supported by a precedent regarding military service and by the fact that the dual benefit 

problem had been brought about by prior congressional action repealing past dual 

benefit restrictions over the objections of the railroads.

1981 AMENDMENTS

By 1980, recurring inflation and recession combined with other factors placed 

financial stresses on the railroad retirement system which made it clear that further 

financial action was needed to maintain the system. Railroad retirement amendments were subsequently enacted on August 13, 1981, as part of an Omnibus 

Budget Reconciliation Act. The amendments were generally effective October 1, 

1981.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 11

Taxes

These amendments increased railroad retirement taxes on both rail employers 

and employees. While tier I taxes on employers and employees remained at the 

same rate as social security taxes, 6.65 percent in 1981, the 9.5 percent tier II tax 

paid by employers was increased to 11.75 percent and employees assumed a 

tier II tax of 2 percent. The amendments also gave the Railroad Retirement Board 

the authority to borrow from U.S. Treasury general funds on the basis of forthcoming financial interchange income if Railroad Retirement Account funds were 

insufficient to pay benefits during a month.

Benefit Provisions

Although the two-tier benefit structure provided by the 1974 Act was left intact, 

changes were made in the tier II formula and there were other changes in benefit 

provisions. The amendments revised the employee, spouse, and survivor formulas for annuity portions paid over and above social security levels. Generally, for 

career retirees whose annuities are awarded on or after October 1, 1981, the simplified formula yields awards that automatically keep pace with average wage increases in the last 60 months of service. The 1981 law continued tier II employee and 

spouse cost-of-living increases, while revising survivor cost-of-living increases to 

correspond with those provided employees and spouses. It also broadened the current connection requirement applicable to certain career employee benefits. While 

the amended law eliminated future supplemental annuity closing dates, it restricted 

future supplemental annuity eligibility to employees with some service prior to October 1981. (Under prior law, an employee who worked in railroad service after a 

specified closing date, based on his or her 65th birthday, would permanently forfeit 

entitlement to a supplemental annuity.) In addition, the amendments provided benefits for divorced spouses, surviving divorced spouses, and remarried 

widow(er)s which are like those provided under the Social Security Act.
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This legislation also required prorated adjustments in individual vested dual 

benefit payments, depending upon the amounts appropriated to the fund created 

for these payments, and the level of vested dual benefit payments was made contingent on the annual Federal budget and appropriations process. The amendments 

restricted the further award of vested dual benefit payments to vested employees 

with dual coverage on their own earnings and precluded further awards of vested 

dual benefit payments to spouses or widow(er)s. Furthermore, after 1981, no further cost-of-living adjustments are made to vested dual benefit payments.

Other Financing Provisions

The 1981 amendments mandated, in the event of certain adverse financial 

indicators, that railway management and labor, and the White House, make further 

financing recommendations to Congress. And the new law required the Railroad 

Retirement Board to reduce annuity levels during any fiscal year in which it appears there would be insufficient funds with which to make full benefit payments 

on a timely basis for every month of the year.

In the first half of 1981, when the amendments were developed, it was anticipated that the financing arrangements would provide the railroad retirement 

system with adequate funding throughout the 1980s. However, the continuing 

recession in the national economy depressed rail traffic levels to the extent that 

large-scale layoffs were underway by the first quarter of 1982. Average monthly 

employment in fiscal year 1982 dropped to 457,000 from the 512,000 average 

of the previous year, and it subsequently declined to 388,000 in the first quarter 

of 1983. The decline in employment limited payroll tax income accordingly. In addition, increased unemployment benefit payments resulting from the layoffs made 

such unprecedented demands on the Railroad Unemployment Insurance Account 

that it owed $500 million to the Railroad Retirement Account by the end of March 

1983.

The condition of the Railroad Retirement Account consequently deteriorated to the point that the RRB was required to prepare to reduce annuity levels on 

October 1, 1983, by an estimated 40 percent of tier II portions, in the absence of 

remedial financial legislation.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 13

THE 1983 RAILROAD RETIREMENT SOLVENCY ACT

The scheduled annuity reductions were averted by enactment of the Railroad Retirement Solvency Act on August 12, 1983. The 1983 Act was based on 

negotiated recommendations of management and labor, and also incorporated 

recommendations of Congress and the Administration. The amendments were, 

in part, patterned after major social security amendments enacted earlier in the 

year, which had already effected changes in railroad retirement taxes and benefits 

through coordinating provisions in the Railroad Retirement Act.

Taxes

Under the Railroad Retirement Solvency Act, tier II taxes on employers increased from 11.75 percent to 12.75 percent in January 1984, to 13.75 percent in 

January 1985, and to 14.75 percent in January 1986. Tier II taxes on employees 

increased from 2 percent to 2.75 percent in 1984, to 3.50 percent in 1985, and 

to 4.25 percent in 1986. And since 1985, railroad retirement taxes are applied to 

earnings on an annual, rather than a monthly, basis. As a result of the 1983 social 

security amendments, tier I taxes on employers and employees increased from 

6.70 percent to 7 percent in January 1984, to 7.05 percent in 1985, to 7.15 percent 

in 1986, to 7.51 percent in 1988 and to 7.65 percent in 1990. (The tier I tax rate 

has remained unchanged since 1990; however, it was temporarily reduced to 

5.65 percent on employees in 2011 and 2012.)

The 1983 social security amendments subjected railroad retirement tier I annuity portions to Federal income taxes on the same basis as social security benefits 

and the Solvency Act made tier II benefits and vested dual benefit payments subject to Federal income tax on the same basis as private pensions, beginning with 

tax year 1984. The revenues raised from income taxes on tier I and vested dual 

benefits are used for benefit payments. Revenues raised by the tax on tier II benefits were to be used for benefit payments through fiscal year 1988, after which 

the revenues would remain in general U.S. Treasury funds. Subsequent legislation 

extended these transfers permanently.
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Other Financing Provisions

The Railroad Retirement Account was reimbursed in three installments from 

the general fund of the U.S. Treasury for shortfalls in vested dual benefit appropriations between 1975 and 1981. The railroad retirement system’s authority to 

borrow general U.S. Treasury funds until the RRB receives financial interchange 

funds from the social security system was broadened to place financial interchange monies in the Railroad Retirement Account on a current basis.

Benefit Provisions

The 1983 social security amendments deferred July 1983 cost-of-living increases to January 1984 and required that future increases be made in January of 

subsequent years.

This deferral applied to railroad retirement tier I annuity amounts as well as 

social security benefits. The Railroad Retirement Solvency Act correspondingly 

changed the future payment dates of tier II cost-of-living increases from July 1 to 

January 1, with the first increase payable on January 1, 1985. It also required an 

offset of the dollar amount of the next five percent of tier I cost-of-living increases 

from tier II benefits. 

The Act modified early retirement provisions for 30-year employees attaining 

age 60 after June 1984 by applying certain reductions to the tier I portions of their 

annuities if they retired before age 62. The reductions did not affect tier II benefits, and employees who acquired 30 years of service and attained age 60 before 

July 1, 1984, could still retire at any time with full benefits, as under prior law. 

(The Railroad Retirement and Survivors’ Improvement Act of 2001, as described 

on pages 18-21, eliminated these reductions for 60/30 employees retiring after 

2001.) The 1983 law established a five-month waiting period for railroad retirement disability annuities, just as for social security disability benefits, and altered 

the tier I computation of annuities subject to reduction for certain non-covered 

service pensions. It required the RRB to honor court orders that treat non-tier I 

railroad retirement benefits as property subject to division in proceedings related 

to divorce, annulment, or legal separation. And the Act limited the retroactivity of 

applications for benefits to a maximum of six months to conform to the Social
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 15

Security Act, except for disability benefit applications, which can retroact 12 

months.

The Solvency Act eliminated annuity reductions made under prior law when 

military service was counted as railroad service and was also the basis for benefits 

under another Federal law. It conformed railroad retirement student benefit provisions to social security student benefit provisions and eliminated age reductions 

applied to disabled widow(er)s’ annuities for months they were under age 60 when 

their annuities began.

LEGISLATION ENACTED 1985-2000

The Balanced Budget and Emergency Deficit Control Act of 1985, known as 

the Gramm/Rudman/Hollings Act, enacted in December 1985, required decreases in vested dual benefit payments during the 1986 fiscal year and suspension 

of the January 1986 cost-of-living increase in the tier II portions of railroad retirement annuities. Gramm/Rudman and/or related budget legislation reduced vested 

dual benefits and supplemental annuities periodically in subsequent years.

Budget reconciliation legislation enacted in April 1986 included changes 

in Internal Revenue Code provisions increasing income taxes on some railroad 

retirement annuities. Effective with tax year 1986, the tier I portion of a railroad 

retirement annuity, which is treated as a social security benefit for Federal income 

tax purposes, was limited for tax purposes to amounts actually equivalent to social 

security benefits. This primarily affected tier I early retirement benefits payable 

between ages 60 and 62 and some occupational disability benefits that are now 

treated like private pensions.

The Tax Reform Act of October 1986 eliminated, for annuities beginning after July 1, 1986, the three-year recovery rule for contributory pensions which had 

been applicable to railroad retirement benefits exceeding social security equivalent 

levels. Under the tax reform law, railroad retirement benefits exceeding social security equivalent levels are taxable immediately upon retirement. For tax reporting 

purposes, benefit payments are prorated on the basis of estimated life expectancies 

to exempt an employee’s previously-taxed pension contributions.
16 2017 INFORMATIONAL CONFERENCE HANDBOOK

While the railroad retirement trust funds held a reserve of $6.9 billion at the 

end of fiscal year 1987, the continuing decline in railroad employment had caused 

concern over the system’s financing in the next century.

A Federal budget deficit reduction bill enacted in December 1987 increased tier II tax rates in January 1988 to 16.10 percent on employers and 4.90 

percent on employees, and extended for one year, until October 1, 1989, the time 

during which revenues from Federal income taxes on tier II railroad retirement 

benefits could be transferred to the Railroad Retirement Account for use in paying 

benefits.

1988 Amendments 

The Railroad Unemployment Insurance and Retirement Improvement Act was 

included in the Technical and Miscellaneous Revenue Act of 1988, enacted 

November 10, 1988. The railroad retirement amendments in the Act eliminated 

the provision suspending annuities of retired employees and spouses who work 

for their last pre-retirement nonrailroad employers, but provided for tier II earnings deductions in such cases. The Act also increased the amount disabled railroad 

retirement annuitants could earn without reducing their benefits from $200 per 

month to $400 per month, exclusive of work-related expenses.

In addition, it provided railroad retirement military service credits under certain conditions for railroad workers who served in the Armed Forces between 

June 15, 1948, and December 15, 1950, but had not been allowed service credit 

because there was not a national state of emergency in force during this period 

before the Korean War.

The Act also provided a lump sum, equal to railroad retirement tier II payroll 

taxes deducted from separation or severance payments made after 1984, to be paid 

upon retirement to employees meeting minimum service requirements if the separation or severance payments did not yield additional railroad retirement service or 

earnings credits.

Social security amendments included in this legislation modified the noncovered service pension reductions applied to the social security and tier I railroad 

retirement benefits of employees awarded certain Federal, State, or local government pensions in recent years.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 17

Omnibus budget reconciliation legislation enacted in 1989 included a number of railroad retirement and social security provisions affecting payroll taxes and 

benefits in 1990 and subsequent years. The budget law increased the amount of 

earnings subject to social security and railroad retirement payroll taxes, and specified that 401(k) contributions and some employer-paid life insurance premiums 

are subject to railroad retirement payroll taxes, conforming railroad retirement 

with social security.

The 1989 budget law also revised sequestration of railroad retirement supplemental annuities under the Gramm/Rudman Act in fiscal year 1990. Subsequent 

1990 omnibus budget legislation permanently exempted supplemental annuities 

from reductions under the Gramm/Rudman Act. The 1990 budget law also increased the maximum compensation subject to Medicare hospital insurance payroll tax and mandated an expedited payroll tax deposit schedule for large employers covered by social security or railroad retirement. Budget legislation enacted 

in 1993 made all earnings subject to the Medicare payroll tax and, for those in 

high tax brackets, made a larger amount of social security and railroad retirement 

tier I benefits subject to Federal income tax.

The time during which revenues from Federal income taxes on tier II railroad 

retirement benefits could be transferred to the Railroad Retirement Account for 

use in paying benefits was extended one year in 1989, and 1990 budget legislation 

further extended the date until October 1, 1992. In 1994, legislation extended the 

transfers, retroactive to October 1992, on a permanent basis which improved the 

financing of the railroad retirement system.

Legislation enacted in April 2000 eased the earnings restrictions affecting 

social security beneficiaries working after full retirement age. The legislation also 

applied to railroad retirement annuitants, but it did not change the railroad retirement work restrictions applying to last pre-retirement employment which are not 

included in the Social Security Act.
18 2017 INFORMATIONAL CONFERENCE HANDBOOK

THE RAILROAD RETIREMENT AND 

SURVIVORS’ IMPROVEMENT ACT OF 2001

The Railroad Retirement and Survivors’ Improvement Act of 2001, signed into 

law December 21, 2001, liberalized early retirement benefits for 30-year employees and 

their spouses, eliminated a cap on monthly 

retirement and disability benefits, lowered 

the minimum service requirement from 10 

years (120 months) to 5 years (60 months) 

of service if performed after 1995, and 

provided increased benefits for some widow(er)s. Financing sections in the law 

provided for the investment of railroad 

retirement funds in nongovernmental assets, 

adjustments in the payroll tax rates paid by 

employers and employees, and the repeal of a supplemental annuity work-hour tax. 

The law was based on joint recommendations to Congress negotiated by a coalition of 

rail labor organizations and rail freight carriers.

60/30 Retirement 

The law amended the Railroad Retirement Act by eliminating the early retirement 

reduction applied to the annuities of 30-year employees retiring between the ages of 

60 and 62 if their annuities begin January 1, 2002, or later. The spouses of such employees are also eligible for full annuities at age 60. Full 60/30 benefits had not been 

payable since 1983 legislation reduced such early retirement benefits. 

Maximum Provision

The law eliminated, effective January 1, 2002, a maximum on the amount of combined monthly employee and spouse benefit payments which had been intended to 

prevent benefits from exceeding an amount based on an employee’s earnings immediately prior to retirement. This maximum provision had the unintended effect of reducing benefits for former employees with no earnings, or low earnings, in the 10-year 

period prior to retirement, and for long-service employees with moderate earnings.

2001 Act 

Benefit Changes

● 60/30 retirement

● Maximum provision eliminated

● Basic service requirement 

lowered

● Widow(er)s’ benefits
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 19

Basic Service Requirement

The legislation lowered the minimum eligibility requirement for regular railroad retirement annuities from 10 years (120 months) of creditable railroad service to 5 years (60 months) of creditable railroad service for those with 5 years of 

service rendered after 1995. This provision was effective January 1, 2002, and was 

not retroactive.

Widow(er)s’ Benefits 

The legislation established an initial minimum amount based on the twotier annuity amount that would have been payable to the railroad employee at the 

time the widow(er)’s annuity is awarded, minus any applicable reductions. Widow(er)’s annuities computed on the basis of the initial minimum amount will not 

increase until the amount payable under previous law plus cost-of-living increases 

is higher than the initial minimum amount.

This provision was effective February 1, 2002, and was not retroactive. It 

applied to widow(er)s on the rolls before the effective date only if the annuity the 

widow(er) was receiving on the effective date was less than she or he would have 

received had the legislation been in effect on the date the widow(er)’s annuity 

began.

Investment Changes 

The legislation provided for the transfer of railroad retirement funds from the 

Railroad Retirement Accounts to the National Railroad Retirement Investment 

Trust, whose Board of seven trustees is 

empowered to invest Trust assets in nongovernmental assets, such as equities and 

debt, as well as in governmental securities. 

The sole purpose of the Trust is to manage 

and invest railroad retirement assets.

The Trust is a tax-exempt entity independent from the Federal Government. Its 

2001 Act 

Financing Changes

● Investments

● Payroll tax rates

● Supplemental annuity funding
20 2017 INFORMATIONAL CONFERENCE HANDBOOK

Board of Trustees is comprised of the following: three members selected by rail 

labor to represent the interests of labor; three members selected by rail management to represent management interests; and one independent member selected by 

a majority of the other six members. The Trustees are subject to fiduciary standards similar to those required by the Employee Retirement Income Security Act. 

The Trust must submit an annual report to Congress on its operations.

Effect on Payroll Tax Rates 

The legislation reduced tier II tax rates on rail employers, including rail labor 

unions, in calendar years 2002 and 2003, and beginning with 2004 provides automatic adjustments in the tier II tax rates for both employers and employees. It also 

repealed the supplemental annuity work-hour tax rate paid by employers, beginning with calendar year 2002.

The tier II tax rate on rail employers and rail labor organizations was reduced 

from 16.10 percent to 15.60 percent in 2002 and to 14.20 percent in 2003. The tier 

II tax rate for rail employee representatives was 14.75 percent in calendar year 

2002 and 14.20 percent in 2003.

While there was no change in the tier II tax rate of 4.90 percent on employees 

in the years 2002 and 2003, starting with calendar year 2004 tier II taxes on both 

employers and employees have been 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 percent and 22.10 percent, while the tier II tax rate for 

employees ranges between 0 percent and 4.90 percent. In 2005, as a result of this 

provision, the tier II tax rate on employees decreased to 4.40 percent from 

4.90 percent. The rate on employers and rail employee representatives decreased 

to 12.60 percent from 13.10 percent. The 2006 rates were the same as in 2005. In 

2007, the tier II tax rate on employees decreased from 4.40 percent to 3.90 percent and on employers it decreased from 12.60 percent to 12.10 percent. Those 

rates remained the same through 2012. In 2013, the tier II tax rate on employees 

increased from 3.90 percent to 4.40 percent. The rate on employers increased from 

12.10 percent to 12.60 percent. Those rates did not change in 2014. In 2015, the 

tier II tax rate on employees increased from 4.40 percent to 4.90 percent. The rate 

on employers increased from 12.60 percent to 13.10 percent. Those rates remain 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 21

unchanged through 2017.

Supplemental Annuity Funding 

In addition to repealing the supplemental annuity work-hour tax, the legislation eliminated the separate Supplemental Annuity Account. Supplemental annuities are funded through the National Railroad Retirement Investment Trust.

COURT DECISIONS, LEGISLATION ENACTED 2006-2015

The Pension Protection Act of 2006 was signed into law August 17, 2006. 

The Act, effective August 17, 2007, provided divorced spouses a railroad retirement annuity independent of the employee’s actual entitlement and extended 

court-ordered partition payments to surviving former spouses. Legislation enacted January 12, 2007, increased the amount employees receiving railroad retirement disability annuities can earn without losing any benefits. Legislation modifying partition payments was signed into law on December 23, 2008.

The Tax Relief, Unemployment Insurance Reauthorization, and Job 

Creation Act of 2010 was signed into law December 17, 2010. Among its provisions, the Act temporarily lowered the social security payroll tax rate on employees, and the corresponding tier I payroll tax rate on railroad employees, by 

2 percentage points for calendar year 2011. The Temporary Payroll Tax Cut 

Continuation Act of 2011 extending the temporary payroll tax reduction through 

February 2012 was signed into law December 23, 2011. The Middle Class Tax 

Relief and Job Creation Act of 2012, signed into law February 22, 2012, extended the reduction through 2012.

On June 26, 2013, the Supreme Court found unconstitutional Section 3 of the 

Defense of Marriage Act, which had prevented the Federal Government from 

recognizing marriages of same-sex couples. As a result, the RRB began accepting 

applications for benefits from those eligible spouses in same-sex marriages who 

were validly licensed under State law. On June 26, 2015, the Supreme Court further found that the Constitution required all States to license same-sex marriages, 

and to recognize lawfully licensed same-sex marriages performed in other States.
22 2017 INFORMATIONAL CONFERENCE HANDBOOK

EMPLOYMENT, PAYROLLS, AND TAX COLLECTIONS

Railroad employment has varied considerably over the years. The total number 

of employees with some service in a year has ranged from a high of 3 million in the 

war year 1945 to a low of 247,000 in calendar year 2010. The average number employed has varied between a high of 1.7 million in the war years 1944-45 to a low of 

approximately 221,000 in 2010. Average employment in 2015 rose 5,000 from the 

previous year to 247,000.

In 2016, total railroad payroll was an estimated $21.6 billion, while the taxable 

payrolls (on the $118,500 tier I and the $88,200 tier II annual bases) were an estimated $20.0 billion and $18.4 billion, respectively. Tier I payroll includes miscellaneous compensation, such as sick pay. The employee tax rates for 2016 were 7.65 

percent for tier I and 4.9 percent for tier II. Employer rates were 7.65 percent and 

13.1 percent, respectively. The tier I rate is divided into 6.2 percent for retirement/

disability and 1.45 percent for Medicare hospital insurance. While the 6.2 percent 

rate applied to the $118,500 annual base, all of an employee’s compensation was 

subject to the 1.45 percent Medicare tax. Employees pay an additional 0.9 percent 

in Medicare hospital insurance taxes on earnings above $200,000 (for those who file 

an individual return) or $250,000 (for those who file a joint return). Retirement tax 

collections in 2016 were approximately $5.9 billion.

SCOPE OF RRB OPERATIONS

Benefits awarded since inception of the railroad retirement 

program through fiscal year 2016:

● 2,051,000 to Retired Employees

● 1,223,000 to Spouses

● 2,524,000 to Survivors

At the end of fiscal year 2016:

● 522,000 Beneficiaries were being paid $12.4 billion a year 

in benefits
2

Provisions of the 

Railroad Retirement Act

23

Service performed for a covered employer or as an employee representative is 

creditable toward all types of benefits under the Railroad Retirement Act. Covered 

employers include interstate railroads and their affiliates engaged in railroadconnected operations, as well as employer associations and national railroad labor 

organizations and their subordinate units. In some cases, military service may be 

counted as railroad service. 

Service for an employer is creditable if it is compensated and the employee 

is subject to the continuing supervision 

of the employer. Benefits are based on 

earnings credits and months of service. 

Earnings are creditable up to certain 

annual maximums on the amount of 

compensation subject to railroad retirement taxes as shown in the table at 

the end of the next chapter. Credit for 

a month of railroad service is given for every month in which an employee had 

some compensated service for an employer covered by the Railroad Retirement 

Act, even if only one day’s service is performed in the month. (However, local 

lodge compensation earned after 1974 is disregarded for any calendar month in 

which it is less than $25.) Special rules may apply for crediting of service months 

resulting from a settlement for an on-the-job injury. 

Benefits are based on 

earnings credits and 

months of service.
24 2017 INFORMATIONAL CONFERENCE HANDBOOK

The basic requirement for railroad retirement annuities is at least 10 years (120 

months) of creditable railroad service, or 5 years (60 months) of creditable railroad service if such service was performed after 1995. Service months need not be 

consecutive. 

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, equals the maximum number of months that may 

be deemed as service months for that year. 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.

Basic Service Requirement for 

Railroad Retirement Annuities

● 120 months of creditable railroad service

or

● 60 months if such service was performed after 1995
PROVISIONS OF THE RAILROAD RETIREMENT ACT 25

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.

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 in force,

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.

● August 2, 1990 to date as yet undetermined

● December 16, 1950 to September 14, 1978

● September 8, 1939 to June 14, 1948

War and national emergency periods

CREDITABLE MILITARY SERVICE
26 2017 INFORMATIONAL CONFERENCE HANDBOOK

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 RRB.

Each year, employees in the industry receive a Certificate of Service Months 

and Compensation (Form BA-6) from the RRB. 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 RRB. The BA-6 form should be 

carefully reviewed to make sure that it is correct. Employees can also view their 

individual railroad retirement records of service months and compensation online 

via the Benefit Online Services section of the RRB's website at www.rrb.gov. 

This feature, called View Service & Compensation History, is available only to 

employees with RRB online accounts.

Instructions for establishing an online account are available by clicking on 

the link for requesting a Password Request Code (PRC) in that same section. This 

electronic alternative does not replace Form BA-6, but makes the same information available online.

Each year, employees in the

industry receive a Certificate of 

Service Months and Compensation 

(Form BA-6) from the RRB which

provides both a current and cumulative

record of an employee’s railroad service

and compensation.
PROVISIONS OF THE RAILROAD RETIREMENT ACT 27

If an employee disagrees with the information shown on the BA-6 form, he or 

she should write the RRB 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 - CESC

 U.S. Railroad Retirement Board

 844 North Rush Street

 Chicago, IL 60611-1275

AGE AND SERVICE, DISABILITY, 

AND SUPPLEMENTAL ANNUITIES 

The basic requirement for a regular employee annuity is 10 years (120 months) 

of creditable railroad service, or 5 years (60 months) of creditable railroad service 

if performed after 1995. Benefits then become payable after the employee meets 

certain other requirements, which depend, in turn, on the type of annuity payable. 

An AGE AND SERVICE ANNUITY can be paid to: 

Employees with 30 or more years of creditable service. They are eligible 

for regular annuities based on age and service the first full month they are age 60. 

Early retirement reductions are applied if the employee first became eligible for a 

60/30 annuity July 1, 1984, or later and retired at ages 60 or 61 before 2002. 

Employees with 10-29 years of creditable service, or 5-9 years, if at least 

5 years were after 1995. They are eligible for regular annuities based on age and 

service the first full month they are age 62. Early retirement annuity reductions are 

applied to annuities awarded before the employee’s full retirement age as 

explained on the next page. 

EMPLOYEE AND SPOUSE ANNUITIES
28 2017 INFORMATIONAL CONFERENCE HANDBOOK

Full retirement age means the age at which an employee can receive full 

benefits with no reduction for early retirement. This ranges from age 65 to age 67, 

depending upon the year of birth. 

Reduced annuities are still payable 

at age 62 to those with less than 

30 years of service, but the maximum reduction is gradually rising 

to 30 percent from 20 percent by 

the year 2022 as a result of social 

security legislation enacted in 

1983. Part of the annuity (tier II) 

is not reduced beyond 20 percent 

if the employee had any creditable 

railroad service before August 12, 

1983. Railroad retirement tiers are 

explained on pages 33 and 35. 

The annuities of employees 

retiring after the first full month 

they are age 60 (for those with 30 

years of service) can begin with the 

first day they are eligible, with up to 

6 months’ retroactivity. The annuities of employees retiring at or after age 62 with an age reduction (for those with 

less than 30 years of service) can begin with the first day of the month in which 

the application is filed. 

An annuity based on age cannot be paid until the employee stops railroad 

employment, files an application, and gives up any rights to return to work for a 

railroad employer. 

A DISABILITY ANNUITY can be paid for: 

Total disability, at any age, if an employee is permanently disabled for all 

regular work and has at least 10 years (120 months) of creditable railroad service. 

Employees with 5-9 years of creditable railroad service, if at least 5 years were 

after 1995, may qualify for tier I only (as defined on page 33) before retirement 

If employee 

was born*

Full retirement 

age is

1937 or later 65

1938 65 and 2 months

1939 65 and 4 months

1940 65 and 6 months

1941 65 and 8 months

1942 65 and 10 months

1943 through 1954 66

1955 66 and 2 months

1956 66 and 4 months

1957 66 and 6 months

1958 66 and 8 months

1959 66 and 10 months

1960 or later 67

*A person attains a given age the day before his or

her birthday. Consequently, someone born on 

January 1 is considered to have attained his or her 

given age on December 31 of the previous year.

Table 1.--Determining Full Retirement Age
PROVISIONS OF THE RAILROAD RETIREMENT ACT 29

age on the basis of total disability if they also meet certain social security earnings 

requirements. An age reduced tier II amount would be payable at age 62. 

Occupational disability, at age 60, if an employee has at least 10 years 

(120 months) of railroad service or at any age if the employee has at least 20 years 

(240 months) of service, when the employee is permanently disabled for his or 

her regular railroad occupation. A current connection with the railroad industry is 

also required for an annuity based on occupational, rather than total, disability. 

A 5-month waiting period beginning with the month after the month of the 

onset of disability is required before any disability annuity payments can begin. 

An employee can be in compensated service while filing a disability annuity 

application as long as the compensated service is not active service and terminates within 90 days from the date of filing. However, in order for a supplemental 

annuity to be paid by the RRB, or for an eligible spouse to begin receiving annuity 

payments, a disabled annuitant under full retirement age must relinquish employment rights. 

A SUPPLEMENTAL ANNUITY can be paid at: 

Age 60, if the employee has at least 30 years of creditable railroad service. 

Age 65, if the employee has 25-29 years of railroad service. 

In addition to the service requirements, a current connection with the railroad 

industry is required for all supplemental annuities. An employee must also be receiving a railroad retirement age and service or disability annuity before a supplemental annuity can be paid. Eligibility is further limited to employees who had at 

least one month of creditable rail service before October 1981. 
30 2017 INFORMATIONAL CONFERENCE HANDBOOK

CURRENT CONNECTION

An employee who worked for a railroad in at least 12 months in the 30 months 

immediately preceding the month 

his or her railroad retirement annuity begins will meet the current 

connection requirement for a 

supplemental annuity, occupational disability annuity, or the survivor benefits described later in 

this chapter. (If the employee died 

before retirement, railroad service in at least 12 months in the 30 months before 

the month of death will meet the current connection requirement for the purpose 

of paying survivor benefits.)

If an employee does not qualify for a current connection on this basis, but has 

12 months of service in an earlier 30-month period, he or she may still meet the 

current connection requirement. This alternative generally applies if the employee 

did not have any regular employment outside the railroad industry after the end of 

the last 30-month period which included 12 months of railroad service, and before 

the month the annuity begins or the month of death. Full or part-time work for a 

nonrailroad employer in the interval between the end of the last 30-month period including 12 months of railroad service and the month an employee’s annuity 

begins, or the month of death if earlier, can break a current connection.

Self-employment in an unincorporated business will not break a current connection; however, self-employment can break a current connection if the business 

is incorporated.

Working for certain U.S. Government agencies--Department of Transportation, National Transportation Safety Board, Surface Transportation Board, Transportation Security Administration, National Mediation Board, Railroad Retirement 

Board--will not break a current connection. State employment with the Alaska 

Railroad, as long as that railroad remains an entity of the State of Alaska, will not 

break a current connection. Also, railroad service in Canada for a Canadian railroad will neither break nor preserve a current connection. 

Once a current connection is 

established at the time the railroad retirement annuity begins, 

an employee never loses it, no 

matter what kind of work is 

performed thereafter.
PROVISIONS OF THE RAILROAD RETIREMENT ACT 31

A current connection can also be maintained, for purposes of supplemental and 

survivor annuities, but not for an occupational disability annuity, if the employee 

completed 25 years of railroad service, was involuntarily terminated without fault 

from his or her last job in the railroad industry, and did not thereafter decline an 

offer of employment in the same class or craft in the railroad industry regardless 

of the distance to the new position. A termination of railroad service is considered 

voluntary unless there was no choice available to the individual to remain in service. Generally, where an employee has no option to remain in the service of his 

or her railroad employer, the termination of the employment is considered involuntary, regardless of whether the employee does or does not receive a separation 

allowance. However, each case is decided by the RRB on an individual basis. This 

exception to the normal current connection requirements became effective October 1, 1981, but only for employees still living on that date who left the rail industry on or after October 1, 1975, or who were on leave of absence, on furlough, or 

absent due to injury on October 1, 1975. 

SPOUSE ANNUITIES 

The age requirements for a spouse annuity depend on the employee’s: 

• age and date of retirement

• years of railroad service

If a retired employee with 30 years of 

service is age 60, the employee’s spouse is 

also eligible for an annuity the first full month 

the spouse is age 60. Certain early retirement 

reductions are applied if the employee first 

became eligible for a 60/30 annuity July 1, 1984, or later and retired at ages 60 or 

61 before 2002. If the employee was awarded a disability annuity, has attained age 

60 and has 30 years of service, the spouse can receive an unreduced annuity the 

first full month she or he is age 60, regardless of whether the employee annuity 

began before or after 2002 as long as the spouse’s annuity beginning date is after 

2001.

Retired employee age 60, 

with 30 years of service
32 2017 INFORMATIONAL CONFERENCE HANDBOOK

 If a retired employee with less than 30 years 

of service is age 62, the employee’s spouse is 

also eligible for an annuity the first full month the 

spouse is age 62. Early retirement reductions are 

applied to the spouse annuity if the spouse retires 

prior to her or his full retirement age. Full retirement age for a spouse is gradually 

rising to age 67, just as for an employee, depending on the year of birth. Reduced 

benefits are still payable at age 62, but the maximum reduction will be 35 percent 

rather than 25 percent by the year 2022. The tier II portion of a spouse annuity 

(as defined on page 35) is not reduced beyond 25 percent if the employee had any 

creditable railroad service before August 12, 1983.

A spouse of an employee receiving an age and service annuity (or a spouse of

a disability annuitant who is otherwise eligible

for an age and service annuity) is eligible for a 

spouse annuity at any age if he or she is caring 

for the employee’s unmarried child under age 

18. The spouse is also eligible if caring for the

employee's disabled child of any age who became disabled before age 22.

The employee must have been married to the spouse for at least 1 year, unless 

the spouse is the natural parent of their child, or the spouse was eligible or potentially eligible for a railroad retirement widow(er)’s, parent’s, or disabled child’s 

annuity in the month before marrying the employee, or the spouse was previously 

married to the employee and received a spouse annuity. However, entitlement to a 

surviving divorced spouse, surviving divorced young mother (father), or remarried

widow(er) annuity does not waive the 1-year marriage requirement.

An annuity may also be payable to the divorced wife or husband of a retired 

employee if their marriage lasted for a period 

of at least 10 years immediately before the date 

the divorce became final, both have attained age 

62 for a full month, and the divorced spouse is 

not currently married. The amount of a divorced spouse’s annuity is, in effect, 

equal to what social security would pay in the same situation and therefore less 

Spouse of an age and service 

employee, caring for the

employee’s unmarried child

Divorced spouse if marriage 

lasted for at least 10 years

Retired employee age 62, 

with less than 30 years 

of service
PROVISIONS OF THE RAILROAD RETIREMENT ACT 33

than the amount of the spouse annuity otherwise payable (tier I only). A divorced 

spouse can receive an annuity even if the employee has not retired, provided they 

have been divorced for a period of not less than 2 years, the employee and former 

spouse are at least age 62, and the employee is fully insured under the Social Security Act using combined railroad and social security earnings. Also, a courtordered partition payment may be paid even if the employee is not entitled to an 

annuity provided that the employee has 10 years of railroad service or 5 years 

after 1995 and both the employee and former spouse are 62.

ANNUITY ESTIMATES 

Railroad employees with RRB online accounts can get estimates of future 

annuities for themselves and their spouses via the Benefit Online Services section of the RRB's website (www.rrb.gov). Instructions for establishing an online 

account are available by clicking on the link for requesting a Password Request 

Code (PRC) in that same section. The estimates are based on the service and 

earnings records maintained by the RRB and show the earliest date the employee 

can receive a full annuity and, if applicable, the earliest date he or she can receive 

a reduced annuity. Employees who want estimates can also contact any RRB field 

office for approximate figures. Estimates can be furnished for employees with at 

least 10 years of railroad service, or 5 years of service after 1995. It is not possible 

to provide a precise amount if the employee is not currently eligible. 

TWO-TIER ANNUITIES AND DUAL BENEFITS 

Regular railroad retirement annuities are calculated under a two-tier formula. 

The annuity formula components for employees and spouses are described later in 

this chapter. 

The FIRST TIER is based on railroad retirement credits and any social security credits an employee has acquired. The amount of the first tier is calculated 

using social security formulas, but with railroad retirement age and service 

requirements. 

(Text continues on page 35.)
34 2017 INFORMATIONAL CONFERENCE HANDBOOK

Average Average years 

 award of service

Employee	 $3,943	 37.2

Employee and spouse	 5,579	 37.5

Note.--For employees with at least 25 years of service and a current connection, a supplemental annuity may be payable. The supplemental annuity

amount is $23 plus $4 for each year of service over 25 years, up to a maximum of $43 for employees with 30 or more years of service. Figures in the

tables on this page include supplemental annuity amounts.

Table 2.--Fiscal year 2016 annuity awards 

to 30-year employees retiring before full retirement age 

Table 3.--Fiscal year 2016 annuity awards 

based on service averaging less than 30 years

Average Average years 

 award of service

Employee full retirement age or over	 $2,491	 21.3	

Employee full retirement age or over

and spouse	 3,471	 22.9

Employee under full retirement age

with less than 30 years of service	 1,801	 16.2

Employee under full retirement age

with less than 30 years of service

and spouse	 2,499	 16.6

Employee retiring because

of disability	 2,669	 21.5
PROVISIONS OF THE RAILROAD RETIREMENT ACT 35

 The SECOND TIER is based on railroad retirement credits only, and may be 

compared to the retirement benefits paid over and above social security benefits to 

workers in other industries. 

An additional amount may also be payable as part of the regular annuity if an 

employee qualified for both railroad retirement and social security benefits before 

1975 and met certain vesting requirements. 

Employees with Railroad Retirement and 

Social Security Benefits 

If a retired or disabled railroad retirement annuitant is also awarded social 

security benefits, the Social Security Administration determines the amount of 

the social security benefit due. The RRB then issues a combined monthly benefit 

payment after the railroad retirement annuity has been reduced by the amount of 

the social security benefit. 

The tier I portion of an employee annuity is based on his or her combined railroad retirement and social security credits, figured under social security formulas, 

and approximates what social security would pay if railroad work were covered by 

that system. It is reduced by the amount of any actual social security benefit paid 

on the basis of the employee’s nonrailroad employment in order to prevent a duplication of benefits based on social security-covered earnings. The tier I amount 

is also reduced in the event a social security benefit is payable to the employee on 

the basis of another person’s earnings. This reduction follows principles of social 

security law which limit payment to the higher of any two or more benefits payable to an individual at one time. An annuitant is required to advise the RRB if any 

benefits are received directly from the Social Security Administration or if those 

benefits increase (other than for a cost-of-living increase). 

If an employee qualified for dual benefits before 1975 and met certain vesting 

requirements, he or she can receive an additional annuity amount, which offsets, 

in part, the dual benefit reduction. This additional amount, which reflects the dual 

benefits payable prior to 1975, is called the vested dual benefit payment. The 

vested dual benefit cannot be paid prior to the date the employee could begin to 
36 2017 INFORMATIONAL CONFERENCE HANDBOOK

receive a social security benefit if he or she were to file for such a benefit. 

Employees who worked for a railroad in 1974 and retired after 1974 are 

considered vested if on December 31, 1974, they had both at least 10 years of 

railroad service and sufficient quarters of coverage to qualify for a social security retirement benefit at age 62. Employees qualified on this basis are eligible for 

vested dual benefit amounts computed on their railroad and social security credits 

through December 31, 1974.

Employees who did not work 

for a railroad in 1974 but had 25 

or more years of railroad service 

before 1975 or employees with 

10 years of railroad service before 

1975 who had either a current connection with the railroad industry 

on December 31, 1974, or at the 

time their annuities began, are also 

considered vested under the same 

conditions as persons who were 

railroad employees in 1974. 

Other employees who completed 10 or more years of railroad 

service before 1975 but left the industry before 1974 are considered 

vested only if they had sufficient 

social security quarters of coverage to qualify for a social security 

retirement benefit as of the end of the year before 1974 in which they left the railroad industry. Their vested dual benefit amount is based only on credits acquired 

through their last year of pre-1975 railroad service instead of through December 

31, 1974. 

Employees who do not qualify for a vested dual benefit may be eligible for a 

refund of any excess social security taxes they paid (see page 62). 

Limitations on

Vested Dual Benefits

Vested dual benefit payments

are funded by annual appropriations

from general U.S. Treasury revenues.

These appropriations account for less

than one percent of total financing

sources for the railroad retirement

system.

Payment of vested dual benefits

is dependent on the time and amount

of such appropriations. If the appropriation in a fiscal year is for less than

the estimated total vested dual benefit

payments, individual payments must

be reduced.
PROVISIONS OF THE RAILROAD RETIREMENT ACT 37

Employees with Public, Non-Profit, or Foreign Pensions

For employees first eligible for a railroad retirement annuity and a Federal, 

State, or local government pension after 1985, there may be a reduction in the 

tier I amount 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 may 

also apply to certain other payments not covered by railroad retirement or social 

security, such as payments from a nonprofit organization, a foreign government, 

or a foreign employer. This 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 United States. 

Workers’ Compensation 

If an employee is receiving a disability annuity, the tier I portion may, under 

certain circumstances, be reduced for receipt of workers’ compensation or public 

disability benefits. 

If an annuitant becomes entitled to any pensions or benefits as described 

above, the RRB must be notified immediately. 

SPOUSES WITH DUAL BENEFITS 

Social Security Benefits 

The tier I portion of a spouse annuity is reduced for any social security entitlement, regardless of whether the social security benefit is based on the spouse’s 

own earnings, the employee’s earnings or the earnings of another person. This reduction follows principles of social security law which limit payment to the higher 

of any two or more benefits payable to an individual at one time. 

Public Pensions 

The tier I portion of a spouse annuity may also be reduced for receipt of any 

Federal, State, or local government pension separately payable to the spouse 
38 2017 INFORMATIONAL CONFERENCE HANDBOOK

based on the spouse’s own earnings. The reduction generally does not apply if the 

employment on which the pension is based was covered under the Social Security 

Act throughout the last 60 months of public employment. 

Most military service pensions and payments from the Department of Veterans Affairs will not cause a reduction. Pensions paid by a foreign government or 

interstate instrumentality will also not cause a reduction. For spouses subject to a 

public pension reduction, the tier I reduction is equal to 2/3 of the amount of the 

public pension. 

Employee Annuity 

If both individuals in a marriage are railroad employees and both started railroad employment after 1974, the amount of any spouse or divorced spouse annuity is reduced by the amount of the employee annuity to which the spouse is also 

entitled. 

If either one had some railroad service before 1975, the spouse tier I amount is 

reduced by the amount of the railroad employee tier I to which the spouse is entitled and that initial reduction is restored in the spouse tier II amount. The spouse 

tier I amount cannot be reduced below zero.

MINIMUM GUARANTY 

Under a special minimum guaranty provision, railroad families will not receive less in monthly benefits than they would have if railroad earnings were 

covered by social security rather than railroad retirement laws. This guaranty is 

intended to cover situations in which one or more members of a family would otherwise be eligible for a type of social security benefit which is not provided under 

the Railroad Retirement Act. 

For example, social security provides children’s benefits when an employee is 

totally disabled, retired, or deceased. The Railroad Retirement Act only provides 

children’s benefits if the employee is deceased. Therefore, if a retired rail 

employee has children who would otherwise be eligible for a benefit under social 

security, the employee’s annuity would be increased to reflect what social security 
PROVISIONS OF THE RAILROAD RETIREMENT ACT 39

would pay the family, unless the annuity is already more than that amount. 

COST-OF-LIVING INCREASES IN EMPLOYEE 

AND SPOUSE RETIREMENT BENEFITS 

After retirement, the tier I portions of both employee and spouse annuities 

are generally increased for higher living costs at the same time, and by the same 

percentage, as social security benefits. These increases, effective December 1 

and included in the January payment, are based on the rise in the Consumer Price 

Index from the third quarter of the last year a cost-of-living adjustment became 

effective to the corresponding period of the current year. Generally, if the Index 

increases by five percent, for example, the tier I portion increases by five percent. 

Under certain circumstances, the increase can be based on average national wage 

increases rather than price increases. 

If an annuitant is receiving both railroad retirement and social security benefits, the increased tier I portion is reduced by the increased social security benefit. 

The tier II portions of retired employee and spouse annuities are normally 

increased by 32.5 percent of the increase in the Consumer Price Index. 

Tier II cost-of-living increases are generally payable at the same time as tier I 

cost-of-living increases. Vested dual benefit payments and supplemental annuities 

are not increased by these cost-of-living adjustments. 

WORKING AFTER RETIREMENT 

Neither a regular annuity, a supplemental annuity nor a spouse annuity is 

payable for any month in which a retired employee, regardless of age, works for 

an employer covered under the Railroad Retirement Act, including labor organizations. However, service for less than $25 a month to a local lodge will not prevent 

payment of the annuity for that month. Regardless of the amount of salary, work 

by a local lodge or division secretary collecting insurance premiums is considered 

railroad work and therefore, no annuity is payable for any month in which such 

activity occurs.
40 2017 INFORMATIONAL CONFERENCE HANDBOOK

Retired employees and spouses who work for their last pre-retirement nonrailroad employer are subject to an earnings deduction. Last pre-retirement nonrailroad employment is employment that continues through the annuity beginning 

date or ended within 6 months of the annuity beginning date. Such employment 

will reduce tier II benefits and supplemental annuity payments, which are not 

otherwise subject to earnings deductions, by $1 for each $2 of earnings received, 

subject to a maximum reduction of 50 percent. These reductions continue after full 

retirement age. Work that begins on the same day as the annuity beginning date is 

not last pre-retirement nonrailroad employment. 

Retired employees and spouses who have not yet 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, may also be subject to additional earnings deductions for any earnings, in or outside the rail industry, that exceed certain exempt 

amounts. The tier I and vested dual benefits of these employee and spouse annuities are subject to deductions if earnings exceed the exempt amounts applicable to 

social security beneficiaries. Prior to the calendar year in which full social security 

retirement age is attained, the deduction is $1 in benefits for every $2 of annual 

earnings exceeding an exempt amount ($16,920 in 2017). 

If the employee or spouse has a tier I reduction for social security benefits, the 

tier I benefit is not reduced for excess earnings. 

In the first year in which an employee, subject to these earnings deductions, is 

both entitled to an annuity and has a non-work month, a full tier I and vested dual 

benefit can be paid for those months in which the employee had low earnings or 

did not have substantial self-employment, no matter what total earnings for the 

year were. A non-work month is one in which the employee neither earns over 

1/12th of the annual exempt amount nor has substantial self-employment. Nonwork months can be claimed in only one calendar year, which need not necessarily 

be the first year of entitlement. 

In the calendar year in which an individual attains full social security retirement age, deductions of $1 are made in tier I and vested dual benefits for every $3 

earned in excess of an exempt amount ($44,880 in 2017), but only counting those 

earnings in the months prior to the month full retirement age is attained. These 
PROVISIONS OF THE RAILROAD RETIREMENT ACT 41

tier I and vested dual benefit deductions stop effective with the month full retirement age is attained. 

Earnings received for services rendered, plus any net earnings from selfemployment, are considered when assessing deductions for earnings. Interest, dividends, certain rental income, or income from some stocks, bonds, or other investments are not generally considered earnings for this purpose. 

Annuitants under full retirement age who work after retirement and expect 

that their earnings for a year will be more than the annual exempt amount must 

promptly notify the RRB and furnish an estimate of their expected earnings in 

order to prevent an overpayment and penalties. They should also notify the RRB if 

their original estimate changes significantly. 

Retired employees and spouses who return to work for a railroad or for their 

last pre-retirement nonrailroad employer must notify the RRB, regardless of earnings or age. 

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 nonrailroad employer or other post-retirement 

employment. 

A spouse annuity is not payable for any month in which the employee’s annuity is not payable, or for any month in which the spouse, regardless of age, works 

for an employer covered under the Railroad Retirement Act. A divorced spouse 

annuity is not payable for any month in which the divorced spouse, regardless of 

age, works for an employer covered under the Railroad Retirement Act. A divorced spouse can receive an annuity even if the employee has not retired, provided they have been divorced for at least 2 years, the employee and former spouse 

are at least age 62, and the employee is fully insured under the Social Security Act 

using combined railroad and social security earnings.

Disability Work Restrictions 

If an annuity is based on disability, there

 A disability annuitant 

 must report any

 earnings.
42 2017 INFORMATIONAL CONFERENCE HANDBOOK

are certain work restrictions that can affect payment, depending on the amount of 

earnings. The annuity is not payable for any month in which the disabled employee annuitant works for an employer covered under the Railroad Retirement 

Act. The annuity is not payable for any month in 2017 in which the disabled 

employee annuitant earns over $910 in any employment or net self-employment, 

exclusive of disability-related work expenses. Withheld payments will be restored 

if earnings for the year are less than $11,375 after deduction of disability-related 

work expenses. Failure to report such earnings could involve a significant penalty 

charge. 

These disability work restrictions cease upon a disabled employee annuitant’s 

attainment of his or her full retirement age. This transition is effective no earlier 

than full retirement age even if the annuitant had 30 years of service. Earnings 

deductions continue to apply to those working for their last pre-retirement nonrailroad employer. 

If a disabled employee annuitant works before his or her full retirement age, 

this may also raise a question about the possibility of that individual’s recovery 

from disability, regardless of the amount of earnings. Consequently, any work 

activity must be reported promptly to avoid overpayments, which are recoverable 

by the RRB and may also include significant penalties. 

WHEN ANNUITIES STOP 

Payment of any annuity stops upon the annuitant’s death, and the annuity is 

not payable for any day in the month of death. 

A disability annuity stops after the employee recovers from the disability; it 

can be reinstated if the disabling condition recurs. 

A spouse annuity stops if the employee’s annuity terminates, or the spouse 

annuity was based on caring for a child and the child is no longer under age 18 or 

disabled or the child is no longer in the spouse’s care. However, the spouse annuity may continue if she or he is qualified without the child or it can resume when 

the spouse attains a qualifying age. 
PROVISIONS OF THE RAILROAD RETIREMENT ACT 43

While a divorce ends eligibility for a spouse annuity, a divorced spouse may, 

under conditions described previously, qualify for a divorced spouse’s annuity. 

A divorced spouse’s annuity stops upon remarriage or upon entitlement to a 

social security benefit based on her or his own earnings if the unreduced social 

security benefit is equal to or greater than one-half of the employee’s unreduced 

tier I amount. A divorced spouse’s annuity may be reduced or stopped if the divorced spouse is also entitled to a railroad retirement annuity. 

Annuities are payable to surviving widow(er)s, children, and certain other 

dependents. Lump-sum benefits are 

payable after the death of a railroad 

employee only if there are no qualified survivors of the employee immediately eligible for monthly annuities. 

With the exception of a residual 

lump-sum death benefit, eligibility for 

survivor benefits depends on whether 

or not the employee was “insured” 

under the Railroad Retirement Act at 

the time of death.

An employee is insured if he or she has at least 10 years (120 months) of railroad service, or 5 years (60 months) performed after 1995, and a current 

connection with the railroad industry as of the month the annuity begins or the 

It is important to notify the Railroad Retirement Board promptly if

one of the above changes occurs. Failure to report can result in an

overpayment, which the RRB will take action to recover, sometimes with

interest or penalties. Failure to report changes promptly or making a false

statement can also result in a fine or imprisonment.

SURVIVOR BENEFITS

Survivor Annuities 

Payable to:

● widow(er)s

● surviving divorced spouses

● remarried widow(er)s

● unmarried children

● parents
44 2017 INFORMATIONAL CONFERENCE HANDBOOK

month of death, whichever occurs first. The current connection requirement is 

described earlier in this chapter.

If a deceased employee was not so insured, jurisdiction of any survivor benefits payable is transferred to the Social Security Administration and any survivor 

benefits are paid by that agency instead of the RRB. Regardless of which agency 

has jurisdiction, the deceased employee’s railroad retirement and social security 

credits will be combined for the purpose of benefit computations.

WIDOWS’ AND WIDOWERS’ ANNUITIES

Widows’ and widowers’ annuities are payable at: 

Age 60; age reductions are applied to annuities awarded before full retirement 

age. The eligibility age for unreduced annuities is gradually rising from age 65 to 

age 67, depending on the year of birth. 

Ages 50-59 if the widow(er) is totally and permanently disabled and unable to 

work in any regular employment. The disability must have begun within 7 years 

after the employee’s death or within 7 years after the termination of an annuity 

based on caring for a child of the deceased employee. In most cases, a 5-month 

waiting period is required after the onset of disability before a disability annuity 

can begin. 

Any age if the widow(er) is caring for an unmarried child of the deceased 

employee under age 18 or a disabled child of any age who became disabled before 

age 22. 

Generally, the widow(er) must have been married to the employee for at least 

9 months prior to death, unless she or he was the natural or adoptive parent of 

their child, the employee’s death was accidental or while on active duty in the U.S. 

Armed Forces, the widow(er) was potentially entitled to certain railroad retirement 

or social security benefits in the month before the month of marriage, or the marriage was postponed due to State restrictions on the employee's prior marriage and 

divorce due to mental incompetence or similar incapacity. 

(Text continues on page 47.)
PROVISIONS OF THE RAILROAD RETIREMENT ACT 45

Type of benefit Number Average

amount

Table 4.--Number and average amount of benefits 

awarded under the Railroad Retirement Act, fiscal year 2016

1 Averages are after court-ordered partitions. 2 Fewer than 50. 3	Excludes partition payments to spouses and divorced spouses where the

	employee is deceased or not otherwise entitled to an annuity.

Note.--Detailed figures may not add to totals shown because of rounding.

MONTHLY BENEFITS

Full retirement age or over	 1,700	 $2,484

Less than full retirement age

Unreduced	 5,900	 3,912

Reduced	 	 2,600	 1,801

Age retirements, total	 10,200	 3,124

Disability retirements	 1,700	 2,667

		 Regular employee

		 annuities, total	 11,900	 3,060

Supplemental employee annuities1 5,900	 41

Unreduced spouse annuities	 7,900	 1,283

Reduced spouse annuities	 2,700	 543

Divorced spouse annuities	 800 651

Spouse and divorced

spouse annuities, total	 11,400	 1,062

Aged widow(er)s	 5,300	 2,096

Disabled widow(er)s	 100	 1,677

Widowed mothers

and fathers	 100	 2,034

Remarried widow(er)s 100	 1,166

Divorced widow(er)s	 700	 1,174

Children	 400	 1,371

Parents2 . . . . . .	 1,217

Survivor annuities, total	 6,700	 1,933

Total3 36,000 . . . . . . .

LUMP-SUM BENEFITS

Lump-sum death payments	 2,800	 $921

Residual payments2 . . . . . .	 5,516

Total 2,800	 . . . . . . .
46 2017 INFORMATIONAL CONFERENCE HANDBOOK

Table 5.--Number and average amount of monthly benefits 

under the Railroad Retirement Act in current payment status 

on September 30, 2016

1 Full retirement age, also known as normal retirement age, is gradually increasing from age 65 to age

67 over a 22-year period. For those born 1/2/1943-1/1/1955, the normal retirement age is 66. Annuities

	 to disability retirees at full retirement age and over are payable as age annuities. 2 Averages are after court-ordered partitions. 3	Fewer than 50. 4	Limited to partition payments to spouses and divorced spouses where the employee is deceased or not

otherwise entitled to an annuity. Partition payments from employees on the rolls are included with the

employees' annuities.

Note.--Detailed figures may not add to totals shown because of rounding.

Full retirement age or over	 20,800	 $2,065

Less than full retirement age

Unreduced	 106,600	 3,427

Reduced	 	 63,500	 1,612

Age retirements, total	 190,800 2,675

Disability retirements1

Under full retirement age	 44,700	 2,358	

Full retirement age and over	 31,300	 2,675

Regular employee annuities, total 266,900 2,622

Supplemental employee annuities2 123,000	 42

Unreduced spouse annuities	 94,400	 1,243

Reduced spouse annuities	 46,600	 518

Divorced spouse annuities	 4,900	 622

Spouse and divorced

spouse annuities, total	 145,900	 991

Aged widow(er)s	 90,900	 1,618

Disabled widow(er)s	 3,700	 1,307

Widowed mothers

and fathers	 700	 1,883

Remarried widow(er)s	 3,200	 1,050

Divorced widow(er)s	 9,700	 1,055

Children	 8,700	 1,066

Parents3 . . . . . .	 927

Survivor annuities, total	 116,800	 1,506

Partition payments4 1,500	 307	

Total 654,100	 . . . . . . .

Type of benefit Number Average 

amount
PROVISIONS OF THE RAILROAD RETIREMENT ACT 47

Survivor annuities may also be payable to a surviving divorced spouse or 

remarried widow(er). Benefits are limited to the amount social security would pay 

and therefore are less than the amount of the survivor annuity otherwise payable. 

However, a former spouse may be paid a court-ordered partition amount. 

A surviving divorced spouse may qualify if she or he was married to the employee for a period of at least 10 years immediately before the date the divorce 

became final, is unmarried or remarried under the conditions described in the next 

paragraph, and is age 60 or older (50 if disabled). A surviving divorced spouse who 

is unmarried can qualify at any age if caring for the employee’s child and the child 

is under age 16 or disabled, in which case the 10-year marriage requirement does 

not apply. 

The portion of a survivor annuity equivalent to a social security benefit (tier I) 

may be paid to a widow(er) or surviving divorced spouse who remarries after age 

60, or to a disabled widow(er) or disabled surviving divorced spouse who remarries 

after age 50; however, remarriage prior to age 60 (or age 50 if disabled) would not 

prevent eligibility if such remarriage ends. Such social security level benefits may 

also be paid to a younger widow(er) or surviving divorced spouse caring for the 

employee’s child who is under age 16 or disabled, if the remarriage is to a person 

entitled to railroad retirement or social security benefits, or the remarriage ends. 

OTHER SURVIVOR ANNUITIES 

Other survivor annuities are payable to: 

An unmarried child under age 18. 

An unmarried child age 18 in full-time attendance at an elementary or secondary school or in approved homeschooling 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 2 

months following the month age 19 is attained. These benefits will be terminated 

earlier if the student marries, graduates, or ceases full-time attendance. 

An unmarried disabled child over age 18 if the child became totally and permanently disabled before age 22.
48 2017 INFORMATIONAL CONFERENCE HANDBOOK

An unmarried dependent grandchild meeting any of the requirements described above for a child, if both the grandchild’s parents are deceased or disabled. 

A parent at age 60 who was dependent on the employee for at least half of the 

parent’s support. If the employee was also survived by a widow(er), surviving divorced spouse, or child who could ever qualify for an annuity, the parent’s annuity 

is limited to the amount that social security would pay (tier I). 

SURVIVOR ANNUITY ESTIMATES 

The best way for survivors to obtain an annuity estimate is to visit the nearest 

RRB field office or contact the agency toll-free at 1-877-772-5772. Active or retired employees who are concerned about the amount of benefits which would be 

payable to their survivors may also receive estimates from the nearest RRB field 

office. 

The following information may be helpful in providing an idea of the amount 

of potential survivor benefits: 

The average annuity awarded to widow(er)s in fiscal year 2016, excluding 

remarried widow(er)s and surviving divorced spouses, was $2,086 a month. Children received $1,371 a month, on the average. Total family benefits for 

widow(er)s with children averaged $4,011 a month. The average annuity awarded 

to remarried widow(er)s or surviving divorced spouses in fiscal year 2016 was 

$1,173 a month. 

SURVIVOR ANNUITY TIERS 

Survivor annuities, like retirement annuities, consist of tier I and tier II components. 

Based on deceased employee’s combined railroad retirement and 

social security credits, and generally equivalent to the amount

that would be payable under social security.

Tier I

Percentages of deceased employee’s tier II amount.

Tier II
PROVISIONS OF THE RAILROAD RETIREMENT ACT 49

Survivor annuity amounts may also be determined under certain minimum 

provisions which guarantee that a widow(er)’s annuity will be at least equal to 

the two-tier benefit the deceased employee would have received at the time of the 

award of the widow(er)’s annuity, minus certain reductions including those for age 

and receipt of social security benefits, and no less than the spouse annuity she or 

he was receiving just prior to the employee’s death. 

SURVIVORS WITH DUAL BENEFITS 

Social Security Benefits 

The tier I portion is reduced by the amount of any social security benefits 

received by a survivor annuitant, whether the social security benefits are based 

on the survivor’s own earnings or those of another individual. This reduction 

follows the 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. When 

both railroad retirement annuities and social security benefits are payable, they 

are generally combined into a single payment issued through the RRB. A survivor 

annuitant must notify the RRB if any benefits are received directly from the Social 

Security Administration or if those benefits increase other than for a cost-of-living 

increase. 

Public Pensions 

The tier I portion of a widow(er)’s annuity may be reduced for receipt of any 

Federal, State, or local government pension based on the widow(er)’s own earnings. The reduction generally does not apply if the employment on which the 

pension is based was covered under the Social Security Act throughout the last 

60 months of public employment. 

Most military service pensions and payments from the Department of Veterans 

Affairs will not cause a reduction. Pensions paid by a foreign government or interstate instrumentality will also not cause a reduction. For those subject to a public 

pension reduction, the tier I reduction is equal to 2/3 of the amount of the public 

pension. 
50 2017 INFORMATIONAL CONFERENCE HANDBOOK

Employee Annuity 

If a widow(er) is also entitled to a railroad retirement employee annuity, and 

both the widow(er) and the deceased employee started railroad employment after 

1974, the survivor annuity (tier I and tier II) payable to the widow(er) is reduced 

by the full amount of the widow(er)'s own employee annuity. 

If a widow or dependent widower is also a railroad employee annuitant, and 

either the widow(er) or the deceased employee had 120 months of railroad service 

before 1975, the tier I reduction may be partially restored in the survivor tier II 

amount.

If either the deceased employee or the survivor annuitant had some railroad 

service before 1975 but less than 10 years of service, the widow(er)'s own employee annuity and the tier II portion of the survivor annuity would be payable to 

the widow(er). The tier I portion of the survivor annuity would be payable only 

to the extent that it exceeds the tier I portion of the widow(er)'s own employee 

annuity. 

COST-OF-LIVING INCREASES 

IN SURVIVOR ANNUITIES 

Cost-of-living increases, effective December 1 and included in the January 

payment, are made on the basis of increases in national prices or, in some circumstances, average national wages, and calculated the same way as cost-of-living 

increases in employee and spouse annuities. 

However, in the case of widow(er)s’ annuities computed on the basis of the 

initial minimum amount provided under 2001 legislation, the monthly payment 

will not increase until the amount payable under previous law plus subsequent 

cost-of-living increases is higher than the initial minimum amount. 
PROVISIONS OF THE RAILROAD RETIREMENT ACT 51

A survivor annuity is not payable

for any month the survivor works

for an employer covered under the

Railroad Retirement Act, regardless

of the survivor’s age.

Survivors

who are receiving social

security benefits have their

railroad retirement annuity

and social

security benefit combined for earnings limitations purposes. Prior to the

calendar year in which full retirement

age is attained, there is a deduction

of $1 in benefits for every $2 earned

over an exempt amount ($16,920 in

2017). The deduction is $1 for every

$3 earned over an exempt amount

($44,880 in 2017) for the months in

the calendar year in which the individual attains full retirement age,

up to the month of attainment. Work

deductions stop effective with the

month full retirement age is attained.

In the first year in which a survivor is

both entitled to an annuity and has

a non-work month, a full annuity can

be paid for

those months

in which the

survivor had

low earnings

or did not

have substantial selfemployment,

no matter what total earnings for the

year were.

These earnings restrictions do

not apply to disabled widow(er)s

under age 60 or to disabled children.

However, any work or earnings by a

disability annuitant must be reported and are reviewed to determine

whether they indicate recovery from

the disability.

WORK AND EARNINGS

What are the limitations?

As work and earnings may affect 

the payment of an annuity, they 

must be reported promptly to the 

RRB in order to prevent potential 

overpayments.
52 2017 INFORMATIONAL CONFERENCE HANDBOOK

WHEN SURVIVOR PAYMENTS STOP 

All survivor payments stop upon death; no annuity is payable for the month of 

death. 

A widow(er)’s annuity will be reduced upon remarriage and in some cases 

payment will be prevented. A widow(er)’s, surviving divorced spouse’s, and remarried widow(er)’s annuity could also end upon entitlement to another survivor 

or spouse annuity under the Railroad Retirement Act which is greater than the 

widow(er)’s annuity. 

A surviving divorced spouse’s or remarried widow(er)’s annuity could stop 

when entitled to a social security benefit which equals or exceeds the deceased 

employee’s basic tier I amount and reduces the annuity amount to zero. 

A widow(er)’s, remarried widow(er)'s, or surviving divorced spouse’s annuity 

which is based on a child in care will end if the child is no longer in the person’s 

care, the child’s eligibility ceases, or, in most situations, remarriage occurs. Provided the child in care is not disabled, this type of annuity also ends when the 

child reaches age 18 (for widow(er)s), or age 16 (for remarried widow(er)s and 

surviving divorced spouses). 

 A child’s or grandchild’s annuity will stop if he or she marries, reaches age 

18, or recovers from the disability upon which his or her annuity was based. If the 

child is 18 and a full-time elementary or high school student, the annuity stops 

when full-time attendance ceases, at graduation, or upon attainment of age 19. 

In most cases, when a student attains age 19 during the school term, benefits are 

extended to the 2 months following the month age 19 is attained. 

An annuity will stop if it was based on disability and the beneficiary recovers 

from the disability before age 60. A disability annuity can be reinstated if the disability recurs within 7 years and the widow(er) is still under age 60. 

A parent’s survivor annuity may stop upon remarriage; in certain cases a remarried parent is entitled to a tier I benefit. 

Any of the above occurrences must be reported promptly to the RRB in order 

to prevent an overpayment. 
PROVISIONS OF THE RAILROAD RETIREMENT ACT 53

LUMP-SUM DEATH BENEFITS 

A lump-sum death benefit is payable to certain survivors of an employee with 

10 or more years of railroad service, 

or less than 10 years if at least 5 years 

were after 1995, and a current connection with the railroad industry if there 

is no survivor immediately eligible for 

a monthly annuity upon the employee’s 

death. 

If the employee did not have 10 years of service before 1975, the lump sum is 

limited to $255 and is payable only to the widow(er) living in the same household 

as the employee at the time of the employee’s death. 

If the employee had less than 10 years of service but had 5 years after 1995, 

he or she must have met social security’s insured status requirements for the lump 

sum to be payable. 

If the employee had 10 years of service before 1975, the lump sum is payable 

to the living-with widow(er). If there is no such widow(er), the lump sum may be 

paid to the funeral home or the payer of the funeral expenses. These lump sums 

averaged $1,013 in fiscal year 2016. 

If a widow(er) is eligible for monthly benefits at the time of the employee’s 

death, but the widow(er) had excess earnings deductions which prevented annuity 

payments or for any other reason did not receive monthly benefits in the 12-month 

period beginning with the month of the employee’s death totaling at least as much 

as the lump sum, the difference between the lump-sum benefit and monthly benefits actually paid, if any, is payable in the form of a deferred lump-sum benefit. 

The average for all types of lump sums was $921 in fiscal year 2016. 

The railroad retirement system also provides, under certain conditions, a 

residual lump-sum death benefit which ensures that a railroad family receives at 

A lump-sum death benefit 

is only payable if there is 

no survivor immediately 

eligible for monthly 

benefits.
54 2017 INFORMATIONAL CONFERENCE HANDBOOK

least as much in benefits as the employee paid in railroad retirement taxes before 

1975. This benefit is, in effect, a refund of an employee’s pre-1975 railroad retirement taxes, after subtraction of any benefits previously paid on the basis of the 

employee’s service. This benefit is seldom payable. 

APPLYING FOR AN ANNUITY 

Applications for railroad retirement or survivor benefits are generally filed at 

one of the RRB’s field offices, with a traveling RRB representative at a customer 

outreach program service location, or by telephone and mail. The RRB 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 is not active service and terminates within 90 days from the date of filing. 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. 

RETIREMENT AND SURVIVOR INFORMATION

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.
PROVISIONS OF THE RAILROAD RETIREMENT ACT 55

Railroad employees with RRB online accounts can get estimates of their 

future annuities through the RRB’s website. Employees can access this service 

by visiting the Benefit Online Services section of www.rrb.gov. Instructions for 

establishing an online account are available by clicking on the link for requesting 

a Password Request Code (PRC) in that same section. 

Persons applying for railroad retirement benefits will be required to enroll in 

either the Direct Deposit program, which electronically transfers payments into 

an individual’s checking or savings account, or the U.S. Department of the Treasury’s Direct Express program, which electronically transfers Federal payments to 

an individual’s Direct Express-issued Debit MasterCard®. Enrollment waivers are 

available only under very limited conditions. 

Applicants for railroad retirement-survivor benefits can check with an RRB 

field office as to when they can expect their first payment. Customer service standards and progress reports are available in field offices and on the RRB's website. 

To expedite filing, applicants should contact an RRB field 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 apply-

 ing 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.
56 2017 INFORMATIONAL CONFERENCE HANDBOOK

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. 

Applicants for disability annuities are required to submit supporting medical 

information and should have as much medical documentation and information 

available as possible at the time of filing. They are sometimes asked to take a special medical examination given by a doctor designated by the RRB. 

An annuity is effective as of the first full month throughout which the employee and/or spouse is age 60 with 30 years of service, or age 62 in the case of reduced annuities with less than 30 years of service. 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. 

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 

RRB 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.
PROVISIONS OF THE RAILROAD RETIREMENT ACT 57

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. 

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.

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.
58 2017 INFORMATIONAL CONFERENCE HANDBOOK

 REPRESENTATIVE PAYEES 

Railroad retirement or health insurance benefit payments can be made to a representative payee for a beneficiary if it would best serve the interests of the beneficiary. Payments made in this way are generally for a child, or an adult incapable 

of using the benefits in his or her own interest. The representative payee must use 

the benefits for the beneficiary’s best interest. The benefits are generally used to 

provide for basic needs. The representative payee must report events which could 

affect the payment of the benefits and be able to account for the benefits. 

IF REQUIREMENTS FOR BENEFITS ARE NOT MET 

Retirement annuities are not payable by the RRB unless the employee has 5 

years (60 months) of creditable service after 1995 or 10 years (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 5 years (60 months) of creditable service 

after 1995 or 10 years (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 (see page 62). 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 59

DURATION OF BENEFITS 

For practical purposes, the average duration of monthly benefits to retired employees is measured by the life expectancies of the beneficiaries at the time their 

benefits begin, which take into account their age, sex, and other factors. A nondisabled male employee retiring today at age 60 may expect to receive his annuity 

for 22.4 years, on the average, while a female age annuitant retiring at age 60 has 

a life expectancy of 25.6 years. 

Age of beneficiary 

when annuity begins

Average duration 

(years)

Retired male employee

		 60 22.4

	 	 65 18.2

	 	 70 14.3

Retired female employee

	 	 60 25.6

	 	 65 21.1

	 	 70 17.0

Disabled annuitant1

	 	 60 17.7

Spouse1

	 	 60 25.5

	 	 65 21.2

	 	 70 17.2

Aged widow(er)1

	 	 60 23.2

	 	 65 19.0

	 	 70 15.4

1	For both sexes combined.

Table 6.--Duration of benefits
60 2017 INFORMATIONAL CONFERENCE HANDBOOK

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. A table showing tax rates 

from 1937 on is at the end of the next chapter. 

The tier I tax on employees and employers is 7.65 percent in 2017. The tier II 

tax on employees is 4.90 percent, while the tier II tax rate on rail employers, rail 

labor organizations, and rail employee representatives is 13.10 percent in 2017. 

An employee representative is a labor official of a non-covered labor organization 

who represents employees covered under the Acts administered by the Railroad 

Retirement Board. 

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. 

DUAL TAX PAYMENTS 

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 RRB sickness 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. 

(Text continues on page 62.)
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 61

 Maximum

annual 

 taxable

Tax rate earnings

Tier I

Employees & employers 7.65% * $127,200

Tier II

Employees	 4.90%	 $94,500

Employers	 13.10%	 $94,500

 Annual regular taxes on

 employees earning $127,200

Tier I Tier II Total

Employees	 $9,730.80 $4,630.50 $14,361.30

Employers	 $9,730.80 $12,379.50 $22,110.30

Table 7.--2017 Regular Railroad Retirement Taxes

* The tier I tax rate is divided into 6.20 percent for railroad retirement and

1.45 percent for Medicare hospital insurance. The 2017 maximum earnings

base for railroad retirement is $127,200, and the Medicare hospital insurance

tax is applied to all earnings. Consequently, employee and employer contributions continue to be made at the 1.45 percent rate, even after the employee

has earned $127,200.

An additional 0.9 percent in hospital insurance taxes (2.35 percent in total)

applies to an individual’s income exceeding $200,000, or $250,000 for a married couple filing a joint tax return. While employers will begin withholding the

additional Medicare tax as soon as an individual’s wages exceed the $200,000

threshold, the final amount owed or refunded will be calculated as part of the

individual’s Federal income tax return.
62 2017 INFORMATIONAL CONFERENCE HANDBOOK

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 1951-74 exceeded a maximum 

annual amount creditable under the Railroad Retirement Act. Eligible employees 

will receive their refunds from the RRB 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 ALLOWANCES 

A separation (or severance) allowance is compensation paid to an employee 

who relinquishes job rights to obtain the payment. This compensation is credited 

under the Railroad Retirement and Unemployment Insurance Acts to either the 

month last worked or, if later, the month in which the employee relinquishes his 

or her employment relationship. It is important to note that no additional service 

months can be credited after the month rights are relinquished. 

Frequently, separation allowances are made in a single payment to an employee. If this election is made, consideration should be given to the individual’s 

income tax obligations for that year because the lump-sum payment will be added 

to any other wages paid to the employee in that year. 

Occasionally, employees will elect to have their separation allowances paid 

to them in monthly or periodic payments. If this option is selected, the individual needs to be aware that these payments, like lump-sum separation allowances, 

will be subject to tier I, tier II, and Medicare tax rates up to the annual maximum 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 63

earnings bases in effect when the compensation is paid--even though no additional 

service months can be credited after the month rights are relinquished. 

All compensation subject to tier I payroll taxes will be considered in the 

computation of a railroad retirement annuity, regardless of the type of separation allowance selected. To the extent that a separation allowance does not yield 

additional tier II railroad retirement service credits, a lump-sum payment equal to 

the individual’s railroad retirement tier II payroll taxes deducted will be paid to 

employees meeting minimum service requirements at retirement or to their survivors. The lump-sum provision applies to separation and severance payments made 

after 1984. 

Dismissal allowances differ from separation allowances in that dismissal 

allowances are monthly compensation allowances made to employees who retain job rights, unlike separation allowances where job rights are relinquished. 

Dismissal allowances are considered compensation and are creditable under the 

Railroad Retirement and Unemployment Insurance Acts to the month for which 

they are allocated. 

FEDERAL INCOME TAX AND 

RAILROAD RETIREMENT BENEFITS 

Regular railroad retirement annuities consisting of tier I, tier II, and vested 

dual benefit components have been subject to United States Federal income tax 

since 1984. Supplemental annuities have been subject to Federal income tax since 

1966. 

Because railroad retirement annuities are not taxable by States, according to 

the Railroad Retirement Act, the Railroad Retirement Board will not withhold 

State income tax. 

Annuitants are taxed under either U.S. citizen rules or nonresident alien rules. 

Most nonresident aliens receiving annuities from the RRB are citizens of Canada. 

In most cases, part of a railroad retirement annuity is treated like a social security benefit for income tax purposes, while other parts of the annuity are treated 
64 2017 INFORMATIONAL CONFERENCE HANDBOOK

like private pensions for tax purposes. Most annuitants are sent two tax statements 

from the Railroad Retirement Board each January, even though they receive only a 

single annuity payment each month. 

The part of a railroad retirement annuity equivalent to a social security benefit 

based on comparable earnings is treated for Federal income tax purposes the same 

way as a social security benefit. The amount of these benefits that may be subject 

to Federal income tax, if any, depends on the annuitant's income. (To determine if 

any amount of the social security equivalent benefit is taxable, annuitants should 

refer to IRS publication 915, Social Security and Equivalent Railroad Retirement 

Benefits.) If part of the benefit is taxable, how much is taxable depends on the 

total amount of an annuitant’s benefit payments and other income. Usually, the 

higher that total amount, the greater the taxable part of an annuitant’s benefit.

Generally, up to 50 percent of an annuitant's social security equivalent benefit 

will be taxable. However, up to 85 percent of these benefits can be taxable if either 

of the following situations applies.

• The total of one-half of an annuitant's social security equivalent benefit 

payments plus all his or her other income is more than $34,000 

($44,000 if a beneficiary is married filing jointly).

• An annuitant is married filing separately and lived with his or her spouse 

at any time during the year.

An annuitant can choose to have Federal income taxes withheld from the 

social security equivalent benefit portion of his or her tier I amount by filing IRS 

Form W-4V, Voluntary Withholding Request, at any RRB office. IRS Form W-4V 

is available from Internal Revenue Service offices. The RRB does not withhold 

taxes from this portion of an annuity unless IRS Form W-4V is filed. 

Railroad retirement annuity payments exceeding social security equivalent 

payments, including any vested dual benefits and supplemental annuities, are 

all treated like private pensions for Federal income tax purposes. In some cases, 

primarily those in which early retirement benefits are payable to retired employees 

and spouses between ages 60 and 62, some occupational disability benefits, and 

other categories of unique railroad retirement entitlements, the entire annuity may 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 65

be treated like a private pension. This is because social security benefits based on 

age and service are not payable before age 62, social security disability benefit 

entitlement requires total disability, and the Social Security Administration does 

not pay some categories of beneficiaries paid by the Railroad Retirement Board. 

Annuitants who wish to have Federal income taxes withheld from the portions 

of their annuity over and above social security equivalent benefits must complete 

a tax withholding election on Form RRB W-4P, Withholding Certificate For Railroad Retirement Payments, and send it to the RRB. 

An annuitant is not required to file Form RRB W-4P. If that form is not filed, 

the RRB will withhold taxes only if the combined portions of an annuity payment 

over and above social security equivalent benefits equal or exceed an annual 

threshold amount. In that case, the RRB withholds taxes as if the annuitants were 

married and claiming three allowances. 

Additional information on the tax treatment of railroad retirement benefits can 

be found in IRS Publication 525, Taxable and Nontaxable Income, Publication 

575, Pension and Annuity Income, and Publication 939, General Rule for Pensions 

and Annuities. 

FOR MORE INFORMATION 

The Railroad Retirement Board’s tollfree telephone service provides customers 

with easy access to the agency’s field office 

representatives. In addition, through automated menus available 24 hours a day, beneficiaries can find the address for the RRB field 

office serving their area and listen to special 

announcements about the agency’s benefit 

programs. They can also request a replacement Medicare card, a letter showing 

their current monthly benefit rate, a replacement tax statement for the most recently completed tax year, or a statement of creditable railroad service and compensation. Information on unemployment and sickness claims is also available. 

TOLL-FREE SERVICE

1-877-772-5772

RRB WEBSITE

www.rrb.gov
66 2017 INFORMATIONAL CONFERENCE HANDBOOK

Many of these same features are available by visiting the RRB’s website at 

www.rrb.gov and clicking on Benefit Online Services. In addition, the website 

has information about benefit requirements, customer service standards, and other 

topics of interest. Publications are also available to view and download. 

MONITORING RETIREMENT AND 

SURVIVOR BENEFIT PAYMENTS 

Under several monitoring programs now in effect, the RRB 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.

Representative payees 

Each person who is paid on behalf of another periodically receives 

a questionnaire. The purpose of the 

questionnaire is to determine whether 

the beneficiary is still living, how much 

of the benefits were used for support of 

the beneficiary, and how any savings 

were invested. 

Disability annuitants 

Disability annuitants receive a 

notice annually reminding them of their 

obligation to report all events which 

may affect their continuing entitlement to a disability annuity. They must notify 

the RRB if they perform any work (including self-employment). They must also 

How Benefit Payments 

are Monitored

l	The RRB maintains contact

	 with beneficiaries.

l	Beneficiary records are checked

	 with the Social Security

	 Administration.

l	Representative payees must com	 plete a questionnaire regarding the

	 beneficiary.

l	Disability beneficiaries are obligated

	 to report all events which may

	 affect entitlement.

l	The RRB conducts State wage 	 	

	 checks for disability cases.

(Text continues on page 68.)
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 67

A railroad worker, spouse, orsurvivor whose application for

a benefit under the Railroad Retirement

Act is denied, or one who is dissatisfied

with the decision, has the right of appeal;

that is, he or she may ask for a reconsideration of the decision. The notification

letter sent to the applicant at the time of

the original award or denial of the claim

informs him or her of the right to appeal.

An individual has 60 days, from the

date of the initial notice of a decision on

his or her claim, to file a written statement requesting reconsideration from the

RRB unit that denied the claim. This step

is mandatory before a decision may be

appealed to the RRB’s Bureau of Hearings and Appeals. In cases involving

overpayments, requests for waiver of recovery of the overpayment must be filed

within 60 days of the date of the overpayment notice. In such cases, recovery

of the overpayment will be deferred and

a personal conference may be held, if

requested. A request for waiver received

after 60 days will be considered but will

not defer collection of the overpayment,

and any amount of the overpayment

recovered prior to the date on which the

waiver request is filed will not be subject

to waiver.

An individual has 60 days from the

date of the reconsideration or waiver decision to file an appeal with the RRB’s

Bureau of Hearings and Appeals, a

bureau independent of the units responsible for reconsideration decisions. The

Bureau of Hearings and Appeals may, if

necessary, further investigate the case

and obtain reports through the RRB’s

field representatives, designated medical

examiners, and others who may be in a

position to furnish information pertinent

to the appellant’s claim. If the appeal

involves questions of fact, the appellant

has the right to request an oral hearing.

If one is held, it may be conducted in

the RRB office closest to the appellant’s

home. In some cases, videoconferencing

or phone hearings are held.

If an appellant is not satisfied with

the Bureau of Hearings and Appeals’

decision, he or she may appeal to the

three-member Board within 60 days from

the date on which notice of the Bureau

of Hearings and Appeals’ decision is

mailed. The three-member Board will

base its decision on the evidence before

the hearings officer and ordinarily will not

accept additional evidence or conduct a

hearing. An appellant who is not satisfied

with the Board’s final decision may apply

for a review of the case by a U.S. Circuit

Court of Appeals. The petition for review

must be filed within one year after notice

of the three-member Board’s decision

has been mailed to the appellant.

THE RIGHT TO APPEAL
68 2017 INFORMATIONAL CONFERENCE HANDBOOK

notify the RRB if their doctor tells them their condition has improved and they are 

able to work. 

If a disability annuitant had substantial earnings, his or her physical condition is reviewed in order to determine whether or not there was a recovery from 

the disability. Notices are sent annually until the annuitant reaches his or her full 

retirement age. 

The following describes railroad retirement annuity formula components as 

applied to new awards. The cost-of-living adjustments applied to annuities are 

described in previous pages of this chapter. 

EMPLOYEE RETIREMENT ANNUITY 

The amount of a regular annuity is the total of portions which are computed 

separately under different formulas and called tiers, plus any vested dual benefit 

payment also due. 

The first tier is calculated in generally the same way as a social security 

benefit. Any social security credits of 

an employee are combined with his or 

her railroad retirement credits for tier I 

computation purposes. 

In computing tier I, an employee’s 

creditable earnings are adjusted to take 

into account the changes in wage levels over a worker’s lifetime. This procedure, 

called indexing, increases creditable earnings from past years to reflect averEMPLOYEE AND SPOUSE ANNUITY 

FORMULA COMPONENTS

The tier I portion of a 

railroad retirement annuity 

is calculated in generally 

the same way as a social 

security benefit.

Tier I
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 69

age national wage levels just prior to the employee’s first year of eligibility. The 

adjusted earnings are used to calculate average indexed monthly earnings, and a 

formula is applied to determine the gross tier I amount. 

For those first eligible in 2017, the gross tier I is equal to: 

● 90 percent of the first $885 of average indexed monthly 

 earnings, plus 

● 32 percent of the amount of these earnings over $885 up to 

 $5,336, plus 

● 15 percent of these earnings in excess of $5,336. 

For employees with less than 10 years of railroad service, tier I benefits are 

calculated only if the employee has at least 5 years of service after 1995 and an 

insured status under Social Security Act rules (usually 40 quarters of coverage), 

counting both railroad retirement and social security covered earnings. 

Delayed retirement credits 

Tier I benefits are increased by a certain percentage for each month an employee delays retirement past full retirement age, up until age 70. For those born 

January 2, 1943, or later, the delayed retirement credit is 2/3 of 1 percent per 

month (8 percent per year). Those born prior to January 2, 1943, earn a lesser 

percentage credit. Delayed retirement credits are not given to an employee with 

less than 10 years of railroad service even if the employee is over full retirement 

age when retiring from his or her railroad job, if the employee is also entitled to 

an age-reduced social security retirement benefit and the beginning date of that 

social security benefit precedes the beginning date of his or her railroad retirement 

annuity. 

Age reductions 

For employees retiring between age 62 and their full retirement age with less 

than 30 years of service, age reductions are applied separately to the components 

of an annuity. As mentioned earlier, the full retirement age is gradually rising from 

65 to 67, depending on the year of birth. The maximum annuity reduction for 
70 2017 INFORMATIONAL CONFERENCE HANDBOOK

retirement at age 62 is gradually increasing from 20 percent to 30 percent. This 

does not affect those who retire at ages 60 or 61 with 30 years of service. 

The full retirement age for employee and spouse benefits increases from 65 to 

66 and from 66 to 67 at the rate of two months per year over two separate six-year 

periods. These changes also affect how reduced benefits are computed for early 

retirement. The increase in full retirement age from age 65 to age 66 affects 

those people who were born in the years 

1938 through 1942. The full retirement 

age will remain at age 66 for people born 

in the years 1943 through 1954. The increase in full retirement age from age 66 

to age 67 affects those who were born in 

the years 1955 through 1959. For people 

who were born in 1960 or later the full 

retirement age will be age 67.

Reduced benefits continue to be 

available but at greater reductions. The 

early retirement reduction factor for an 

employee is 1/180 for each of the first 

36 months of the reduction period regardless of the age of initial entitlement and 

decreases to 1/240 for each month (if any) over 36, as mentioned earlier. This will 

result in a gradual increase in the reduction at age 62 to 30 percent for an employee once the age 67 retirement age is in effect. 

If an employee has less than 10 years of railroad service and is already entitled 

to an age-reduced social security benefit, the age reduction in his or her tier I will 

be based on the age reduction applicable on the beginning date of the employee’s 

social security benefit, even if the employee is already of full retirement age on 

the beginning date of his or her railroad retirement annuity. 

Full Retirement Age

Social security legislation enacted

in 1983 affected railroad retirement

benefits through coordinating provisions of the Railroad Retirement Act.

As a result, since the year 2000, the

age requirements for some unreduced

railroad retirement benefits have

been rising just like the social security requirements. The minimum age

requirements for railroad retirement

benefits have not changed, but the

maximum early retirement annuity

reduction is increasing.
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 71

Age reductions are required in the tier I annuity amounts of 30-year employees 

who retired at ages 60-61 before 2002 and attained age 60 or completed 30 years 

of service after June 1984. The age reductions are applied only to the tier I annuity portion. If an employee affected by this provision was born before 1938 and 

attained 60/30 eligibility after December 1985, tier I is permanently reduced by 

approximately 20 percent. For those born after 1937 who retired before 2002, the 

reduction gradually increased as described earlier. In both cases, the tier I amount 

is frozen until the first month throughout which the employee is age 62. It is then 

recomputed to reflect interim increases in national wage levels and will become 

subject to future cost-of-living increases. There is no reduction if the employee 

retired at age 62 or older with 30 years of service, or at age 60 with 30 years of 

service and retirement is after 2001. 

Annuity

Year of birth Full retirement reduction 

age at age 62

1937 or earlier	 65	 	 20.00%

1938	 65 and 2 months	 20.833%

1939	 65 and 4 months	 21.667%

1940	 65 and 6 months	 22.50%

1941	 65 and 8 months	 23.333%

1942	 65 and 10 months	 24.167%

1943 through 1954	 66	 	 25.00%

1955	 66 and 2 months	 25.833%

1956	 66 and 4 months	 26.667%

1957	 66 and 6 months 	 27.50%

1958	 66 and 8 months	 28.333%

1959	 66 and 10 months	 29.167%

1960 or later	 67	 	 30.00%	

Table 8.--Employee Retiring with

Less than 30 Years of Service
72 2017 INFORMATIONAL CONFERENCE HANDBOOK

Workers’ compensation or public disability benefit reductions 

For employees who are under age 65 and receiving a disability annuity, the 

tier I amount is, under certain circumstances, reduced for receipt of workers’ compensation or public disability benefits. 

Social security reductions 

After any required age reduction, the tier I amount is reduced by the amount of 

any social security benefits also payable but not to an amount below zero. 

Reductions for public, non-profit, or foreign pensions 

For employees who attain eligibility for both tier I benefits and certain government pension or other payments after 1985, a reduction may be required for 

receipt of a public pension based, in part or in whole, on employment not covered 

by railroad retirement or social security after 1956. This also applies to payments 

from a non-profit organization or from certain foreign governments or employers. 

Usually, an employee’s tier I benefit will not be reduced by more than 1/2 of his 

or her pension from noncovered employment. However, if the employee is under 

age 65 and is receiving a disability annuity, the tier I benefit may be reduced by an 

additional amount if the pension from noncovered employment is a public disability benefit. 

The second tier of a regular annuity is computed under a separate formula, and 

is based on railroad service alone. 

Tier II benefits are equal to 7/10 

of one percent of the employee’s 

average monthly earnings using the 

tier II tax base in the 60 months of 

highest earnings, times his or her 

years of service in the rail industry. 

The tier II component is reduced by 25 percent of any gross employee vested dual 

benefit amount due. 

Tier II

 The tier II portion of a railroad 

 retirement annuity is based on 

 railroad service alone.
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 73

Age reductions 

Age reductions required for those employees retiring between age 62 and their 

full retirement age with less than 30 years of service are also applied to the tier II 

component of an annuity. The reduction is 1/180 for each of the first 36 months 

the employee is under his or her full retirement age when his or her annuity begins 

and 1/240 for each additional month (if any). 

Full retirement age is gradually rising as mentioned earlier. However, if an employee had any creditable railroad service before August 12, 1983, full retirement 

age for tier II purposes will remain 65. 

Employees with 5-9 years of creditable railroad service, if at least 5 years were 

after 1995, are eligible for tier II benefits the first full month they are age 62. Their 

tier II benefits are subject to the same age reductions that apply to employees with 

10 to 29 years of service. If they are eligible on the basis of total disability, a tier II 

benefit is not payable until age 62 and that amount is reduced for early retirement.

Amount of vested dual benefit

To determine this additional annuity amount for a retired employee meeting 

the vesting requirements, the RRB computes a social security benefit based solely 

on the individual’s railroad service before 1975, and a social security benefit based 

solely on social security covered earnings before 1975. The vested dual benefit is 

the amount by which the total of these two computations exceeds a social security 

benefit based on combined railroad and social security covered earnings before 

1975. 

The vested dual benefit is increased by the cumulative cost-of-living percentage increases applicable to tier I benefits that occurred between January 1, 1975, 

and the date of retirement or January 1, 1982, whichever was earlier. The computed amount is then frozen; that is, no further cost-of-living increases are applied 

thereafter. The amount of any vested dual benefit due is added to the tier portions 

and paid as part of the regular annuity. 
74 2017 INFORMATIONAL CONFERENCE HANDBOOK

The same age reduction applied to the tier I component is applied to the vested 

dual benefit component of an annuity for those employees retiring before full 

retirement age with less than 30 years of service. 

The amount of a supplemental annuity awarded after 1974 is equal to $23 plus 

$4 for each year of service over 25, up to a maximum of $43. A fraction of $4 is 

added for each fractional year of service. 

If a retired employee also receives a private pension paid for entirely or in part 

by a railroad, the supplemental 

annuity is subject to reduction. 

The reduction is equal to the 

amount of the pension paid for 

by the employer. If the employer reduces the private pension 

because of the supplemental 

annuity, the amount of the reduction is restored to the supplemental annuity but does not raise it over the 

$43 maximum.

SPOUSE ANNUITY

The spouse annuity formula is based on certain percentages of the employee’s 

tier I and tier II amounts. 

The tier I portion of a spouse annuity, before any applicable reductions, is 50 

percent of the railroad employee’s unreduced tier I amount. 

Supplemental annuity formula

There is no reduction in the supplemental annuity for any part of 

a private pension paid for by the 

employee alone nor is there a 

reduction for a pension paid 

by a railroad labor organization.

Tier I
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 75

Spouse age reductions 

Age reductions required for those spouses (between age 62 and their full 

retirement age) of employees retiring with less than 30 years of service are applied separately to each annuity component. Full retirement age for a spouse is 

gradually rising, just as for an employee. Actuarially reduced benefits continue 

to be available but at greater reductions. The tier I reduction is 1/144 for each of 

the first 36 months the spouse is under full retirement age when her or his annuity 

begins and will decrease to 1/240 for each month (if any) over 36. This will result 

in a gradual increase in the reduction at age 62 from 25 percent to 35 percent for a 

spouse once the age 67 retirement age is in effect. If an employee has less than 10 

years of railroad service and the spouse is already entitled to an age-reduced social 

security benefit, the age reduction in her or his tier I will be based on the age 

reduction applicable on the beginning date of the spouse’s social security benefit, 

even if the spouse is already of full retirement age on the beginning date of her or 

his railroad retirement annuity. 

December 2001 legislation eliminated the tier I age reduction for employees 

ages 60 or 61 with 30 or more years of service whose railroad retirement annuities 

began January 1, 2002, or later. The spouses of these employees are also eligible 

for full annuities at age 60. 

Age reductions required for spouses of employees with 30 years of service 

who attained 60/30 eligibility after June 1984 but whose annuities began before 

January 2002 are applied only to the tier I portion of the spouse annuity. If the employee attained 60/30 eligibility before July 1984, retired at age 62 with 30 years 

of service or begins receiving an annuity at ages 60 or 61 after 2001 with 30 years 

of service, the spouse tier I portion is not subject to these reductions. 

If the employee’s annuity is subject to 60/30 age reductions, the spouse of 

such an employee may receive a reduced tier I benefit, unless the spouse is already 

of full retirement age. 

In reduced 60/30 spouse cases, the tier I benefit is equal to 1/2 of the employee’s reduced tier I on the employee’s annuity beginning date and is also frozen until the first full month throughout which both the employee and spouse are age 62. 
76 2017 INFORMATIONAL CONFERENCE HANDBOOK

Then, it is recomputed based on 1/2 of the employee’s age 62 gross tier I amount 

and reduced for each month the spouse is under her or his full retirement age at 

that time. If at the time of recomputation the spouse is already at full retirement 

age, or the spouse has a minor or disabled child in care, no age reduction would 

apply. 

The spouse of a disability annuitant who is otherwise eligible for a 60/30 

age annuity receives an age reduction if the spouse’s annuity beginning date was 

before 2002. If the spouse’s annuity beginning date is January 1, 2002, or later, the 

spouse can receive an unreduced annuity as early as age 60. If the spouse is entitled based on having a minor or disabled child in care, there is no age reduction. 

Reductions for other benefits 

After any applicable age reduction required for the spouse’s early retirement, 

the spouse tier I amount is reduced by the amount of any social security benefit 

to which the spouse is entitled. 

The tier I amount may also be reduced for certain Federal, State, or local 

government pension payments based on the spouse’s own earnings. For spouses 

subject to the public pension reduction, the tier I reduction is equal to 2/3 of the 

public pension. 

The spouse tier I amount may also be reduced if the employee under age 65 

is receiving a disability annuity and a worker’s compensation or public disability 

benefit. 

While these offsets can reduce or even completely wipe out the tier I benefit 

otherwise payable to a spouse, they do not affect the tier II benefit potentially 

payable to that spouse. 

The annuity of a divorced spouse is limited to the tier I amount and thus equal 

to what social security would pay. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 77

The spouse tier II amount, before any applicable reductions, is 45 percent of 

the employee’s unreduced tier II amount. If the employee is awarded a vested 

dual benefit, the employee tier II amount used in computing the spouse benefit is 

the amount after the 25 percent reduction for the employee’s vested dual benefit 

entitlement. 

Age reductions 

As mentioned earlier, age reductions are gradually increasing. The tier II age 

reduction for spouses of employees retiring with less than 30 years of service is 

1/144 for each of the first 36 months the spouse is under her or his full retirement 

age when her or his annuity begins and decreases to 1/240 for each month (if 

any) over 36. However, if a railroad employee had any creditable railroad service 

before August 12, 1983, the employee and spouse retirement age for tier II purposes remains 65. Age reductions are not applied to spouse annuities based on the 

spouse’s caring for a child. 

DUAL ANNUITIES 

If a spouse is also a railroad employee annuitant and both the employee and 

spouse started railroad employment after 1974, the amount of any spouse or divorced spouse annuity is reduced by the amount of the employee annuity to which 

the spouse is also entitled. 

If both the employee and spouse are railroad employees and either one had 

some railroad service before 1975, the spouse tier I amount is reduced by the 

amount of the railroad employee tier I to which the spouse is entitled and that 

initial reduction is restored in the spouse tier II amount. The spouse tier I amount 

cannot be reduced to an amount below zero. 

A spouse who is also entitled to a survivor annuity on a different earnings 

record will receive only the higher benefit. 

Tier II
78 2017 INFORMATIONAL CONFERENCE HANDBOOK

The survivor tier I amount is based on the deceased employee’s combined railroad retirement and social security credits, and is computed using social security 

formulas. In general, the survivor tier I amount is equal to the amount of survivor 

benefits that would have been payable under social security. 

The gross survivor tier I amount (before reductions for early retirement, or 

other benefits) is generally equivalent to the unreduced tier I retirement benefit the 

deceased employee had, or would have, received. 

For surviving aged or disabled widow(er)s, remarried widow(er)s and surviving divorced spouses whose annuities begin a year or more after the employee’s 

death, the average indexed monthly earnings, upon which the tier I benefit is 

based, may be reindexed using a later year if it would result in a higher benefit, 

provided the employee died before age 62. The reindexing takes into account 

changes in national earnings levels which occur after the employee’s death but before the survivor becomes eligible for benefits. This provides a benefit consistent 

with earnings levels at the time of the survivor’s eligibility, rather than the time of 

the employee’s death. 

A widow(er), surviving divorced spouse or remarried widow(er) whose annuity begins at full retirement age or later receives the full tier I amount unless the 

deceased employee received an annuity that was reduced for early retirement. The 

eligibility age for a full widow(er)’s annuity is gradually rising from 65 to 67. The 

maximum age reductions will range from 17.1 percent to 20.36 percent, depending on the widow(er)’s date of birth. For a surviving divorced spouse or remarried 

widow(er), the maximum age reduction is 28.5 percent. For a disabled widow(er), 

disabled surviving divorced spouse, or disabled remarried widow(er), the maximum reduction is 28.5 percent, even if the annuity begins at age 50. 

SURVIVOR ANNUITY FORMULA COMPONENTS

Tier I
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 79

A widow(er) or surviving divorced spouse whose eligibility is based on caring 

for a child of the employee receives 75 percent of the full tier I amount. Benefits 

to a surviving divorced spouse end when the child is 16. An eligible child also 

receives 75 percent of the full tier I amount. The total amount the family can receive is subject to a maximum (usually applicable if there are three or more family 

members, not counting aged or disabled surviving divorced spouses, entitled to 

survivor annuities). 

A dependent parent can receive 82.5 percent of the full tier I amount, but if 

both parents are eligible, the total amount cannot be more than 150 percent of the 

full tier I amount. 

Dual benefit reduction 

The tier I amount described above is reduced by the amount of any social 

security benefit or by the tier I amount of any railroad retirement employee annuity the survivor also receives. In the case of a widow or dependent widower who 

is also a railroad employee annuitant, and either the widow(er) or the deceased 

employee had at least 10 years of railroad service before 1975, the tier I reduction may be partially restored in the survivor tier II amount. If either the deceased 

employee or the widow(er) had some railroad service before 1975 but less than 10 

years, the survivor tier I portion is payable only to the extent that it exceeds the 

tier I portion of the widow(er)’s own employee annuity. 

The tier I amount may also be reduced by certain Federal, State, or local 

government pensions which are based on a widow(er)’s own earnings. For widow(er)s subject to the government pension reduction, the tier I reduction is equal 

to 2/3 of the public pension. 

Widow(er)s 

December 2001 legislation established an initial minimum amount which 

yields, in effect, a widow(er)’s tier II benefit equal to the tier II benefit the emTier II
80 2017 INFORMATIONAL CONFERENCE HANDBOOK

ployee would have received at the time of the award of the widow(er)’s annuity, minus any applicable age reduction. It does this by providing an additional 

amount, initially set at 50 percent of the employee’s tier II, to the 100 percent tier I 

and 50 percent tier II benefits provided under prior law. 

This additional amount is offset each year by the dollar amount of the cost-ofliving increases payable in both the tier I and tier II benefits provided under prior 

law. Consequently, such a widow(er)’s net benefit payment will not increase until 

such time as the widow(er)’s annuity, as computed under prior law with all interim 

cost-of-living increases otherwise payable, exceeds the widow(er)’s annuity computed under the initial minimum amount formula. 

The initial minimum amount provision applies to all widow(er)s whose annuities begin February 1, 2002, or later, and to some, but not all, widow(er)s on the 

rolls before that date. If, because of previous cost-of-living adjustments, annuities 

awarded before February 2002 were already higher than the annuity that would be 

payable under the December 2001 legislation, the provision did not apply. 

In most cases, the same age reductions that apply to tier I amounts also apply 

to tier II amounts. 

Other survivors 

Each child receives 15 percent of the deceased employee’s tier II amount, and 

each surviving parent receives 35 

percent. The minimum total tier II 

amount payable to a family is 35 

percent of the employee’s tier II 

amount, and the maximum, 130 

percent. 

If the widow(er) qualifies for a railroad retirement employee annuity and

neither the widow(er) nor the deceased employee had any railroad service

before 1975, the survivor annuity (tier I and tier II) payable to the widow(er) is

reduced by the total amount of the widow(er)’s own employee annuity.

The minimum total tier II 

amount payable to a family is 

35 percent of the employee’s 

tier II amount, and the 

maximum, 130 percent.
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 81

A tier II benefit is not provided for a surviving divorced spouse or a remarried 

widow(er). However, partition payments may be extended to surviving former 

spouses pursuant to divorce agreements. A tier II benefit is not payable to surviving parents if other family members may receive benefits or if the parent has 

remarried. 

SURVIVOR-SPOUSE GUARANTY 

A widow(er) who received a spouse annuity from the RRB is guaranteed that 

the amount of any widow(er)’s benefit payable will not be less than the annuity 

she or he was receiving as a spouse in the month before the employee died. If the 

survivor-spouse guaranty applies, increases are not payable until the regular survivor formula produces more in benefits than the spouse guaranty. At that point, 

benefit components are based on the regular survivor formula and both tier I and 

tier II amounts are increased for the cost of living. 
3

Financing of the 

Railroad Retirement System

83

Railroad retirement and survivor benefits are financed by the following sources 

of income: 

1. Payroll taxes on railroad earnings paid by covered employees 

and employers. 

2. Income from a financial interchange with the social security trust 

funds.

3. Earnings on investments. Funds not needed immediately for benefit payments 

or administrative expenses are transferred to the National Railroad Retiremen

Investment Trust for investment as explained on pages 87-88. 

4. Borrowing from general revenues related to certain features of the 

financial interchange mentioned in (2). 

5. Appropriations from general revenues. 

6. Revenues from Federal income taxes on railroad retirement benefits. 

Each of these income sources is described briefly on the following pages. 

Note.—The Social Security Equivalent Benefit (SSEB) Account came into existence on October 1, 1984. 

Certain items of income to the railroad retirement system are credited to that account, and the portion of benefits 

which is equivalent to social security benefits is charged to that account. The existence of the account changes on

the manner of accounting for income and outgo, but does not change the financing of the railroad retirement system in any way. For this reason, the term “Railroad Retirement Account” may be read as referring to the combine

Railroad Retirement and SSEB Accounts. 
84 2017 INFORMATIONAL CONFERENCE HANDBOOK

Payroll taxes levied on covered employers and their employees are the primary 

source of income to the Railroad Retirement Account. 

Payroll taxes had been paid in equal shares by employers and employees from 

1937 through September 1973. From October 1973 through September 1981, the 

employee rate was the same as the employee rate under social security, while the 

employer rate was 9.5 percentage points higher than the corresponding rate under 

social security. The tax rate equivalent to that which would be paid under social 

security is commonly called the tier I tax. Payroll taxes in excess of the tier I rate 

are called tier II taxes. 

The 1981 railroad retirement amendments raised employer tier II taxes and 

instituted an employee tier II tax. Amendments in 1983 and 1987 further raised 

both employee and employer payroll taxes. Amendments in 1989 specified 401(k) 

contributions and some employer-paid life insurance premiums as subject to railroad retirement payroll taxes. 

The Railroad Retirement and Survivors’ Improvement Act of 2001 significantly revised the financing of the railroad retirement system through provisions for the investment of railroad retirement funds in nongovernmental assets, 

adjustments in the payroll tax rates paid by employers and employees, and the repeal of a supplemental annuity work-hour tax. Supplemental annuities continue to 

be payable and are funded by the National Railroad Retirement Investment Trust. 

In 2017, the employee and employer tier I tax rate of 7.65 percent is divided 

into 6.20 percent for railroad retirement and 1.45 percent for Medicare hospital 

insurance. In 2017, tier II taxes are 13.10 percent on employers and employee representatives and 4.90 percent on employees. An additional 0.9 percent in Medicare 

hospital insurance taxes (2.35 percent in total) is withheld from employees on earnings above $200,000.

1. Payroll Taxes
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 85

Tier II taxes on both employers and employees are based on an average 

account benefits ratio. Depending on the average account benefits ratio, the 

tier II tax rate for employers ranges between 8.20 percent and 22.10 percent, while 

the tier II tax rate for employees is between 0 percent and 4.90 percent. 

The account benefits ratio is, with respect to any fiscal year, the amount determined by the Railroad Retirement Board by dividing the fair market value of the 

assets in the Railroad Retirement Account and the National Railroad Retirement 

Investment Trust as described on pages 87-88 (and for years before 2002, the 

Social Security Equivalent Benefit Account) as of the close of such fiscal year by 

the total benefits and administrative expenses paid from the Railroad Retirement 

Account and the National Railroad Retirement Investment Trust during such fiscal 

year. If the ratio is not an exact multiple of 0.1, it is raised to the next highest multiple of 0.1. 

Likewise, the term average account benefits ratio means, with respect to any 

calendar year, the average determined by the Secretary of the Treasury of the account benefits ratios for the 10 most recent fiscal years ending before such calendar year. 

Tax schedules from 1937 on are shown in the table at the end of this chapter. 

Tier I taxes are ultimately transferred to the social security and hospital insurance trust funds through the financial interchange. The tier II tax is used to finance 

tier II benefits, supplemental annuity benefits, and also the portion of tier I benefits not reimbursed through the financial interchange. 

Earnings Base.--The taxable amounts of an employee’s earnings are subject to tier I and tier II maximums, which are both indexed to annual increases in 

national wage levels. The tier I maximum is the same as the social security wage 

base. The tier II earnings limit is what the social security limit would be if the 

1977 social security amendments had not been enacted. 
86 2017 INFORMATIONAL CONFERENCE HANDBOOK

The financial interchange between the railroad retirement and social security 

systems is intended to put the Social Security Old-Age, Survivors, and Disability 

Insurance (OASDI) and Hospital Insurance (HI) trust funds in the same position 

they would have been had railroad employment been covered under the Social Security and Federal Insurance Contributions Acts. It follows that all computations 

under the financial interchange are performed according to social security law. 

The amount of benefits payable under the Railroad Retirement Act has no effect 

on the results. 

The financial interchange provision was introduced by the 1951 amendments 

to the Railroad Retirement Act and was made retroactive to January 1, 1937. The 

initial determination covered the period from January 1937 through June 1952 

and indicated a balance of $488.2 million in favor of the social security system. 

Only interest was paid on that amount until the debt was liquidated by subsequent 

offsets in favor of the railroad retirement system. Since the liquidation of the original balance, annual transfers reflecting the experience of the preceding fiscal year 

have always favored railroad retirement. The 2016 net transfer alone amounted to 

$4.0 billion. 

The experience under the financial interchange proved to be more favorable 

to the railroad retirement system than was originally anticipated. There were two 

primary causes for this. The first was a series of successive amendments to the 

Social Security Act which raised benefits immediately while tax increases were 

deferred. The second factor was the decline in railroad employment, which reduced the taxes payable to social security but had little immediate effect on the 

benefit reimbursements. 

Financial Interchange Determinations.--Placing the social security trust 

funds in the same position they would have been had railroad employment been 

covered under social security since its inception involves computing the amount of 

social security payroll and income taxes relating to railroad employment and computing the amount of additional benefits which social security would have paid to 

2. Financial Interchange
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 87

railroad retirement beneficiaries during the same fiscal year. In the computation 

of the latter amount, credit is given for any social security benefits actually paid 

to railroad retirement beneficiaries. When benefit reimbursements exceed payroll 

and income taxes, the difference, with an allowance for interest and administrative 

expenses, is transferred from the social security trust funds to the Social Security 

Equivalent Benefit Account. If taxes exceed benefit reimbursements (this has not 

happened since 1951), a transfer would be made in favor of the social security 

trust funds. 

The National Railroad Retirement Investment Trust was established by the 

Railroad Retirement and Survivors’ Improvement Act of 2001. The Trust, a 

tax-exempt entity independent from the Federal Government, became effective 

February 1, 2002. 

The sole purpose of the Trust is to manage and invest railroad retirement 

assets. The Railroad Retirement and Survivors’ Improvement Act authorizes the 

Trust to invest the assets of the Railroad Retirement Account in a diversified investment portfolio in the same manner as those of private sector retirement plans. 

Prior to the Act, investment of Railroad Retirement Account assets was limited to 

U.S. Government securities. 

The Trust’s Board of Trustees is comprised of seven individuals, three selected 

by railroad labor unions and three by railroad companies. The seventh is an independent Trustee selected by the other six Trustees. The terms are for 3 years and 

are staggered. 

The Trustees are required to discharge their duties solely in the interest of the 

Railroad Retirement Board, and through it, the participants and beneficiaries of 

the programs funded under the Railroad Retirement Act. The Trustees are subject 

to fiduciary rules similar to those required by the Employee Retirement Income 

Security Act. 

3. Investments
88 2017 INFORMATIONAL CONFERENCE HANDBOOK

The financial statements of the Trust are required to be audited annually by an 

independent public accountant. In addition, the Trust must submit an annual report 

to Congress on its operations, including a statement of financial position, a statement of cash flows, a statement on internal accounting and administrative control 

systems, the independent auditor’s report, and any other information necessary 

to inform Congress about the operations and financial condition of the Trust. All 

National Railroad Retirement Investment Trust annual management reports and 

quarterly updates are available on the Railroad Retirement Board’s website at 

www.rrb.gov. 

Financial interchange transfers are made in a lump sum for a whole fiscal year 

in the June following the close of a fiscal year. For example, the transfer reflecting 

transactions which occurred from October 2014 through September 2015 took 

place in June 2016. At any time, therefore, there are between 9 and 21 months’ 

worth of financial interchange transfers which, in a sense, are owed the RRB. The 

RRB receives interest on this money, so this practice does no long-term harm to 

the financial condition of the Railroad Retirement Account. The lag in the transfers, however, periodically caused short-term cash-flow problems in past years. 

In order to avoid any further cash-flow problems from this lag, the 1983 

amendments provided for monthly loans from U.S. Treasury general funds. Each 

loan is equal to an estimate of the transfer the RRB would have received in the 

preceding month if the financial interchange with social security were on an upto-date basis, with interest adjustments. The RRB must repay these loans when it 

receives the transfer from social security against which the money was advanced. 

As previously noted, under the financial interchange, the railroad retirement 

system gives the social security system the taxes social security would have 

Borrowing from General Revenues

 Related to the Financial Interchange 4.

5. Appropriations from General Revenues
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 89

collected, and the social security system gives the railroad retirement system the 

additional benefits social security would have paid to railroad workers and their 

families over what it actually pays them. 

The word additional in the preceding sentence is important because it is possible for a railroad employee to be covered under both railroad retirement and social 

security. The social security coverage may be based on earnings from moonlighting while in a railroad job or from coverage under the two systems at different 

times. Fulfilling the purpose of the financial interchange requires deducting from 

social security’s fund only the difference between what social security would 

have paid had it covered railroad employment and what it actually pays the person based on his or her nonrailroad employment. Under the financial interchange, 

therefore, social security subtracts an employee’s social security benefit from the 

amount it would otherwise give to the railroad retirement system. 

This arrangement gave rise to problems that became acute in the early 1970s. 

The problems arose from the weighting in the social security formula in favor of 

low-earning, short-service workers. A railroad employee’s nonrailroad earnings 

usually added little to the benefit social security would have paid on combined 

railroad and nonrailroad earnings (called gross tier I today). However, the employee might qualify for the minimum social security benefit, receiving much more 

from social security than the nonrailroad earnings added to his or her gross tier I 

benefit. 

In order to improve the system’s financial condition, the Railroad Retirement 

Act of 1974 provided that the tier I component of the railroad retirement annuity 

be reduced by any social security benefit. This essentially integrated the two systems and eliminated the advantage of qualifying for benefits under both systems. 

It was generally considered unfair to eliminate this advantage entirely for 

those already retired or close to retirement when the 1974 Act became effective. 

The 1974 Act, therefore, provided for a restoration of social security benefits that 

were considered vested at the end of 1974. The restored amount is known as the 

vested dual benefit. This benefit was available to qualifying spouses and survivors 

as well as to qualifying employees. 
90 2017 INFORMATIONAL CONFERENCE HANDBOOK

For employees retiring in 1975 or later, the vested dual benefit was to be 

equal to: 

•	 a social security benefit based on social security earnings, plus 

•	 a social security benefit based on railroad earnings, minus 

•	 a social security benefit based on combined railroad and social 

security earnings. 

Social security or railroad earnings after 1974 were not to be included in this 

calculation, and the social security benefit referred to is the one which would have 

been calculated at the end of 1974. The resulting amount was to be increased by 

all the automatic social security cost-of-living adjustments between 1974 and the 

date the employee retired. 

For spouses and survivors, the formulas were different and more complicated 

than those for employees. 

The 1981 amendments made significant changes regarding vested dual benefits. Spouses and survivors were not to be awarded vested dual benefits after 

August 13, 1981, though they would continue to receive these benefits if they 

were awarded before that date. Also, vested dual benefits awarded to employees 

would take into account cost-of-living increases only through 1981, rather than 

through the date of retirement. 

Since October 1981, vested dual benefits have been paid from a segregated 

Dual Benefits Payments Account, and appropriations have been made to that account. This means that, starting in fiscal year 1982, each annual appropriation is to 

be sufficient to pay the benefits for that year. If the appropriation for a fiscal year 

is less than required for full funding, the Railroad Retirement Board must reduce 

benefits to a level that the amount appropriated will cover. 

The appropriation for vested dual benefits in fiscal year 1982 was less than 

required for full funding, resulting in a cutback in benefits during that year. Full 

funding was restored for the last two months of fiscal year 1982. The appropriation was less than required in fiscal year 1986, resulting in a cutback during 

April-September of that year. The appropriation was again less than required in 

fiscal year 1988, which resulted in a cutback during April-September. Benefits 
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 91

were cut back in January 1996 due to a lapse in government funding and then 

restored later that same month. For years other than those mentioned, full benefits 

have been paid. 

Social security amendments in 1983 subjected railroad retirement tier I benefits to Federal income taxes on the same basis as social security benefits, and 

subsequent railroad retirement legislation subjected benefits over and above social 

security levels to Federal income tax on the same basis as private pensions, beginning with taxable year 1984. Revenues raised from income taxes on tier I, tier II, 

and vested dual benefits are used for benefit payments. 

FINANCIAL POSITION OF THE

RAILROAD RETIREMENT SYSTEM 

The financial condition of the railroad retirement system is closely related 

to the size of the railroad work force. This is because, as mentioned previously, 

payroll taxes on covered employers and their employees are the primary source of 

income to the system. Clearly, a large labor force will generate more revenue for 

the system than a small labor force. Although railroad employment has declined 

significantly from the historical high in the 1940s, the chart on the next page 

shows that employment has been fluctuating in recent years. 

A drop in employment necessitated the strong corrective action taken in the 

1981 and 1983 amendments. In the absence of these amendments, substantial 

reductions in payments would have been required. 

The omnibus budget legislation enacted December 22, 1987, increased railroad retirement payroll tax rates in January 1988 by a total of 2 percent, and it 

provided for revenues from Federal income taxes on certain railroad retirement 

benefits to be transferred to the railroad retirement system for an additional year, 

fiscal year 1989. Subsequent legislation extended these income tax transfers on a 

permanent basis. 

6. Taxation of Railroad Retirement Benefits
92 2017 INFORMATIONAL CONFERENCE HANDBOOK

Legislation in 2001 provided for the investment of railroad retirement funds in 

nongovernmental assets, adjustments in the payroll tax rates paid by employers and 

employees, and the repeal of a supplemental annuity work-hour tax. 

Table 9.--Average railroad employment, 2005-2015

232 236 237 235 

223 221 

229 234 237 242 247 

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(Years) 

(Thousands) 
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 93

FINANCIALREPORT

The Railroad Retirement Board’s 

2016 railroad retirement financial 

report was submitted to Congress in 

June 2016. The report was generally 

favorable. It concluded that barring 

a sudden, unanticipated, large decrease in railroad employment, or 

substantial investment losses, the 

railroad retirement system will experience no cash-flow problems during 

the next 25 years. The long-term stability of the system, however, is still 

uncertain. Under the current financing structure, actual levels of railroad 

employment and investment return 

over the coming years will largely 

determine whether corrective action 

is necessary. No financing changes 

were recommended.

As of September 30, 2016, total 

railroad retirement system assets, 

comprising assets managed by 

the National Railroad Retirement 

Investment Trust and the railroad 

retirement system accounts at the 

Treasury, equaled approximately 

$27 billion.
94 2017 INFORMATIONAL CONFERENCE HANDBOOK

For the Fiscal Year Ended September 30 2016 2015

Financing Sources:

Payroll Taxes $5,927.4 $6,432.5

Financial Interchange 4,123.7 4,057.0 

Interest on Investments and Other Revenue 34.3 41.4

Federal Income Taxes 758.0 718.0

General Appropriations 32.8 36.8

Other 774.0 (1,566.1)

Transfers to the National 

 Railroad Retirement Investment Trust 0.0 0.0

Transfers from the National 

 Railroad Retirement Investment Trust 1,410.0 1,191.0

 Total Financing Sources 13,060.2 10,910.6

Costs:

Benefit Payments 12,364.5 12,199.7

Interest Expense 97.5 101.1

Salaries and Expenses2 139.7 139.1

Other (25.1) (29.7)

 Total Costs 12,576.6 12,410.2

Financing Sources over Costs 483.6 (1,499.6)

Net Position - Beginning of Period 25,147.8 26,647.4

Net Position - End of Period $25,631.4 $25,147.8

Table 10.--Railroad Retirement and Survivor Program - U.S. Treasury Accounts 

Consolidated Financing Sources, Costs, and Net Position (Millions)1

1

 Prepared on an accrual basis of accounting.

2

 Includes unemployment and sickness insurance salaries and expenses of approximately 

 $25.1 million and $18.1 million in each of the fiscal years 2016 and 2015, respectively. 
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 95

Market value of assets managed 

by NRRIT on September 30, 2016 $25.1 billion

Rate of return of investment portfolio 

managed by NRRIT for full year 

ended September 30, 2016 8.13%

Source: NRRIT

Note.--All NRRIT annual management reports and quarterly updates are available 

on the RRB’s website at www.rrb.gov.

Table 11.--National Railroad Retirement Investment Trust (NRRIT) 

Fiscal Year 2016 Summary
96 2017 INFORMATIONAL CONFERENCE HANDBOOK

Table 12.--Tax rates and maximum taxable earnings 

under the social security program

See continuation of table and footnotes on page 97.

1937-1949 $3,000 ... 1.0 1.0 ... ... ... ... ... ...

1950 3,000 ... 1.5 1.5 ... ... ... ... ... ...

1951-1953 3,600 ... 1.5 1.5 ... ... 2.25 2.25 ... ...

1954 3,600 ... 2.0 2.0 ... ... 3.0 3.0 ... ...

1955-1956 4,200 ... 2.0 2.0 ... ... 3.0 3.0 ... ...

1957-1958 4,200 ... 2.25 2.0 0.25 ... 3.375 3.0 0.375 ...

1959 4,800 ... 2.5 2.25 0.25 ... 3.75 3.375 0.375 ...

1960-1961 4,800 ... 3.0 2.75 0.25 ... 4.5 4.125 0.375 ...

1962 4,800 ... 3.125 2.875 0.25 ... 4.7 4.325 0.375 ...

1963-1965 4,800 ... 3.625 3.375 0.25 ... 5.4 5.025 0.375 ...

1966 6,600 $6,600 4.2 3.5 0.35 0.35 6.15 5.275 0.525 0.35

1967 6,600 6,600 4.4 3.55 0.35 0.5 6.4 5.375 0.525 0.5

1968 7,800 7,800 4.4 3.325 0.475 0.6 6.4 5.0875 0.7125 0.6

1969 7,800 7,800 4.8 3.725 0.475 0.6 6.9 5.5875 0.7125 0.6

1970 7,800 7,800 4.8 3.65 0.55 0.6 6.9 5.475 0.825 0.6

1971 7,800 7,800 5.2 4.05 0.55 0.6 7.5 6.075 0.825 0.6

1972 9,000 9,000 5.2 4.05 0.55 0.6 7.5 6.075 0.825 0.6

1973 10,800 10,800 5.85 4.3 0.55 1.0 8.0 6.205 0.795 1.0

1974 13,200 13,200 5.85 4.375 0.575 0.9 7.9 6.185 0.815 0.9

1975 14,100 14,100 5.85 4.375 0.575 0.9 7.9 6.185 0.815 0.9

1976 15,300 15,300 5.85 4.375 0.575 0.9 7.9 6.185 0.815 0.9

1977 16,500 16,500 5.85 4.375 0.575 0.9 7.9 6.185 0.815 0.9

1978 17,700 17,700 6.05 4.275 0.775 1.0 8.1 6.01 1.09 1.0

1979 22,900 22,900 6.13 4.33 0.75 1.05 8.1 6.01 1.04 1.05

1980 25,900 25,900 6.13 4.52 0.56 1.05 8.1 6.2725 0.7775 1.05

1981 29,700 29,700 6.65 4.7 0.65 1.3 9.3 7.025 0.975 1.3

1982 32,400 32,400 6.7 4.575 0.825 1.3 9.35 6.8125 1.2375 1.3

1983 35,700 35,700 6.7 4.775 0.625 1.3 9.35 7.1125 0.9375 1.3

1984 37,800 37,800 17.0 5.2 0.5 1.3 114.0 10.4 1.0 2.6

1985 39,600 39,600 7.05 5.2 0.5 1.35 114.1 10.4 1.0 2.7

1986 42,000 42,000 7.15 5.2 0.5 1.45 114.3 10.4 1.0 2.9

1987 43,800 43,800 7.15 5.2 0.5 1.45 114.3 10.4 1.0 2.9

1988 45,000 45,000 7.51 5.53 0.53 1.45 115.02 11.06 1.06 2.9

1989 48,000 48,000 7.51 5.53 0.53 1.45 115.02 11.06 1.06 2.9

Period

Maximum annual 

taxable earnings

Tax rate (percent)

Employer and employee, each Self-employed person

OASDI HI Total OASI DI HI Total OASI DI HI
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 97

Table 12.--Continued

1990 $51,300 $51,300 7.65 5.6 0.6 1.45 15.3 11.2 1.2 2.9

1991 53,400 125,000 7.65 5.6 0.6 1.45 15.3 11.2 1.2 2.9

1992 55,500 130,200 7.65 5.6 0.6 1.45 15.3 11.2 1.2 2.9

1993 57,600 135,000 7.65 5.6 0.6 1.45 15.3 11.2 1.2 2.9

1994 60,600 No Limit 7.65 5.26 0.94 1.45 15.3 10.52 1.88 2.9

1995 61,200 No Limit 7.65 5.26 0.94 1.45 15.3 10.52 1.88 2.9

1996 62,700 No Limit 7.65 5.26 0.94 1.45 15.3 10.52 1.88 2.9

1997 65,400 No Limit 7.65 5.35 0.85 1.45 15.3 10.7 1.7 2.9

1998 68,400 No Limit 7.65 5.35 0.85 1.45 15.3 10.7 1.7 2.9

1999 72,600 No Limit 7.65 5.35 0.85 1.45 15.3 10.7 1.7 2.9

2000 76,200 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2001 80,400 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2002 84,900 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2003 87,000 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2004 87,900 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2005 90,000 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2006 94,200 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2007 97,500 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2008 102,000 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2009 106,800 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2010 106,800 No Limit 7.65 5.3 0.9 1.45 15.3 10.6 1.8 2.9

2011 106,800 No Limit 27.65 5.3 0.9 1.45 215.3 10.6 1.8 2.9

2012 110,100 No Limit 27.65 5.3 0.9 1.45 215.3 10.6 1.8 2.9

2013 113,700 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2014 117,000 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2015 118,500 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2016 118,500 No Limit 7.65 5.015 1.185 31.45 15.3 10.03 2.37 32.9

2017 127,200 No Limit 7.65 5.015 1.185 31.45 15.3 10.03 2.37 32.9

2018 [4] No Limit 7.65 5.015 1.185 31.45 15.3 10.03 2.37 32.9

2019 and

later [4] No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

1 Before tax credit. Employees received a credit of 0.3 percent in 1984. The self-employed received a credit of 2.7 percent 

 in 1984, 2.3 percent in 1985 and 2.0 percent in 1986-1989. The trust funds received general revenue equivalent to the credits.

2 Before payroll tax holiday. In calendar years 2011 and 2012, the tax rate for employees and the self-employed was reduced 

 2 percentage points. The trust funds received general revenue equivalent to the reduction in revenue. 

3 Beginning in 2013, employees pay an additional 0.9 percent on earnings above $200,000 (for those who file an individual tax 

 return) or $250,000 (for those who file a joint tax return). This additional HI tax rate is not reflected in the tax rates shown in the table.

4 Based on automatic adjustments in proportion to increases in average earnings levels.

Period

Maximum annual 

taxable earnings

Tax rate (percent)

Employer and employee, each Self-employed person

OASDI HI Total OASI DI HI Total OASI DI HI
98 2017 INFORMATIONAL CONFERENCE HANDBOOK

See continuation of table on next page and footnotes on page 100.

Table 13.--Tax rates and maximum taxable earnings under the railroad 

retirement and railroad unemployment insurance programs

Period

Railroad Retirement

Railroad 

Unemployment 

Insurance

Unemployment 

Repayment Tax4

Supplemental 

Annuities

Maximum earnings 

base1 Tax rate (percent)1

Maximum 

monthly 

taxable 

earnings

Employer 

tax rate 

(percent)3

Maximum 

taxable 

earnings

Employer 

tax rate 

(percent)

Period

Employer 

tax rate 

(cents/hr.)5 Tier I2 Tier II

Tier I Tier II

Employer & 

employee 

each

Employer Employee

1937-6/39 $300 ... 2.75 ... ... ... ... ... ... 11/66-3/70 2 7/39-12/39 300 ... 2.75 ... ... $300 3.0 ... ... 4/70-6/70 6

1940-1942 300 ... 3.0 ... ... 300 3.0 .. ... 7/70-12/70 7

1943-1945 300 ... 3.25 ... ... 300 3.0 ... ... 1/71-6/72 6

1946 300 ... 3.5 ... ... 300 3.0 ... ... 7/72-12/74 71⁄2

1947 300 ... 5.75 ... ... 300 3.0 ... ... 1/75-12/75 81⁄2

1948 300 ... 5.75 ... ... 300 0.5 ... ... 1/76-12/76 12

1949-1951 300 ... 6.0 ... ... 300 0.5 ... ... 1/77-12/77 121⁄2

1952-6/54 300 ... 6.25 ... ... 300 0.5 ... ... 1/78-12/78 12

7/54-12/54 350 ... 6.25 ... ... 350 0.5 ... ... 1/79-12/80 121⁄2

1955 350 ... 6.25 ... ... 350 0.5 ... ... 1/81-12/81 141⁄2

1956 350 ... 6.25 ... ... 350 1.5 ... ... 1/82-12/82 17

1957 350 ... 6.25 ... ... 350 2.0 ... ... 1/83-12/83 181⁄2

1958 350 ... 6.25 ... ... 350 2.5 ... ... 1/84-12/85 20

1/59-5/59 350 ... 6.25 ... ... 350 3.0 ... ... 1/86-12/86 221⁄2

6/59-12/59 400 ... 6.75 ... ... 400 3.75 ... ... 1/87-12/87 24

1960-1961 400 ... 6.75 ... ... 400 3.75 ... ... 1/88-6/91 26

1962 400 ... 7.25 ... ... 400 4.0 ... ... 7/91-3/92 281⁄2

1/63-10/63 400 ... 7.25 ... ... 400 4.0 ... ... 4/92-12/93 31

11/63-12/64 450 ... 7.25 ... ... 400 4.0 ... ... 1/94-12/94 30

1/65-9/65 450 ... 8.125 ... .. 400 4.0 ... ... 1/95-12/95 33

10/65-12/65 450 ... 7.125 ... ... 400 4.0 ... ... 1/96-12/96 34

1966 550 ... 7.95 ... ... 400 4.0 ... ... 1/97-12/98 35

1967 550 ... 8.65 ... ... 400 4.0 ... ... 1/99-12/99 27

1968 650 ... 8.9 ... ... 400 4.0 ... ... 1/00-12/00 261⁄2

1969-1970 650 ... 9.55 ... ... 400 4.0 ... ... 1/01-12/01 26

1971 650 ... 9.95 ... ... 400 4.0 ... ...

1972 750 ... 9.95 ... ... 400 4.0 ... ...

1/73-9/73 900 $900 10.6 ... ... 400 4.0 ... ...

10/73-12/73 900 900 5.85 9.5 ... 400 4.0 ... ...

1974 1,100 1,100 5.85 9.5 ... 400 4.0 ... ...

1975 1,175 1,175 5.85 9.5 ... 400 4.0 ... ...

1976 1,275 1,275 5.85 9.5 ... 400 5.5 ... ...

1977 1,375 1,375 5.85 9.5 ... 400 8.0 ... ...

1978 1,475 1,475 6.05 9.5 ... 400 8.0 ... ...

1979 1,908.33 1,575 6.13 9.5 ... 400 7.0 ... ...

1980 2,158.33 1,700 6.13 9.5 ... 400 5.5 ... ...

1/81-9/81 2,475 1,850 6.65 9.5 ... 400 8.0 ... ...

10/81-12/81 2,475 1,850 6.65 11.75 2.0 400 8.0 ... ...

1982 2,700 2,025 6.7 11.75 2.0 400 8.0 ... ...

1983 2,975 2,225 6.7 11.75 2.0 400 8.0 ... ...

1984 3,150 2,350 67.0 12.75 2.75 600 8.0 ... ...

1985 39,600 29,700 7.05 13.75 3.5 600 8.0 ... ...

1/86-6/86 42,000 31,500 7.15 14.75 4.25 600 8.0 ... ...

7/86-12/86 42,000 31,500 7.15 14.75 4.25 600 8.0 $3,500 4.3

1987 43,800 32,700 7.15 14.75 4.25 600 8.0 7,000 4.7

 1988 45,000 33,600 7.51 16.1 4.9 600 8.0 7,000 6.0

 1989 48,000 35,700 7.51 16.1 4.9 710 8.0 710 4.0

 1990 51,300 38,100 7.65 16.1 4.9 745 8.0 745 4.0
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 99

1991 $53,400 $39,600 7.65 16.1 4.9 $765 5.55 - 12.0 ... 8.00 $765 4.0

1992 55,500 41,400 7.65 16.1 4.9 785 3.10 - 12.0 (3.12) 8.00 785 4.0

1993 57,600 42,900 7.65 16.1 4.9 810 0.65 - 12.0 (5.31) 7.30 810 4.0

1994 60,600 45,000 7.65 16.1 4.9 840 0.65 - 12.0 (0.22) 6.06

1995 61,200 45,300 7.65 16.1 4.9 850 0.65 - 12.0 ... 4.15

1996 62,700 46,500 7.65 16.1 4.9 865 0.65 - 12.0 ... 2.31

1997 65,400 48,600 7.65 16.1 4.9 890 0.65 - 12.0 ... 1.16

1998 68,400 50,700 7.65 16.1 4.9 925 2.15 - 12.0 1.5 0.85

1999 72,600 53,700 7.65 16.1 4.9 970 2.15 - 12.0 1.5 0.92

2000 76,200 56,700 7.65 16.1 4.9 1,005 0.65 - 12.0 ... 1.67

2001 80,400 59,700 7.65 16.1 4.9 1,050 2.15 - 12.0 1.5 2.59

2002 84,900 63,000 7.65 15.6 4.9 1,100 3.15 - 12.0 2.5 2.71

2003 87,000 64,500 7.65 14.2 4.9 1,120 3.15 - 12.0 2.5 2.36

2004 87,900 65,100 7.65 13.1 4.9 1,130 2.15 - 12.0 1.5 2.38

2005 90,000 66,900 7.65 12.6 4.4 1,150 2.15 - 12.0 1.5 3.43

2006 94,200 69,900 7.65 12.6 4.4 1,195 2.15 - 12.0 1.5 4.03

2007 97,500 72,600 7.65 12.1 3.9 1,230 2.15 - 12.0 1.5 3.75

2008 102,000 75,900 7.65 12.1 3.9 1,280 2.15 - 12.0 1.5 3.02

2009 106,800 79,200 7.65 12.1 3.9 1,330 2.15 - 12.0 1.5 2.61

2010 106,800 79,200 7.65 12.1 3.9 1,330 2.15 - 12.0 1.5 2.51 

 

2011 106,800 79,200 7

7.65 12.1 3.9 1,330 3.15 - 12.0 2.5 2.50

2012 110,100 81,900 7

7.65 12.1 3.9 1,365 2.15 - 12.0 1.5 2.65

2013 113,700 84,300 9

7.65 12.6 4.4 1,405 0.65 - 12.0 ... 3.69

2014 117,000 87,000 9

7.65 12.6 4.4 1,440 0.65 - 12.0 ... 4.53

2015 118,500 88,200 9

7.65 13.1 4.9 1,455 2.15 - 12.0 1.5 4.09

2016 118,500 88,200 9

7.65 13.1 4.9 1,455 2.15 - 12.0 1.5 2.52

2017 127,200 94,500 9

7.65 13.1 4.9 1,545 2.15 - 12.0 1.5 1.62

2018 and

later [8] [8] 9

7.65 [10] [10] [8] [3] [3] [3]

Table 13.--Continued

Period

Railroad Retirement Railroad Unemployment 

Insurance

Unemployment 

Repayment Tax4

Maximum earnings 

base1 Tax rate (percent)1

Maximum 

monthly 

taxable 

earnings

Employer 

tax rate

(percent)3

Surcharge

(or pooled 

credit)

New 

employer 

tax rate 

(percent)

Maximum 

taxable 

earnings

Employer 

tax rate 

(percent) Tier I2 Tier II

Tier I Tier II

Employer & 

employee 

each

Employer Employee

See footnotes on page 100.
100 2017 INFORMATIONAL CONFERENCE HANDBOOK

Table 13.--Continued

1 Earnings bases are monthly through 1984 and annual for 1985 and later. October 1, 1973, 

was the effective date for the allocation of railroad retirement taxes by tiers, subject to a 

moratorium for certain railroad labor organizations. The tier I tax rate was set equal 

to the current social security tax rate. 

2 Beginning in 1991, the portion of the tier I tax rate which does not exceed the social 

security HI tax rate is applied to earnings up to the HI maximum taxable amount. In 1993, 

a 1.45 percent tax applied to earnings up to $135,000 and a 6.2 percent tax applied to 

earnings up to $57,600.

3 Taxes are paid only by employers. From 1948 through 1988, the rate for a calendar year 

was based on a graduated schedule depending on the preceding September 30 account 

balance (including administration fund). Except for certain commuter railroads, the rate for 

1989-1990 was fixed at 8.0 percent. Beginning in 1991, each employer’s rate is 

experienced-based, with a minimum of 0.65 percent and a maximum of 12 percent, or 

12.5 percent if a 3.5 percent surcharge applies due to a low account balance.

4 This temporary tax applied to employers until all pre-October 1985 loans from the Railroad 

Retirement Account were fully repaid with interest on June 29, 1993. Earnings bases are 

annual through 1988 and monthly for 1989-1993.

5 Taxes are paid only by employers. The supplemental annuity tax was repealed for calendar 

years after 2001.

6 Before tax credit. Employees received a credit of 0.3 percent in 1984. The self-employed 

received a credit of 2.7 percent in 1984, 2.3 percent in 1985 and 2.0 percent in 1986-1989. 

The trust funds received general revenue equivalent to the credits.

7 Before payroll tax holiday. In calendar years 2011 and 2012, the tax rate for employees and the 

self-employed was reduced 2 percentage points. The trust funds received general revenue 

equivalent to the reduction in revenue.

8 Based on automatic adjustments in proportion to increases in average earnings levels.

9 Beginning in 2013, employees pay an additional 0.9 percent on earnings above $200,000 (for 

those who file an individual tax return) or $250,000 (for those who file a joint tax return). This 

additional HI tax rate is not reflected in the tax rates shown in the table.

10Beginning in 2004, the tier II tax rate is determined annually from a tax rate schedule 

based on the average account benefits ratio. The average account benefits ratio is the 

average for the 10 fiscal years preceding the calendar year of the ratio of the fair market 

value of the assets in the Railroad Retirement Account and the National Railroad 

Retirement Investment Trust as of the close of each fiscal year to the total benefits and 

administrative expenses paid from those accounts during the fiscal year. Employer tax 

rates can range from 8.2 percent to 22.1 percent. Employee tax rates can range from 

0 percent to 4.9 percent.
4

Health Insurance for the 

Aged and Disabled

101

Amendments to the Social Security Act enacted in 1965 established a broad 

program of health insurance, known popularly as Medicare, for people age 65 or 

older, including railroad workers and members of their families. Part A provides 

hospital insurance and related 

benefits financed through payroll 

taxes. Part B provides medical 

insurance benefits on a voluntary 

basis, with the cost shared by the 

participants and the Federal Government. Both parts of the program have been modified and liberalized several times since 1967, 

principally in the 1973 extension 

of coverage to persons under age 

65 who are totally disabled or 

have permanent kidney failure. 

In 2003, legislation was enacted 

which provided prescription drug 

coverage for Medicare beneficiaries beginning in 2006, among 

other changes. 

Persons covered by the railroad retirement system participate in Medicare 

on the same basis as those under the social security system. Amendments to the 

• Medicare Part A 

(Hospital Insurance)

• Medicare Part B

(Medical Insurance)

• Medicare Part C

(Medicare Advantage Plans)

• Medicare Part D

(Medicare Prescription 

Drug Coverage)

MEDICARE INCLUDES:
102 2017 INFORMATIONAL CONFERENCE HANDBOOK

railroad retirement laws in 1965 and to the social security laws in 1972 gave the 

Railroad Retirement Board an important role in the administration of the health 

insurance program and made possible the collection of hospital insurance taxes 

on the same basis as retirement taxes under the Railroad Retirement Tax Act. The 

1965 amendments also empowered the RRB to make payments from the Railroad 

Retirement Account for hospital insurance services provided anywhere in Canada 

to persons receiving or qualified to receive railroad retirement benefits. Such payments apply only to the charges in excess of the amounts payable for hospital and 

related services under Canadian public health insurance laws. 

Social security legislation in 1972 gave the RRB direct legislative authority 

to collect Medicare premiums from railroad retirement beneficiaries and to select 

a carrier to process medical insurance claims for all railroad retirement beneficiaries. Previously, authority in these areas had been delegated to the RRB by the 

Social Security Administration. 

This chapter describes Medicare as amended through December 2016. 

ELIGIBILITY 

All railroad retirement beneficiaries age 65 or over and other persons who are 

directly or potentially eligible for railroad retirement benefits are covered by the 

program. Although the age requirements for some unreduced railroad retirement 

benefits have risen just like the social security requirements, beneficiaries are still 

eligible for Medicare at age 65. Coverage before age 65 is available for disabled 

employee annuitants who have been entitled to monthly benefits based on total 

disability for at least 24 months and have a disability insured status under social 

security law. There is no 24-month waiting period for those who have ALS 

(Amyotrophic Lateral Sclerosis), also known as Lou Gehrig’s disease. If entitled 

to monthly benefits based on an occupational disability, and the individual has 

been granted a disability freeze, he or she is eligible for Medicare 29 months after 

the freeze date. If receiving benefits due to occupational disability and the person 

has not been granted a disability freeze, he or she is generally eligible for Medicare at age 65. The standards for a disability freeze determination follow social 
 HEALTH INSURANCE FOR THE AGED AND DISABLED 103

security law and are comparable to the medical criteria for granting total disability. 

Disabled widow(er)s under age 65, disabled surviving divorced spouses under 

age 65, and disabled children may also be eligible for Medicare, usually after a 

24-month waiting period. 

Medicare coverage at any age on the basis of permanent kidney failure is also 

available to employee annuitants, employees who have not retired but meet certain 

minimum service requirements, spouses, and dependent children who suffer from 

permanent kidney failure requiring hemodialysis or a kidney transplant. The Social Security Administration usually has jurisdiction of Medicare for those eligible 

on the basis of permanent kidney failure. 

PART A AND PART B ENROLLMENT 

If a retired employee or a family member is receiving a railroad retirement 

annuity, enrollment for both hospital and medical insurance is generally automatic 

and coverage begins when the person reaches age 65. For beneficiaries who are 

totally and permanently disabled, Medicare hospital and medical insurance starts 

automatically with the 30th month after the beneficiary became disabled or, if later, the 25th month after the beneficiary became entitled to monthly benefits. Even 

though enrollment is automatic, an individual may decline medical insurance, if so 

desired; this does not prevent him or her from applying for medical insurance at a 

later date. However, premiums may be higher if enrollment is delayed. 

If an individual is eligible for but not receiving an annuity, he or she should 

contact the nearest RRB office before attaining age 65 and apply for both hospital 

and medical insurance. (This does not mean that the individual must retire if presently working.) The best time to apply is during the 3 months before the month in 

which the individual reaches age 65. He or she will then have both hospital and 

medical insurance protection beginning with the month age 65 is reached. If the 

individual does not enroll for medical insurance in the 3 months before attaining 

age 65, he or she can enroll in the month age 65 is reached or during the next 3 

months, but there will be a delay of 1 to 3 months before medical insurance is 
104 2017 INFORMATIONAL CONFERENCE HANDBOOK

EXPLANATION OF HOSPITAL INSURANCE BENEFITS

(Part A of Medicare)

The hospital insurance program is designed to help 

pay the bills when an insured person is hospitalized. 

The program also provides payments for required 

professional services in a skilled nursing facility 

(but not for custodial care) following a hospital stay, 

home health services, and hospice care.

effective. Individuals who do not enroll during this initial enrollment period may 

sign up in any general enrollment period (January 1 - March 31 each year). 

Coverage for such individuals begins July 1 of the year of enrollment. 

Premiums for medical insurance are increased 10 percent for each 12-month 

period the individual could have been, but was not, enrolled. However, individuals 

age 65 or older who wait to enroll in Part B because they have group health plan 

coverage based on their own or their spouse’s current employment may not have 

to pay higher premiums because they may be eligible for a special enrollment 

period. The same special enrollment period rules apply to disabled individuals, 

except that the group health insurance may be based on the current employment of 

the individual, his or her spouse, or a family member. 

Individuals deciding when to enroll in Medicare Part B must consider how 

this will affect eligibility for health insurance policies which supplement Medicare 

coverage. These include Medigap insurance and prescription drug coverage and 

are explained later in this chapter. 

For information on coverage for kidney disease, a social security office should 

be contacted. 

Benefits under this program cover medically necessary care in hospitals and 

skilled nursing facilities, home health visits, and hospice care. Coverage also includes blood, after the first three pints, when the person is an inpatient at a hospital or skilled nursing facility during a covered stay. 

(Text continues on page 106.)
 HEALTH INSURANCE FOR THE AGED AND DISABLED 105

1. If a patient is hospitalized, Medicare 

will pay for all covered hospital services 

during the first 60 days 

of a benefit period except for a deductible 

($1,316 in 2017). From 

the 61st through the 

90th day, Medicare 

hospital insurance 

pays for all covered 

services except for a 

coinsurance charge 

($329 a day in 2017). 

A lifetime reserve of 60 

days may be used if a 

patient is in the hospital for more than 90 

days in a benefit period; the patient pays 

$658 a day in 2017 for 

these additional days. 

Covered hospital services include almost 

all those ordinarily furnished by a hospital to 

its patients. More 

information on specific 

services is available 

by calling 

1-800-MEDICARE 

(1-800-633-4227) 

or by visiting 

www.medicare.gov.

However, payments 

will not be made for 

private-duty nursing 

or personal comfort 

items. Inpatient psychiatric hospital services 

are covered, but there 

is a lifetime limitation 

of 190 days.

2. Under certain conditions, the cost of 

skilled nursing care in 

a facility approved by 

Medicare for services 

of a professional level 

(not custodial care) is 

covered for the first 20 

days in each benefit 

period plus up to 80 

additional days with 

the patient paying 

$164.50 a day in 2017 

for the 21st through 

the 100th day. These 

benefits are payable 

only if the patient was 

in a hospital for at 

least 3 days in a row, 

not counting the day 

of discharge, before 

transferring to a skilled 

nursing facility. 

3. Under certain 

conditions, Medicare 

pays the cost of medically necessary home 

health care services.

This is limited to reasonable and necessary 

part-time or intermittent skilled nursing 

care and home health 

aide services as well 

as physical therapy, 

occupational therapy, 

and speech-language 

therapy which are ordered by a doctor. It 

also includes medical 

social services, durable medical equipment 

(such as wheelchairs, 

hospital beds, oxygen, 

and walkers), medical 

supplies, and other 

services.

4. Hospice care is a 

service provided to

terminally-ill persons. 

It includes drugs for 

symptom control and 

pain relief, medical and 

support services from 

a Medicare-approved 

hospice, and other 

services not otherwise 

covered by Medicare.

What Medicare Part A Covers
106 2017 INFORMATIONAL CONFERENCE HANDBOOK

There is a limit on how many days of hospital or skilled nursing care Medicare 

helps pay for in each benefit period. A benefit period begins the day a patient goes 

to a hospital or skilled nursing facility. It ends after a person has not received any 

hospital or skilled nursing care for 60 days in a row. There is no limit to the 

number of benefit periods a person can have.

Benefits are ordinarily paid only for services received in the United States or 

Canada. Hospital insurance also covers hospital stays in Mexico under very 

limited conditions.

Financing 

Railroad employers and employees each pay hospital insurance taxes with 

their railroad retirement taxes. The hospital insurance tax on each is 1.45 percent 

on all earnings. An additional 0.9 percent in hospital insurance taxes (2.35 percent 

in total) applies to an individual’s income exceeding $200,000, or $250,000 for a 

married couple filing a joint tax return. While employers will begin withholding 

the additional Medicare tax as soon as an individual’s wages exceed the $200,000 

threshold, the final amount owed or refunded will be calculated as part of the 

individual’s Federal income tax return. 

The medical insurance program is voluntary, but eligible persons who wish 

to participate pay a monthly premium. For persons who are receiving railroad 

retirement benefits (including those also in receipt of social security benefits), the 

monthly premium is deducted from their railroad retirement checks; others make 

payments or, in some cases, have their premiums paid under a State assistance 

program. 

(Text continues on page 108.)

EXPLANATION OF MEDICAL INSURANCE BENEFITS

(Part B of Medicare)

The medical insurance program is designed to help 

pay the bills for doctors' services and for a number 

of other medical costs not covered by the hospital 

insurance program.
 HEALTH INSURANCE FOR THE AGED AND DISABLED 107

Medical and Other 

Services

Medically-necessary 

doctors’ services 

(not routine physical 

exams), outpatient 

medical and surgical 

services and supplies, diagnostic tests, 

ambulatory surgery 

center facility fees for 

approved procedures, 

and durable medical 

equipment are usually 

covered, if ordered 

from a Medicareapproved provider.

Clinical Laboratory 

Services

Blood tests, urinalysis, 

and some screening 

tests can be covered.

Home Health Care 

Services

This is limited to 

reasonable and necessary part-time or 

intermittent skilled 

nursing care and 

home health aide services as well as 

physical therapy, 

occupational therapy, 

and speech-language 

therapy ordered by 

a doctor, and some 

other services.

Outpatient Hospital 

Services

This includes hospital 

services and supplies 

received as an outpatient as part of a 

doctor’s care.

Blood

Part B helps pay for 

blood as an outpatient 

or as part of a Part B 

covered service.

Preventive Services

These include bone 

mass measurements, 

cardiovascular screening, colorectal cancer 

screening, diabetes 

services, glaucoma 

testing, screening 

mammograms, Pap 

test and pelvic examination, prostate 

cancer screening, 

some shots (Flu,

Pneumococcal, and 

Hepatitis B), and a 

one-time Welcome 

to Medicare physical 

examination.

Many other services 

are covered. More information on specific 

services is available 

by calling 

1-800-MEDICARE 

(1-800-633-4227) 

or by visiting 

www.medicare.gov.

Medical insurance 

generally does not pay 

for services outside the 

United States. There 

are rare emergency 

cases where medical 

insurance can pay 

for care in Canada or 

Mexico. 

What Medicare Part B Covers
108 2017 INFORMATIONAL CONFERENCE HANDBOOK

The medical insurance plan helps cover physicians’ services, outpatient medical and surgical services, and many other medical and health services in and out of 

medical institutions. It also helps cover some preventive services. 

There is an annual deductible for Part B services ($183 in 2017). After the 

deductible is paid, Medicare will generally pay 80 percent of the approved charges 

for covered services during the rest of the year; the beneficiary is responsible for 

paying the remaining 20 percent of the cost. 

Medicare provides basic protection against the high cost of illness, but it will 

not pay all health care expenses. Some of the services and supplies Medicare cannot pay for are custodial care, such as help with bathing, eating, and taking medicine; dentures and routine dental care; most eyeglasses, hearing aids, and routine 

examinations to prescribe or fit them; and long-term care (nursing homes). 

Financing 

Part B medical insurance is paid for by premiums from persons who enroll in 

the program and by Federal general revenue funds. The standard premium rate 

for new enrollees in 2017 is $134. However, most Medicare beneficiaries will not 

pay this amount. By law, Part B premiums for current enrollees cannot increase by 

more than the amount of the cost-of-living adjustment for social security (railroad 

retirement tier I) benefits. Since that adjustment is 0.3 percent in 2017, about 70 

percent of Medicare beneficiaries will see only a slight increase in their Part B 

premiums. The higher premium amount will apply to new enrollees in the program, and certain beneficiaries will continue to pay higher premiums based on 

their modified adjusted gross income.

 Monthly premiums for some beneficiaries are greater, depending on a beneficiary’s or married couple’s modified adjusted gross income. The incomerelated Part B premiums ($134 plus the monthly adjustment amount) for 2017 are 

$187.50, $267.90, $348.30, or $428.60, depending on how much an individual 

beneficiary’s modified adjusted gross income exceeds $85,000 (or a married 

couple’s income exceeds $170,000). Only beneficiaries whose modified adjusted gross income exceeds $214,000 (or $428,000 for a married couple) pay the 

highest premium. Some individuals also pay premium surcharges because they 

enrolled late for Part B. 
 HEALTH INSURANCE FOR THE AGED AND DISABLED 109

MEDICARE PLAN CHOICES 

Medicare beneficiaries have choices for receiving health care services. The 

Original Medicare Plan is the traditional fee-for-service Medicare plan that is 

available nationwide. A beneficiary can see any doctor or provider who accepts 

Medicare and is accepting new Medicare patients. Or a beneficiary can choose a 

Medicare Advantage Plan (Part C). These plans combine Medicare Part A and 

Part B and, in some cases, Part D prescription drug coverage. In limited instances, 

other Medicare health plans may be available. To find out which plans are available in an area, visit www.medicare.gov, or call 1-800-MEDICARE

(1-800-633-4227). 

A beneficiary must have both Medicare Part A and Part B to join a Medicare 

Advantage Plan, and the individual must live in the plan’s service area. Under a 

Medicare Advantage Plan, a beneficiary may pay lower copayments and receive 

extra benefits. 

Original Medicare Plan (Part A and Part B)

Under the Original Medicare Plan, patients visit the hospital, doctor, or health 

care provider of their choice who accepts Medicare patients. Medicare pays a set 

percentage of the expenses, and patients are responsible for certain deductible and 

coinsurance payments. 

Persons enrolled in the Original Medicare Plan who want prescription drug 

coverage must join a Medicare Prescription Drug Plan (Part D) as described on 

pages 111-112, unless they already have drug coverage from a current or former 

employer or union that is at least as good as the standard Medicare prescription 

drug coverage. 

When a patient receives hospital insurance benefits, he or she is billed by the 

hospital only for the deductible amount, any coinsurance amount, and any noncovered services. The remainder of the bill from the hospital, as well as bills for 

services in skilled nursing facilities or home health visits, is sent to Medicare to 

pay its share. 
110 2017 INFORMATIONAL CONFERENCE HANDBOOK

Claims for medical insurance benefits filed on behalf of railroad retirement 

beneficiaries in the Original Medicare Plan are generally handled by Palmetto 

GBA on a nationwide basis. Palmetto GBA is a private company that contracts 

with the RRB and Medicare to pay Part B claims for railroad retirement beneficiaries, and can be reached at: 

Palmetto GBA 

Railroad Medicare Part B Office 

P.O. Box 10066 

Augusta, GA 30999-0001 

1-800-833-4455 

www.palmettogba.com/medicare

Medigap.--Many private insurance companies sell insurance, called Medigap

for short, that helps pay for services not covered by the Original Medicare Plan. 

Policies may cover deductibles, coinsurance, copayments, health care outside the 

United States, and more. Generally, individuals need Medicare Part A and Part B 

to enroll, and a monthly premium is charged. 

When someone first enrolls in Medicare Part B at age 65 or older, he or she 

has a 6-month Medigap open enrollment period. During this period, an insurance 

company cannot deny coverage, place conditions on a policy, or charge more for a 

policy because of past or present health problems. 

More detailed information about Medigap policies is available by calling the 

Medicare toll-free number, 1-800-633-4227, or by visiting www.medicare.gov. 

Medicare Advantage Plans (Part C) 

Medicare Advantage Plans combine Medicare Part A and Part B coverage, and 

are available in most areas of the country. A beneficiary must have both Medicare 

Part A and Part B to join a Medicare Advantage Plan, and the individual must live 

in the plan’s service area. Medicare Advantage Plan choices include regional preferred provider organizations (PPOs), health maintenance organizations (HMOs), 

private fee-for-service plans, and others. A PPO is a plan under which a beneficiary uses doctors, hospitals, and providers belonging to a network; beneficiaries 

can use doctors, hospitals, and providers outside the network for an additional 

cost. Under Medicare Advantage, a beneficiary may pay lower copayments and/or 
 HEALTH INSURANCE FOR THE AGED AND DISABLED 111

Part B premiums, and receive extra benefits. Most plans include prescription drug 

coverage (Part D). Advantage Plans are managed by private insurance companies 

approved by Medicare. 

The monthly Part C premium can be deducted from railroad retirement or social security benefits paid by the RRB, if the beneficiary contacts his or her 

Part C plan and requests that the RRB withhold Part C premiums. 

For those in a Medicare Advantage Plan, information on out-of-pocket costs is 

available by calling 1-800-633-4227 or by visiting www.medicare.gov. 

Medicare Prescription Drug Coverage (Part D) 

Medicare contracts with private companies to offer beneficiaries prescription 

drug coverage. These companies offer a variety of options, with different covered 

prescriptions, and different costs. Beneficiaries pay a monthly premium, a yearly 

deductible and part of the cost of prescriptions. Those with limited income and 

resources may qualify for help in paying some prescription drug costs. 

The Affordable Care Act requires some Part D beneficiaries to also pay a 

monthly adjustment amount, depending on a beneficiary’s or married couple’s 

modified adjusted gross income. The Part D income-related monthly adjustment amounts for 2017 are $13.30, $34.20, $55.20, or $76.20, depending on the 

extent to which an individual beneficiary’s modified adjusted gross income exceeds $85,000 (or a married couple’s income exceeds $170,000), with the highest amounts only paid by beneficiaries whose incomes are over $214,000 (or 

$428,000 for a married couple). 

The monthly Part D premium can be deducted from railroad retirement or 

social security benefits paid by the RRB, if the beneficiary contacts his or her 

Part D plan and requests that the RRB withhold Part D premiums. The RRB also 

withholds Part D income-related adjustment amounts from benefit payments. 

Medicare prescription drug plans are voluntary. To enroll, individuals must 

have Medicare Part A, and must live in the prescription drug benefit plan’s service 

area. Beneficiaries can join during the period that starts 3 months before Medicare 
112 2017 INFORMATIONAL CONFERENCE HANDBOOK

coverage starts and ends 3 months after the first month of Medicare coverage. 

There may be a higher premium if an individual doesn’t join a Medicare drug plan 

when first eligible, and he or she does not have other prescription drug coverage 

that, on average, covers at least as much as standard Medicare prescription drug 

coverage. In most cases, there is no automatic enrollment to get a Medicare prescription drug plan. Individuals enrolled in Medicare Advantage Plans will generally get their prescription drug coverage through their plan. 

More information about Medicare prescription drug plans, as well as free personalized information, is available online at www.medicare.gov, or by calling the 

Medicare toll-free number, 1-800-633-4227. Free personalized counseling is also 

available from the local State Health Insurance Assistance Program (SHIP) and 

other local and community-based organizations. Beneficiaries can visit the Medicare website to find the organization nearest them. 

APPEALS 

If a patient disagrees with a decision on the amount Medicare will pay on a 

claim or whether services received are covered by Medicare, he or she has the 

right to appeal the decision. Under the Original Medicare Plan, the notice received 

from Medicare stating the decision made on a claim tells a patient what appeal 

steps can be taken. This information is also in Medicare Advantage Plan materials. 

ADVANCE DIRECTIVES 

Individuals have the right to make a health care advance directive. This directive contains written instructions stating the person’s choices for health care 

or names someone to make those choices. The instructions are to be used if the 

person is unable to make his or her own health care decisions. Laws governing 

advance directives vary from State to State. 
 HEALTH INSURANCE FOR THE AGED AND DISABLED 113

MEDICARE PUBLICATIONS

A handbook, Medicare & You, is mailed to Medicare beneficiary households 

each fall by the Centers for Medicare & Medicaid Services and is also available at 

www.medicare.gov. It describes the Medicare benefits, costs, and health service 

options available. 

Medicare for Railroad Workers and Their Families (Form RB-20) provides 

general information on Medicare and is available at any RRB field office. It is also 

available online at www.rrb.gov.

TOLL-FREE NUMBERS, WEBSITES

MEDICARE

1-800-MEDICARE (1-800-633-4227)

TTY/1-877-486-2048

www.medicare.gov

PALMETTO GBA 

1-800-833-4455

TTY/TDD 1-877-566-3572

www.palmettogba.com/medicare
5

Development of the Railroad

Unemployment Insurance System

115

The railroad unemployment insurance system, like the railroad retirement 

system, was established in the 1930s. The Great Depression demonstrated the 

need for unemployment compensation programs, and State unemployment programs had been established under the Social Security Act in 1935. While the State 

unemployment programs generally covered 

railroad workers, railroad operations which 

crossed State lines caused special problems. 

Unemployed railroad workers were denied 

compensation by one State because they became unemployed while working in another 

State or because their employers had paid 

unemployment taxes in another State. Although there were cases where employees appeared to be covered in more than one State, they often did not qualify in 

any. 

A Federal study commission, which reported on the nationwide State plans 

for unemployment insurance, recommended that railroad workers be covered by 

a separate plan because of the complications their coverage had caused the State 

plans. Congress subsequently enacted the Railroad Unemployment Insurance Act 

in June 1938. The Act established a system of benefits for unemployed railroaders, financed entirely by railroad employers and administered by the RRB. 

Sickness benefits were added in 1946. 

June 25, 1938

The Railroad 

Unemployment 

Insurance Act 

is enacted.
116 2017 INFORMATIONAL CONFERENCE HANDBOOK

THE RAILROAD UNEMPLOYMENT INSURANCE ACT 

OF 1938 AND LATER AMENDMENTS 

The Act of 1938 established a system of benefits for unemployed railroad 

workers, plus a free placement service, to be financed by a payroll tax of 

3 percent, payable entirely by employers. After some minor changes in the following year, the law went into operation on July 1, 1939. 

Benefits were payable to qualified railroad employees according to a scale 

of daily rates geared to base-year earnings. Initially, the daily rates ranged from 

$1.75 to $3 and were payable for a maximum of 80 days in each benefit year, after 

an initial waiting period. In 1940, the maximum daily rate was raised to $4 and the 

maximum duration to 100 days in 20 weeks; the waiting period was reduced from 

15 days to 7 days and a uniform benefit year was established. 

The first set of major amendments was enacted in 1946. The maximum 

duration was increased to 26 weeks and the maximum daily benefit rate to $5. The 

most important feature of these amendments was the program of cash sickness 

benefits (including maternity benefits) for railroad workers, paralleling unemployment benefits and financed from the same taxes. At that time, only two States, 

Rhode Island and California, had sickness plans. Three additional States (New 

Jersey, New York, and Hawaii) and Puerto Rico later adopted similar plans. 

As a result of the very low rate of unemployment and relatively high payrolls 

during the war years, the balance in the Railroad Unemployment Insurance Account increased rapidly. Consequently, in 1948 the principle of a fixed contribution rate was abandoned and a sliding scale of contribution rates substituted. The 

rates were to range from 0.5 percent to 3 percent of taxable payroll, depending on 

the current balance in the Railroad Unemployment Insurance Account. 
 DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 117

Amendments enacted in 1952 and 1954 raised the maximum daily benefit 

rate to $7.50 and then to $8.50, the base-year earnings needed by an employee to 

qualify for benefits to $300 and then to $400, and the taxable limit on monthly 

earnings from $300 to $350. The amendments also provided that the benefit rate, 

subject to the maximum amount, should not be less than half the claimant’s daily 

wage rate. In addition, normal benefits for unemployment or sickness in a benefit 

year were each limited in total to the employee’s creditable base-year earnings. 

Legislation in 1959 increased the maximum daily benefit rate to $10.20, 

raised the benefit rate guaranty to 60 percent of the daily wage rate, and provided extended unemployment benefits for 13 weeks to employees with at least 10 

years of service and 26 weeks of extended benefits to 15-year employees. These 

amendments also raised the base-year qualifying amounts from $400 to $500 and 

the limit on creditable and taxable earnings from $350 to $400 a month. They removed the waiting period for unemployment benefits and the Sunday and holiday 

disqualification provision, and increased the maximum contribution rate to 

3.75 percent. In addition, the RRB received authority to borrow money from the 

Railroad Retirement Account when necessary in order to pay benefits when due. 

Such loans were to bear the same interest rate as was being earned by other investments of the Railroad Retirement Account and were to be repaid as funds became 

available. 

Amendments enacted in 1963 were designed to improve the financing of 

the system. The maximum contribution rate was increased to 4 percent, and the 

amount of base-year earnings needed by an employee to qualify for benefits was 

raised from $500 to $750. Also, a minimum base-year service requirement of 7 

months was added for employees having no previous railroad service, and the 

disqualification for quitting work voluntarily without good cause was made more 

stringent. 

In 1968, legislation increased the maximum daily benefit rate to $12.70 and 

provided extended benefits for sickness on essentially the same basis as for 

1950s

1960s
118 2017 INFORMATIONAL CONFERENCE HANDBOOK

unemployment, except that these extended sickness benefits could not be paid to 

employees age 65 or older. These amendments also raised the base-year qualifying 

amount to $1,000, eliminated the special maternity benefit provisions (benefits 

were still payable for pregnancy and childbirth under the sickness benefit provisions), and added a disqualification for employees who receive separation allowances. 

Amendments in 1975 increased the maximum daily benefit rate to $24 beginning on July 1, 1975, and to $25 starting on July 1, 1976. The 60 percent daily 

benefit rate guaranty was retained in the amended law up to the amount of the new 

daily maximum, and a new daily minimum rate of $12.70 was established. The 

amendments liberalized the basic eligibility requirements for new employees by 

lowering the 7-month base-year service requirement to 5 months. In addition, the 

1975 amendments mandated a 7-day waiting period for benefit payments resulting 

from strikes. The tax rate schedule was increased, starting in 1976, from a maximum of 4 percent to a maximum of 8 percent, depending on the balance in the 

account, in order to finance the increased benefits. This legislation also lowered 

the waiting period for sickness benefits. 

The 1975 legislation also provided extended unemployment benefit periods of 

up to 13 weeks for employees with less than 10 years of service during periods of 

high unemployment. Under the pre-existing law, extended benefits were payable 

only to employees with 10 or more years of service. However, subsequent 1981 

legislation repealing the high unemployment extended benefit provisions in the 

State unemployment programs nullified the related railroad unemployment insurance provisions, and the RRB was required to cease awarding extended benefits to 

employees with less than 10 years of service. 

The Revenue Act of 1978 made unemployment benefits and sickness benefits 

paid in lieu of unemployment benefits subject to Federal income tax. 

1970s
 DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 119

Amendments enacted in 1981 subjected the first six months of sickness 

benefits to tier I railroad retirement taxes, provided the benefits did not result from 

on-the-job injury. Legislation enacted in March 1983 provided unemployed 

railroad workers with less than 10 years of service, who exhausted normal railroad unemployment benefits, up to 10 weeks of temporary supplemental extended 

unemployment benefits, but these temporary benefits were financed from Federal 

general revenue funds. 

The national economic recession of the early 1980s caused large-scale railroad 

layoffs. The layoffs increased unemployment benefit payments to record levels 

which far exceeded unemployment tax income and necessitated high levels of 

loans from the Railroad Retirement Account. The Railroad Unemployment Insurance Account owed the Railroad Retirement Account a peak amount of over 

$850 million at the end of fiscal year 1986. Financial measures to assist the Railroad Unemployment Insurance Account were included in the Railroad Retirement 

Solvency Act enacted August 12, 1983. 

The Railroad Retirement Solvency Act of 1983 raised the taxable limit 

on monthly earnings from $400 to $600 and the base-year qualifying amount 

from $1,000 to $1,500. Also, the waiting period for benefits during strikes was 

increased from 7 to 14 days. In addition, a temporary repayment tax on railroad 

employers was scheduled to begin July 1, 1986, to initiate repayment of the loans 

made by the Railroad Retirement Account. And sickness benefits, other than those 

resulting from on-the-job injuries, were made subject to Federal income tax. 

The legislation also mandated the establishment of a Railroad Unemployment 

Compensation Committee to review the unemployment and sickness benefit programs and submit a report to Congress. The Committee reviewed all aspects of the 

railroad unemployment insurance system, in particular, repayment of the system’s 

debt to the Railroad Retirement Account, and the viability of transferring railroad 

unemployment benefit payments to State programs. 

The Consolidated Omnibus Budget Reconciliation Act of April 1986 

revised the 1983 law which had set a temporary unemployment insurance loan 

1980s
120 2017 INFORMATIONAL CONFERENCE HANDBOOK

repayment tax beginning July 1, 1986, at a 2 percent rate with increases of 0.3 

percent a year until 1990. The amended schedule required rates of 4.3 percent on 

wages up to $3,500 beginning July 1986, 4.7 percent in calendar year 1987 on 

wages up to $7,000, and 6 percent in 1988. This budget legislation also continued 

authority for borrowing by the Railroad Unemployment Insurance Account from 

the Railroad Retirement Account, but provided for an automatic unemployment 

insurance surtax on rail employers of 3.5 percent on annual wages up to $7,000 if 

further borrowing took place. 

As a result of the Gramm/Rudman Act, unemployment and sickness benefits were reduced in fiscal year 1986 and were reduced periodically in subsequent 

years. 

The 1986 Tax Reform Act made all unemployment benefits subject to Federal 

income tax, beginning with taxable year 1987. 

The Railroad Unemployment Insurance and Retirement Improvement 

Act, based on the recommendations of the Railroad Unemployment Compensation Committee, was included in the Technical and Miscellaneous Revenue Act 

of 1988, enacted November 10, 1988. The legislation raised the unemployment 

and sickness daily benefit rate from 

$25 to $30 retroactively to July 1988 

and indexed benefit rates and earnings 

requirements to national wage levels. 

The daily benefit rate subsequently 

rose to $31 in July 1989, $33 in July 

1992, and $36 in July 1994. (Legislation enacted in 1996 raised the rate 

to $42 effective October 9, 1996. By 

July 2015, the rate increased to $72, 

and will remain $72 in July 2017. In 

July 2018, the rate will rise to $77.) 

A 2-week waiting period was established and employers were provided the right to appeal claims of their employees 

after 1989. Also, the amount of subsidiary remuneration from part-time work 

which unemployment benefit claimants can earn without affecting their benefits 

was increased from $10 to $15 a day. 

1988 Legislation

●	 Daily benefit rate increased

●	 Earnings base indexed

●	 Experience rating phased in

●	 2-week waiting period established

●	 Repayment of debt assured

●	 Annual financial reports required
 DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 121

Under the indexing provisions of the 1988 amendments, the taxable earnings 

base in calendar year 1989 increased from $600 to the first $710 of each employee’s monthly earnings, and in 2017 is $1,545. For 1989 and 1990, the contribution 

rate for all employers except certain public commuter railroads was set at 

8 percent. Experience-based tax rates were phased in during 1991, with rates 

ranging from 5.55 percent to 12 percent. In 2017, they range from 2.15 percent 

(the minimum basic rate of 0.65 percent plus a 1.5 percent surcharge as explained 

below) to 12 percent. The surcharge does not apply to new employers, who pay 

1.62 percent in 2017. 

The amendments exempted public commuter railroads covered by the Railroad 

Unemployment Insurance Act from paying the 8 percent tax in 1989 and 1990; 

instead they reimbursed the unemployment insurance system for the amount of 

benefits paid during the year to their employees, plus certain administrative costs. 

Since 1991, these railroads again pay taxes on the same basis as other railroads. 

The 1988 amendments assured repayment of the unemployment system’s debt 

to the retirement system by fixing the loan repayment tax at 4 percent in January 

1989, with that rate remaining in force until the debt was fully repaid with interest. 

And the previous $7,000 annual base for this tax was changed to conform to the 

indexed monthly taxable compensation base. In June 1993 the $180 million loan 

balance was repaid in its entirety from cash reserves in the Railroad Unemployment Insurance Account and the loan repayment tax was terminated. 

A contingency surtax of 3.5 percent, effective in the event of further borrowing by the Railroad Unemployment Insurance Account, was eliminated in 1991. 

Instead, a surcharge can be added to employers’ unemployment insurance taxes 

for a calendar year if the balance in the unemployment insurance account on the 

previous June 30 goes below $100 million (as indexed). The surcharge rate would 

be 1.5, 2.5, or 3.5 percent depending on the balance in the account. If a 3.5 percent 

surcharge went into effect for a given year, the maximum rate for any employer 

would be 12.5 percent rather than 12 percent. A 1.5 percent surcharge is in effect 

during 2017. 

Credits would be provided to employers if a large balance accumulates in the 

account. If the account balance on the preceding June 30 were above $250 million 
122 2017 INFORMATIONAL CONFERENCE HANDBOOK

(as indexed), the excess would be refunded to the employers in the form of a rate 

reduction for the year through a pooled credit. 

The 1988 amendments also require the RRB to make annual financial reports 

to Congress on the status of the unemployment insurance system. The reports have 

been favorable. 

The Omnibus Budget Reconciliation Act of 1989 revised Federal indexing procedures, which raised the maximum on monthly compensation subject to 

railroad unemployment insurance taxes and the qualifying earnings requirement. 

This legislation also revised fiscal year 1990 unemployment and sickness benefit 

sequestrations under the Gramm/Rudman Act. 

Under 1991, 1992, and 1993 emergency unemployment compensation legislation providing temporary extended State unemployment benefits, unemployed 

railroad workers were made eligible for extended benefits, on a temporary basis, 

regardless of years of service. These temporary extended benefits were made available for specified periods in 1991, 1992, 1993, and 1994 if previous benefit rights 

were exhausted by certain dates. Temporary extended unemployment benefits were 

also provided under 2009, 2010, 2011, and 2012 legislation. 

Under the Budget Control Act of 2011 and a subsequent sequestration 

order, railroad unemployment and sickness insurance benefits were reduced by 9.2 

percent beginning in March 2013. Based on revised projections of benefit claims 

and payments, the reduction amount was adjusted to 7.2 percent in October 2013, 

to 7.3 percent in October 2014, to 6.8 percent in October 2015, and to 6.9 percent 

effective October 1, 2016. As this publication went to press, the reduction was to 

remain in effect through September 30, 2017, the end of the fiscal year. Reductions 

in future fiscal years, should they occur, will be calculated based on applicable law. 

1990s and later
 DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 123

This Act, signed into law on

October 9, 1996, increased the railroad

unemployment and sickness insurance

daily benefit rate and revised the formula for indexing future benefit rates.

It also reduced the waiting period for

initial benefit payments and eliminated

duplicate waiting periods in continuous

periods of unemployment and sickness.

In addition, the Act applied an earnings

test to claims for unemployment and

reduced the duration of extended benefit periods for long-service employees.

The Act’s provisions were based on

joint recommendations to Congress negotiated by rail labor and management

in order to update the railroad unemployment insurance system along the

lines of State unemployment insurance

systems. The following provisions were

effective upon the October 9, 1996, enactment date:

●	 The maximum railroad unemployment and sickness insurance daily benefit rate increased to $42 from $36. The

formula for indexing future benefit rates

was modified so that rates increase

more frequently, generally with the start

of each new benefit year in July.

The daily benefit rate increased

to $43 in July 1997, and gradually increased to $72 in July 2015. It remains

$72 in July 2017 and will rise to $77 in

July 2018.

●	 The law made benefits payable for

each day of unemployment or sickness

in excess of 7 during an employee’s first

14-day registration period in a benefit

year. Under prior law, no benefits were

payable for the first 14-day claim in a

benefit year in order to satisfy a 2-week

waiting period requirement. Also, a second waiting period is no longer required

when a new benefit year begins during

a continuing period of unemployment or

sickness.

●	 An earnings test was made applicable to claims for intermittent unemployment. If an employee’s earnings for

days worked in a 14-day registration

period are more than a certain indexed

amount, no benefits are payable for any

days of unemployment in that period.

●	 The Act eliminated the second

13-week period of extended benefits for

those with 15 or more years of service.

The Railroad Unemployment Insurance 

Amendments Act of 1996
124 2017 INFORMATIONAL CONFERENCE HANDBOOK

EMPLOYMENT AND BENEFITS

Throughout the post World War II period, there has been a declining trend in 

railroad employment and, consequently, in the number of qualified employees 

under the Railroad Unemployment Insurance Act. The number of qualified employees dropped from a peak of 2,400,000 in 1946-47 to a low of 235,100 in calendar year 2010. In calendar year 2015, the number of qualified employees rose to 

260,500, the fifth consecutive increase since 2010.

In the 2015-2016 benefit year, unemployment benefits totaled about $72 

million[1] and unemployment benefit claimants numbered approximately 16,400. 

Benefits increased about 133 percent while the number of claimants increased 

nearly 117 percent in comparison with the previous year.

The number of sickness beneficiaries has ranged from 179,000 in 1948-49 to 

15,500 in 2015-2016. In the 2015-2016 benefit year, gross sickness benefits of 

nearly $74 million were paid to almost 16,000 beneficiaries. Net sickness benefits 

totaled about $55 million, reflecting repayment of a large amount of benefits following settlements of suits for injuries. The number of claimants increased almost 

3 percent while net benefits increased approximately 13 percent in comparison 

with the previous year.

1 Temporary extended benefits under the American Recovery and Reinvestment Act of 2009, and the Worker, Homeownership, and Business Assistance Act of 2009, as amended by the Tax Relief, Unemployment 

Insurance Reauthorization, and Job Creation Act of 2010, the Temporary Payroll Tax Cut Continuation Act 

of 2011, the Middle Class Tax Relief and Job Creation Act of 2012, and the American Taxpayer Relief Act of 

2012, have expired with only recoveries being reflected in net benefit amounts.

Note.--In accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by 

the Budget Control Act of 2011, amounts reflect a reduction of 9.2 percent under sequestration for days of unemployment and sickness after February 28, 2013, 7.2 percent for days after September 30, 2013, 7.3 percent 

for days after September 30, 2014, and to 6.8 percent for days after September 30, 2015.

SCOPE OF RRB OPERATIONS

	 ● By June 30, 2016, approximately $8.9 billion in unemployment-sickness 

	 	 benefits had been paid since operations began 77 years earlier.

	 ● About two-thirds of this amount was for unemployment benefits.
6

Provisions of the Railroad

Unemployment Insurance System

125

The Railroad Unemployment Insurance Act provides benefits for qualified 

railroad employees. The Act is designed to restore part of their wage loss arising 

from unemployment or sickness (including maternity). 

Payments are made for days of 

unemployment or sickness in 

a benefit year, which generally 

begins on July 1, to employees 

who had sufficient earnings 

in the preceding calendar year 

(called the base year) to meet the qualifying conditions.

A day of unemployment is a day on which a qualified employee is able to 

work and available for work and does not receive any pay, is not disqualified, and 

has properly registered for unemployment benefits. Any calendar day on which 

Who is considered a qualified employee?

A qualified employee is one who earns qualifying creditable compensation in 

a base year ($3,637.50 in 2016; $3,862.50 in 2017) counting no more than a certain amount in any month ($1,455 in 2016; $1,545 in 2017). In addition, a new employee must have some employment in at least 5 months of the first year worked in 

the railroad industry in order to draw benefits in the following benefit year.

To be eligible for unemployment 

benefits, a qualified employee 

must be:

●	 Able to work

●	 Available for work
126 2017 INFORMATIONAL CONFERENCE HANDBOOK

the employee does not work solely because of mileage-limitation or workrestriction agreements or solely because he or she is between regularly assigned 

trips or tours of duty or because a turn in pool service 

was missed is not considered 

a day of unemployment. An 

extra-board employee can 

receive unemployment benefits between jobs if the miles 

and/or hours actually worked 

were less than the equivalent of normal full-time work in his or her class of service during the 14-day claim period. Entitlement to benefits would also depend on 

earnings. 

A day of sickness is a day on which the employee is unable to work because of 

sickness or injury and for which he or she does not receive any pay and has filed 

an application for sickness benefits and a statement of sickness. The statement of 

sickness provides evidence of the employee’s medical condition and its expected 

duration. It must be signed by the employee’s doctor (or other authorized individual). 

As indicated above, a claimant may not receive benefits for any day for which 

pay is received. This includes railroad and nonrailroad wages, salary, pay for time 

lost, pay while sick, dismissal allowances, most wage guaranty payments, vacation pay, holiday pay, military reservist pay, earnings from self-employment, or 

remuneration other than subsidiary remuneration. However, payments received 

under a Railroad Retirement Board-approved nongovernmental supplemental 

unemployment or sickness insurance plan, an employee’s own health or accident 

insurance policy, or a group insurance policy will not affect entitlement to benefits 

and should not be reported on claims. 

An earnings test is applied to unemployment claims. If a claimant’s earnings 

for days worked, and/or days of vacation, paid leave, or other pay, in a 14-day 

registration period are more than a certain indexed amount, no benefits are payable for any days of unemployment in that period. That registration period, however, can be used to satisfy the waiting period requirement described on the next 

two pages. Earnings include pay from self-employment and railroad, nonrailroad, 

To be eligible for sickness 

benefits, a qualified employee 

must be:

● Unable to work because 

of sickness or injury
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 127

and part-time work. Earnings also include pay that would have been earned except 

for failure to mark up or report for duty on time, or because the employee missed 

a turn in pool service, or was otherwise not ready or willing to work. For the 

benefit year that began July 2016, the amount is $1,455; for the benefit year that 

begins July 2017, the amount remains $1,455; and for the benefit year that begins 

July 2018, the amount will be $1,545. These amounts correspond to the base year 

monthly compensation amounts used in determining eligibility for benefits in each 

year. Also, even if an earnings test applies on the first claim in a benefit year, this 

will not prevent the first claim from satisfying the waiting period in a benefit year. 

On the other hand, earnings of no more than $15 a day from work which is 

substantially less than full-time and not inconsistent with the holding of normal 

full-time employment may be considered subsidiary remuneration and may not 

prevent payment of any days in a claim. However, a claimant must be sure to 

report all full and part-time work on each claim, regardless of the amount of earnings, so the RRB can determine whether the work affects benefits. 

The maximum daily benefit rate payable 

in benefit year 2016-2017 (July 1, 2016 -

June 30, 2017) is $72; and, for biweekly 

claims, maximum benefits can total $720. The 

maximum daily benefit rate will remain $72 in July 2017, and will rise to $77 in 

July 2018. It may increase at the beginning of each future benefit year depending 

on the growth in average national wages. 

Sickness benefits payable for the first 6 months after the month the employee 

last worked are subject to tier I railroad retirement payroll taxes, unless benefits 

are being paid for an on-the-job injury. 

Benefits are normally paid for the number of days of unemployment or sickness over 4 in 14-day registration periods. Initial sickness claims must also begin 

with 4 consecutive days of sickness. However, during the first 14-day claim period 

in a benefit year, benefits are only payable for each day of unemployment or sickness in excess of 7 which, in effect, provides a 1-week waiting period. Separate 

waiting periods are required for unemployment and sickness benefits. However, 

only one 7-day waiting period is generally required during any period of continuing unemployment or sickness, even if that period continues into a subsequent 

benefit year. 

What is the current 

daily benefit rate?
128 2017 INFORMATIONAL CONFERENCE HANDBOOK

If an employee has at least 5 days of unemployment or 5 days of sickness in a 

14-day period, he or she should still file for benefits. 

A period of continuing sickness means either (1) a period of consecutive days 

of sickness, whether from one or more causes, or (2) a period of successive days 

of sickness due to a single cause without interruption of more than 90 consecutive 

days which are not days of sickness. An example of a qualifying situation under 

the latter condition would be an ailment such as chronic arthritis which could disable an employee for several days in a row, then be relieved for a brief period before recurring and forcing the employee to again be absent from work. Assuming 

this sequence of events occurred within 90 days, the period of continuing sickness 

would still be in effect and the employee could receive sickness benefits without 

again satisfying the 4 consecutive day requirement for a new sickness. 

A period of continuing unemployment means a period of time for which an 

employee files claims for unemployment benefits where (1) each claim has 5 or 

more valid days of unemployment, and (2) each claim begins within 15 days after 

the previous claim ends. 

A registration period for unemployment is 

normally a period of 14 days, beginning with 

the first day which the employee claims by 

properly registering. A new registration period begins with the first day claimed 

after the end of a preceding registration period. 

A registration period for sickness benefits begins with the first day with 

respect to which the employee files an application for sickness benefits, and a 

statement of sickness filled out by his or her doctor. A new registration period 

begins immediately after the end of the preceding registration period as long as the 

employee’s period of sickness continues. Registration periods for sickness benefits 

may also overlap when a period of continuing sickness ends and a new sickness 

follows the end of the previous one within 14 days. 

If someone is unemployed because of 

a strike conducted in accordance with the 

Railway Labor Act, benefits are not payable 

for days of unemployment during the first 14 days of the strike, but benefits are 

payable during subsequent 14-day periods. If a strike is in violation of the Railway 

What are registration periods?

Are strike benefits available?
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 129

Labor Act, unemployment benefits are not payable to employees participating in 

the strike. However, employees not among those participating in such an illegal 

strike, but who are unemployed on account of the strike, may receive benefits after 

the first 2 weeks of the strike. While a benefit year waiting period cannot count 

towards a strike waiting period, the 14-day strike waiting period may count as the 

benefit year waiting period if the employee subsequently becomes unemployed for 

reasons other than a strike later in the benefit year. 

Normal benefits are paid for up to 130 days 

(26 weeks) in a benefit year. Benefit rights are 

exhausted when a benefit year ends (normally 

June 30) or earlier if benefit payments equal base-year creditable earnings. 

Maximum normal benefits payable in the benefit year beginning July 2016 

cannot exceed an employee’s railroad earnings in base year 2015, counting 

monthly earnings up to $1,879; in the benefit year beginning July 2017, monthly 

earnings up to $1,879 for base year 2016 will be counted; and in the benefit year 

beginning July 2018, monthly earnings up to $1,996 for base year 2017 will be 

counted. This allows employees who qualify with relatively low earnings to be 

eligible for more days of benefits. 

In order to qualify for normal unemployment benefits, the employee must not 

have voluntarily quit work without good cause and not have voluntarily retired. 

If an employee has at least 10 years of 

service (120 or more cumulative service 

months) and exhausts normal unemployment 

or sickness benefits, he or she may be eligible to receive extended benefits for up 

to 65 days (during 7 consecutive 14-day registration periods). Also, if the employee is not qualified for normal benefits in the current benefit year but received 

normal benefits in the previous year, he or she may still be eligible for extended 

benefits. 

In order to qualify for extended unemployment benefits, a claimant must not 

have voluntarily quit work without good cause and not have voluntarily retired. 

To qualify for extended sickness benefits, a beneficiary must not have voluntarily 

retired and must be under age 65. 

What are normal benefits?

Can benefits be extended?
130 2017 INFORMATIONAL CONFERENCE HANDBOOK

Employees with 10 or more years of service (120 or more cumulative service months) 

whose earnings do not qualify them for unemployment or sickness benefits in the current benefit year, but will qualify them in 

the next benefit year, may be able to receive normal unemployment or sickness 

benefits before the regular beginning date of the next benefit year. To be eligible 

for these accelerated benefits, they must have 14 or more consecutive days of 

unemployment or sickness and not have voluntarily retired, or quit work without 

good cause if claiming unemployment benefits, and be under age 65 when claiming sickness benefits. This provision gives protection to a long-service employee 

at the time it is most needed; for example, to an employee with substantial recent 

earnings who is not otherwise qualified for benefits because an illness, long layoff, 

or other circumstances prevented him or her from working in the base year. 

A benefit year that is started early for one type of benefit also starts early for 

benefits of the other type. Also, an employee may receive sickness benefits in a 

benefit period extended for unemployment, or unemployment benefits in a benefit 

period extended for sickness, and it is possible to have benefit periods extended 

for both unemployment and sickness with respect to the same benefit year. 

Maternity benefits are not payable as such. 

However, a qualified employee may receive 

sickness benefits if she is unable to work or if 

working would be injurious to her health because of pregnancy, miscarriage, or 

childbirth. Such benefits are paid in the same amounts as any other sickness benefits. 

If an employee receives a retirement, disability or survivor benefit under the Railroad 

Retirement Act, Social Security Act, or any 

other social insurance law for days for which he or she is also entitled to benefits 

under the Railroad Unemployment Insurance Act, unemployment or sickness benefits are payable only to the extent to which they exceed the other payments for 

those days. Examples of other such social insurance payments are military pensions other than VA benefits, firefighters’ and police pensions, or certain workers’ 

compensation payments. Claimants should report all such other payments promptly to avoid having to refund benefits later. 

Can benefits be accelerated?

Are maternity benefits available?

Can benefits be payable under 

more than one system?
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 131

There is no reduction in unemployment or sickness benefits for benefits paid 

under an RRB-approved nongovernmental sickness insurance plan, such as a supplemental sickness plan established by a railroad. Similarly, there is no reduction 

in benefits if an employee receives supplemental unemployment benefits under an 

RRB-approved nongovernmental unemployment benefit plan. But unemployment 

and sickness benefits provided under the Railroad Unemployment Insurance Act 

are not payable if Federal/State unemployment or sickness benefits under other 

laws, including Canadian law, are paid for the same period of time. 

If an employee is awarded damages or receives a settlement because of an injury, any sickness benefits already paid for the same injury will have to be deducted from the settlement and refunded to the RRB. Any benefits due for the same 

injury for later periods may be withheld. The amount recoverable or withheld in 

such cases cannot, however, exceed the net amount of the damages or settlement 

after medical (even if covered by insurance) and legal expenses have been deducted. 

Unemployment benefits are normally not paid if an employee is fully protected by a wage guaranty plan. If an employee receives unemployment or sickness 

benefits and later is paid for time lost for the same period, the employer will be 

asked to withhold an amount equal to the unemployment or sickness benefits. The 

employer must then pay this amount to the RRB. 

Unemployment benefits can sometimes be paid even though a claimant is covered by a job protection plan which guarantees a certain amount of work or wages each month. However, if a claimant receives a protective allowance from an 

employer for a period for which benefits were paid, some or all of the benefits will 

have to be refunded. Such allowances should be reported promptly to the RRB. 
132 2017 INFORMATIONAL CONFERENCE HANDBOOK

To protect the system, various 

measures are provided in the Railroad 

Unemployment Insurance Act and its 

administration by the RRB. First, the 

law specifies various conditions of 

eligibility. Second, the procedures for 

registration and adjudication of claims 

are designed to provide evidence that 

these conditions are met. Third, claimants may be temporarily disqualified 

for a number of reasons. The maximum amount payable in a benefit year 

is not affected by disqualifications. 

A claimant for unemployment benefits may be disqualified for 30 days 

if he or she refuses to accept suitable 

work or fails to follow instructions to 

apply for work or to report to an RRB 

office or a State unemployment office 

for an interview.

A claimant who leaves either railroad or nonrailroad work voluntarily 

without good cause is disqualified, 

starting with the day he or she leaves 

work, until he or she has returned 

to railroad employment and earned 

wages sufficient to qualify for benefits 

again. This disqualification also applies 

to a claimant who leaves work voluntarily with good cause, but only with 

respect to periods in which he or she 

could receive unemployment benefits 

under another law.

A claimant is also disqualified for 

any day on which he or she takes part 

in a strike begun in violation of the 

Railway Labor Act or in violation of the 

established rules and practices of a 

labor organization of which he or she 

is a member. This disqualification only 

applies to claimants who work on the 

premises where the strike occurs and

who do the same kind of work as the 

employees participating or directly involved in the strike.

An employee who is paid a separation allowance is disqualified for both 

unemployment and sickness benefits 

for roughly the period of time it would 

have taken to earn the amount of the 

allowance.

A claimant may be disqualified for 

sickness benefits if he or she fails to 

take a medical examination when required by the RRB.

If a claimant makes a false or 

fraudulent statement or claim to obtain 

unemployment or sickness benefits, 

he or she will be disqualified for 75 

days and may also be subject to a fine 

or imprisonment. The RRB conducts 

checks with Federal agencies and all 

50 States, the District of Columbia, 

and Puerto Rico as well as railroads 

in order to detect fraudulent benefit 

claims. The RRB also checks with physicians to verify the accuracy of medical statements supporting sickness 

benefit claims.

Can an employee be disqualified from receiving benefits?
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 133

FREE PLACEMENT SERVICE

The Railroad Unemployment Insurance Act authorizes the RRB to operate a 

free placement service. The primary purpose of the placement service is to secure 

new employment for experienced railroad workers who have lost their jobs. 

When a claimant applies for unemployment benefits, he or she also applies 

for employment service. The claimant will probably be interviewed by an RRB 

representative who will try to help secure employment if he or she does not have 

good prospects of returning to his or her former job. The claimant may be referred 

by the representative to a suitable railroad job; otherwise, an effort will be made 

towards placement in a nonrailroad job for which the claimant appears qualified. 

As part of its placement service, the RRB maintains a list of job openings reported by railroads. The list is available for review at all RRB offices and online at 

www.rrb.gov. The booklet, Guide to Finding the Right Job (Form UB-12), is also 

available from any RRB office and online. 

PAYMENTS

Applicants for unemployment or sickness benefits can check with their local 

RRB 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. 

Some claims for benefits may take longer to handle than others if they are 

more complex, or if an RRB office has to get information from other people or 

organizations. If a decision notice or payment is not received within the specified 

time period, claimants can call the RRB toll-free at 1-877-772-5772 to obtain their 

current status. 

(Text continues on page 136.)
134 2017 INFORMATIONAL CONFERENCE HANDBOOK

Claimants can apply for unemployment benefits by mail or online.

To apply by mail, claimants must 

obtain an application from their labor 

organization, employer, local RRB 

field office, or online at www.rrb.gov. 

The completed application should be 

mailed to the local RRB field office as 

soon as possible and, in any case, 

must be filed within 30 days of the date 

on which the claimant became unemployed or the first day for which he or 

she wishes to claim benefits. Benefits 

may be lost if the application is filed 

late.

Claimants with RRB online accounts can apply electronically by visiting the Benefit Online Services section 

of www.rrb.gov. Instructions for establishing an online account are available 

by clicking on the link for requesting 

a Password Request Code (PRC) in 

that same section. For security purposes, first-time users must apply for a 

PRC. The agency automatically mails 

a PRC to any employee who files a 

paper application for unemployment or 

sickness benefits. If an individual has 

not received a PRC, they can request 

one by clicking the appropriate box on 

the home page. Employees are encouraged to establish online accounts 

while still employed so the account 

is ready if they ever need to apply 

for these benefits or use other select 

Internet services. 

The local RRB field office reviews 

the completed application, whether it 

was submitted by mail or online, and 

notifies the claimant’s current railroad 

employer, and base-year employer if 

different. The employer has the opportunity to provide information about the 

benefit application.

After the RRB processes the application, biweekly claim forms are 

mailed to the claimant, and are also 

available online, as long as he or she 

remains unemployed and eligible for 

benefits. Claim forms should be signed 

and sent on or after the last day of 

the claim. This can be done by mail 

or electronically. The completed claim 

must be received by an RRB office 

within 15 days of the end of the claim 

or the date the claim was mailed to 

the claimant or made available online, 

whichever is later. Claimants must not 

file both a paper and online claim form 

for the same claim period(s).

Only one application need be filed 

during a benefit year, even if a claimant becomes unemployed more than 

once. However, a claimant must, in 

such a case, request a new claim form 

from an RRB office within 30 days of 

the first day for which he or she wants 

to resume claiming benefits. These 

claims may then be filed by mail or 

online.

Claiming Unemployment Benefits
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 135

Claiming Sickness Benefits

An application for sickness benefits can be obtained from railroad labor 

organizations, railroad employers, any 

RRB office, or online at www.rrb.gov. An 

application and a doctor’s statement of 

sickness are required at the beginning 

of each period of continuing sickness for 

which benefits are claimed.

The RRB suggests that employees 

keep an application on hand for use 

in claiming sickness benefits, and that 

family members know where the form is 

kept and how to use it. If an employee 

becomes unable to work because of 

sickness or injury, the employee should 

complete the application and then have 

his or her doctor complete the statement 

of sickness. If the employee is too sick 

to complete the application, someone 

else may do so. In such cases, a family 

member should also complete Form 

SI-10, Statement of Authority to Act for 

Employee, which accompanies the statement of sickness.

After completion, the forms should 

be mailed to the RRB’s headquarters 

in Chicago by the 7th day of the illness 

or injury for which benefits are claimed. 

After the RRB receives the application 

and statement of sickness and determines eligibility, biweekly claim forms 

are mailed to the claimant for completion 

and return to an RRB field office for processing. 

Employees with RRB online accounts can complete claim forms electronically by visiting the Benefit Online 

Services section of www.rrb.gov. Instructions for establishing an online account 

are available by clicking on the link for 

requesting a Password Request Code 

(PRC) in that same section. For security 

purposes, first-time users must apply 

for a PRC. The agency automatically 

mails a PRC to any employee who files 

a paper application for unemployment 

or sickness benefits. If an individual has 

not received a PRC, they can request 

one by clicking the appropriate box on 

the home page. The claim forms must 

be received at the RRB within 30 days of 

the last day of the claim period, or within 

30 days of the date the claim form was 

mailed to the claimant or made available 

online, whichever is later. Benefits may 

be lost if an application or claim is filed 

late.

Claimants are reminded that while 

claim forms for sickness benefits can be 

submitted online, applications must be 

returned to the RRB by mail. Doctors' 

statements of sickness can be submitted 

by mail or fax (faxes must include cover 

sheet from doctor's office).
136 2017 INFORMATIONAL CONFERENCE HANDBOOK

Railroad unemployment and sickness insurance benefits are paid by Direct 

Deposit. With Direct Deposit, benefit payments are made electronically to an 

employee’s bank, savings and loan, credit union, or other financial institution. 

New applicants for unemployment and sickness benefits will be asked to provide 

information needed for Direct Deposit enrollment. 

APPEALS

Employees

If a claimant disagrees with a decision made on a claim, he or she has 60 

days from the date of the initial notice of the decision in which to file a written 

statement requesting reconsideration from the RRB office that made the decision. 

This step is mandatory before a decision may be appealed to the RRB’s Bureau of 

Hearings and Appeals. Failure to request reconsideration within 60 days will result 

in forfeiture of further appeal rights. 

If the case involves a benefit overpayment of more than 10 times the maximum daily benefit rate, the claimant may request a waiver of recovery. In order for 

recovery of the overpayment to be deferred while a waiver request is pending, the 

waiver request must be in writing and filed within 60 days from the date on which 

notice of the overpayment was mailed to the beneficiary. If waiver is requested, 

the claimant may be asked to complete a financial statement on a form provided 

by the RRB. 

If dissatisfied with the reconsideration or waiver decision, a claimant may, 

within 60 days, appeal to the RRB’s Bureau of Hearings and Appeals. This appeal 

must be filed using RRB Form HA-1, which may be obtained from any RRB field 

office or the agency's website, www.rrb.gov.

If not satisfied with the Bureau of Hearings and Appeals’ decision, a claimant 

may further appeal, within 60 days, to the three-member Board. 
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 137

If not satisfied with the three-member Board’s decision, a claimant may file 

a petition for a review of the decision by the appropriate U.S. Court of Appeals. 

A petition for review must be filed within 90 days of the notice of the Board’s 

decision. 

Employers

When an employer is a party to a claim for benefits, that employer may protest 

the payment of benefits, but such protests do not prevent the timely payment of 

benefits. However, employees may be required to repay benefits if their employers’ protests are ultimately successful. The employer also has the right to appeal an 

unfavorable decision to the RRB’s Bureau of Hearings and Appeals. 

INCOME TAXES

Unemployment benefits paid by the RRB are subject to Federal income taxes, 

just like unemployment benefits paid under the State government programs. 

Sickness benefits paid by the RRB, except for sickness benefits resulting from 

on-the-job injuries, are subject to Federal income tax under the same limitations 

and conditions that apply to the taxation of sick pay received by workers in other 

industries. 

The Railroad Unemployment Insurance Act specifically provides that railroad 

unemployment and sickness benefits are not subject to State income taxes. In 

January of each year, the RRB sends railroad employees Form 1099-G showing 

the total amount of unemployment benefits paid during the previous year and/or 

Form W-2 showing the net amount of sickness benefits paid. 
138 2017 INFORMATIONAL CONFERENCE HANDBOOK

FOR MORE INFORMATION

Unemployment and sickness claimants can conveniently check on the status 

of their claims or payments at any time by calling the agency’s toll-free service at 

1-877-772-5772. The service is available 24 hours a day, 7 days a week. 

Unemployment claimants can file applications and claims online, and sickness 

claimants can file claims electronically, at www.rrb.gov. They can also access 

information about their individual railroad unemployment and sickness insurance 

account statements online. 

TOLL-FREE SERVICE

1-877-772-5772

RRB WEBSITE

www.rrb.gov
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 139

Table 14.--Benefits under the railroad unemployment insurance system

QUALIFYING WAGES

Base Year 2015 $3,637.50

Base Year 2016 $3,637.50

Base Year 2017 $3,862.50

DAILY BENEFIT RATE

Basic Rate (60% of Daily Rate of Pay)

Maximum

 Benefit Year 2016-20171$72.00

 Benefit Year 2017-2018 $72.00 

 Benefit Year 2018-2019 $77.00

Minimum $12.70

MAXIMUM NORMAL BENEFITS

For 14-Day Period 

 Benefit Year 2016-2017 $720

 Benefit Year 2017-2018 $720

 Benefit Year 2018-2019 $770

For Benefit Year

 Duration (130 Compensable Days)

 Amount2

 Benefit Year 2016-2017 $9,360

 Benefit Year 2017-2018 $9,360

 Benefit Year 2018-2019 $10,010

MAXIMUM EXTENDED BENEFITS

10 or More Years of Service

 Duration (65 Compensable Days)

 Amount

 Benefit Year 2016-2017 $4,680

 Benefit Year 2017-2018 $4,680

 Benefit Year 2018-2019 $5,005

1 A benefit year generally runs from July 1 of a calendar year through June 30 of the next calendar 

year. 2 Not to exceed the employee’s taxable earnings in the base year, counting earnings up to 

$1,879 a month for benefit year 2016-2017 (base year 2015), $1,879 a month for benefit year 2017-

2018 (base year 2016), and $1,996 a month for benefit year 2018-2019 (base year 2017).

Note.--Amounts do not reflect sequestration. In accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by the Budget Control Act of 2011, benefits were 

reduced 9.2 percent for days of unemployment and sickness after February 28, 2013, 7.2 percent for 

days after September 30, 2013, 7.3 percent for days after September 30, 2014, 6.8 percent for days 

after September 30, 2015, and are reduced 6.9 percent for days after September 30, 2016.

Some net sickness benefit payments are somewhat less than the above amounts since they are subject to tier I railroad retirement taxes.
140 2017 INFORMATIONAL CONFERENCE HANDBOOK

Table 15.--Maximum weekly benefit amount under 

Railroad Unemployment Insurance Act and 

State unemployment laws, July 2016

See continuation of table on next page.

Maximum weekly

Benefit plan benefit amount 

RAILROAD UNEMPLOYMENT INSURANCE ACT: $360

STATE LAW:

Alabama $265

Alaska 370-442

Arizona 240

Arkansas 451

California 450

Colorado 516 or 568

Connecticut 598-673

Delaware 330

District of Columbia 359

Florida 275 

Georgia 330

Hawaii 569

Idaho 410

Illinois 437-595

Indiana 390

Iowa 447-548

Kansas 474

Kentucky 415

Louisiana 247

Maine 410-615

Maryland 430

Massachusetts 722-1,083

Michigan 362

Minnesota 440-683

Mississippi 235

Missouri 320

Montana 510
 PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 141

STATE LAW:

Nebraska $392

Nevada 426

New Hampshire 427

New Jersey 657

New Mexico 423-473

New York 425

North Carolina 350

North Dakota 630

Ohio 435-587

Oklahoma 505

Oregon 590

Pennsylvania 573-581

Puerto Rico 133

Rhode Island 566-707

South Carolina 326

South Dakota 380

Tennessee 275

Texas 479

Utah 509

Vermont 458

Virginia 378

Virgin Islands 480

Washington 681

West Virginia 424

Wisconsin 370

Wyoming 489

Note.--When two amounts are given, the higher includes dependents’ 

allowances. There are other States with dependents’ allowances but 

the maximum is the same with or without the allowance.

 Maximum weekly

Benefit plan benefit amount

Table 15.--Continued
142 2017 INFORMATIONAL CONFERENCE HANDBOOK

 Unemployment Sickness 

Benefit activity benefits benefits

Table 16.--Operations under the Railroad 

Unemployment Insurance Act, benefit year 2015-20161

Qualified employees 254,200 254,200

Applications received 24,100 19,800

Claims received 137,300 129,200

Payments2:

 Number 112,300 109,700

 Average amount per

 two-week claim period3 $591 $592

Amount of benefits (net)3 $71,655,0004 $54,511,000

Claimants 16,400 16,000

Accounts exhausted 3,300 3,100

1 July 1, 2015, through June 30, 2016.

2 Not adjusted for recoveries or settlements of underpayments.

3 In accordance with the Balanced Budget and Emergency Deficit Control 

Act of 1985, as amended by the Budget Control Act of 2011, amounts 

 reflect a reduction of 9.2 percent under sequestration for days of unemploy-

 ment and sickness after February 28, 2013, 7.2 percent for days after 

September 30, 2013, 7.3 percent for days after September 30, 2014, and 

6.8 percent for days after September 30, 2015.

4 Starting in June 2009, includes temporary extended unemployment benefits 

authorized by the American Recovery and Reinvestment Act of 2009. 

Beginning in November 2009, temporary extended unemployment benefits are 

also being paid under the Worker, Homeownership, and Business Assistance 

Act of 2009, as amended by the Tax Relief, Unemployment Insurance Cut

Reauthorization, and Job Creation Act of 2010. The Temporary Payroll Tax 

 Continuation Act of 2011, the Middle Class Tax Relief and Job Creation Act

 of 2012, and the American Taxpayer Relief Act of 2012 continued the temporary unemployment benefit extension.
7

Financing Unemployment and

Sickness Insurance

143

Under the Railroad Unemployment Insurance Act, an employee’s eligibility 

for benefits is based on taxable earnings in a calendar year and normally applies 

only to benefits in the benefit year starting the following July 1. For example, 

qualifying earnings in calendar year 2016 ordinarily give rise to normal benefits only in the benefit year beginning July 1, 2017. Given this limited period of 

potential benefits, the financing of railroad unemployment and sickness benefits is 

essentially a short-term proposition in comparison to the financing of retirement 

benefits. An employee’s eligibility for unemployment or sickness benefits ceases within about 2 years after he or she leaves railroad work, while eligibility for 

railroad retirement annuities continues for decades after an employee leaves the 

industry. Consequently, in a given series of benefit years, gradually declining rail 

employment is less of a factor than major recessions or work stoppages causing 

industry-wide unemployment on a temporary basis. 

CONTRIBUTIONS 

The railroad unemployment and sickness benefit programs are financed exclusively by contributions of railroad 

employers, based on the taxable earnings of their employees. The employees 

themselves do not contribute. In calendar year 2017, the taxable earnings 

Railroad unemployment 

and sickness benefits 

are financed by railroad 

employers.
144 2017 INFORMATIONAL CONFERENCE HANDBOOK

base is the first $1,545 of each employee’s monthly earnings. The earnings base 

is indexed each year by a rate which is equal to approximately two-thirds of the 

annual rate of increase in the maximum base for railroad retirement tier I taxes. 

Experience-based tax rates were phased in during 1991. Each employer 

pays contributions at a rate which takes into consideration the employer’s actual 

incidence of benefit usage. Under experience rating, employers whose employees 

have low incidences of unemployment and sickness pay contributions at a lower rate than employers with higher levels of benefit usage. Each employer’s rate 

also has a component for administrative expenses and a component to cover costs 

shared by all employers. 

In 2017, the basic tax rates on railroad employers, including covered commuter railroads, range from a minimum of 0.65 percent to a maximum of 12 percent. 

Also, a surcharge of 1.5 percent is added to the basic tax rate, as the Railroad Unemployment Insurance Account accrual balance of $93.8 million was less than the 

indexed threshold of $152.9 million, but greater than a threshold of $76.4 million 

on June 30, 2016. Nearly 78 percent of employers are being assessed 2.15 percent 

in 2017 (the 0.65 percent minimum rate plus the 1.5 percent surcharge). The surcharge does not apply to new employers, who pay a tax of 1.62 percent in 2017, 

which represents the average rate paid by all employers in the period 2013-2015. 

A surcharge is added to each employer’s tax rate during any calendar year 

in which the balance in the Railroad Unemployment Insurance Account on the 

preceding June 30 is less than an indexed threshold amount. If the account balance is less than $100 million (as indexed), but at least $50 million (as indexed), 

the surcharge will be 1.5 percent. If the account balance is less than $50 million 

(as indexed), but greater than zero, the surcharge will be 2.5 percent. A maximum 

surcharge of 3.5 percent applies if the account balance is less than zero. If the account balance on the preceding June 30 is above $250 million (as indexed), the excess will be refunded to the employers in the form of a rate reduction for the year 

through a pooled credit. Each employer’s tax rate (prior to application of individual maximum and minimum limitations) will be reduced by the ratio of the excess 

amount to the taxable payroll of all employers. 
 FINANCING UNEMPLOYMENT AND SICKNESS INSURANCE 145

The experience-based tax rates have a 12 percent maximum, or a 12.5 percent 

maximum if a 3.5 percent surcharge is in effect. Included in the rate is the basic 

rate, an administration tax rate of 0.65 percent, and, if either is applicable, the 

surcharge rate or the rate of the pooled credit. Since the basic employer tax rate 

plus any pooled credit cannot be less than zero, 0.65 percent is the minimum rate 

which any employer can pay. 

RAILROAD UNEMPLOYMENT 

INSURANCE ACCOUNT 

Railroad unemployment insurance funds not needed immediately for the payment of benefits are deposited in the Railroad Unemployment Insurance Account 

maintained by the Treasury. This account, together with similar accounts for each 

State, forms a national unemployment trust fund. Deposits in the unemployment 

trust fund are invested by the Treasury in securities of the U.S. Government. 

Every quarter, the Railroad Unemployment Insurance Account and the Railroad 

Unemployment Insurance Administration Fund each receive a proportionate share 

of the interest earnings of the trust fund, based on average daily balances. 

The Railroad Unemployment Insurance Administration Fund, separate from 

the Railroad Unemployment Insurance Account, pays the costs of administering 

the railroad unemployment insurance system. An amount equal to 0.65 percent of 

taxable payroll is set aside from railroad contributions for the Railroad Unemployment Insurance Administration Fund. Any amount in the Railroad Unemployment 

Insurance Administration Fund in excess of $6 million (on an accrual basis) on 

September 30 of any year is transferred to the Railroad Unemployment Insurance 

Account. 

To ensure adequate funds in periods of 

high unemployment, Congress gave the RRB 

authority in 1959 to borrow money from the 

Railroad Retirement Account for the payment of benefits from the Railroad Unemployment Insurance Account. Interest on money borrowed is paid to the Railroad Retirement Account at approximately the same rate as the Treasury pays on 

the investments of the Railroad Retirement Account. 

Borrowing Authority
146 2017 INFORMATIONAL CONFERENCE HANDBOOK

After the borrowing authority was first used in July 1959, additional sums 

were subsequently borrowed in succeeding years as required. Payments on the 

debts to the Railroad Retirement Account were made whenever excess unemployment funds were available. Following 1963 financing amendments, indebtedness 

to the Railroad Retirement Account gradually declined from a then peak level of 

nearly $330 million and was liquidated in September 1973. 

Subsequent to 1973, the Railroad Unemployment Insurance Account balance 

fluctuated into and out of the red until the early 1980s when the continuing recession in the national economy depressed rail traffic levels to the extent that largescale layoffs were underway by early 1982. 

Increased unemployment benefit payments resulting from the layoffs of over 

25 percent of the rail industry’s workforce made unprecedented demands on the 

Railroad Unemployment Insurance Account. By the end of fiscal year 1986, the 

debt to the Railroad Retirement Account was at its peak level of over 

$850 million. 

The Railroad Retirement Solvency Act of 1983 established a Railroad Unemployment Compensation Committee to review all aspects of the unemployment 

and sickness insurance program and recommend to Congress adjustments in 

contributions and benefits resulting in the repayment of the loans from the Railroad Retirement Account before December 31, 2000. The Solvency Act precluded 

further borrowing after 1985 and levied a special excise tax on railroad employers 

and employee representatives to be used solely to repay loans from the Railroad 

Retirement Account. This tax, as amended by omnibus budget reconciliation legislation enacted in 1986, levied a 4.3 percent rate on wages up to $3,500 beginning 

July 1986, 4.7 percent in calendar year 1987 on wages up to $7,000, and 6 percent 

in 1988. The budget legislation restored the borrowing authority but provided an 

automatic unemployment insurance surtax on rail employers in the event further 

borrowing from the Railroad Retirement Account were necessary. 

The Railroad Unemployment Insurance and Retirement Improvement Act of 

1988, based on the recommendations of the Railroad Unemployment Compensation Committee, assured repayment of the unemployment system’s debt to the 

retirement system by fixing the loan repayment tax at 4 percent in January 1989, 
 FINANCING UNEMPLOYMENT AND SICKNESS INSURANCE 147

with that rate remaining in force until the debt was fully repaid with interest. The 

previous $7,000 annual base for this tax was changed to an indexed monthly base 

of $710 in January 1989; in 1993, the base was $810. The 1988 amendments also 

eliminated the contingency surtax as of 1991, replacing it with a surcharge if the 

balance in the Railroad Unemployment Insurance Account falls below 

$100 million (as indexed), as described earlier. 

In June 1993, the $180,242,000 balance of the Railroad Unemployment Insurance Account’s debt to the Railroad Retirement Account was repaid in its entirety 

from cash reserves in the Railroad Unemployment Insurance Account. Repayment 

of the debt terminated the loan repayment tax. 

Subsequent to the June 1993 repayment, the Railroad Unemployment Insurance Account has exercised its authority to borrow from the Railroad Retirement 

Account in 2002 (repaid in 2003) and most recently in 2009-2010 (repaid in 

2011). 

FINANCIAL REPORT

The Railroad Retirement Board is required to report annually to Congress on 

the financial status of the railroad unemployment insurance system. The railroad 

unemployment insurance financial report submitted in June 2016 was generally 

favorable. Even as projected maximum benefit rates increase 36 percent from 

$72 to $98 from 2015 to 2026, experience-based contribution rates maintain 

solvency. 

The report also predicted average employer contribution rates well below 

the maximum throughout the projection period. A surcharge of 1.5 percent, in 

effect for 2016, will remain in effect for 2017. A surcharge of 1.5 percent is also 

likely for 2018. No financing changes were recommended.
148 2017 INFORMATIONAL CONFERENCE HANDBOOK

For the Fiscal Year Ended September 30 2016 2015

 

Financing Sources:

Employer Payroll Taxes $117.2 $74.7

Interest Income 2.3 2.7

General Appropriations 0.0 0.0

Other (16.4) (13.2)

 Total Financing Sources 103.1 64.2

Costs:

	 Benefit Payments:	

 Unemployment 74.9 35.7

 Sickness 51.8 50.6

 Other 5.6 (0.3)

 Total Costs 132.3 86.0

Financing Sources over Costs (29.2) (21.8)

Net Position - Beginning of Period 243.8 265.6

Net Position - End of Period2 $214.6 $243.8

1 Prepared on an accrual basis of accounting.

2 Includes funds from the Worker, Homeownership, and Business Assistance Act of 

2009, and the American Recovery and Reinvestment Act of 2009.

Table 17.--Unemployment and Sickness Insurance Program

Consolidated Financing Sources, Costs, and Net Position (Millions)1
8

Administration of the

Railroad Retirement System

149

The railroad retirement system is based on three Federal laws: the Railroad 

Retirement Act, the Railroad Unemployment Insurance Act, and the Railroad 

Retirement Tax Act. The first two of these Acts are administered by the Railroad 

Retirement Board, and the third by the Internal Revenue Service of the U.S. 

Treasury. The RRB also participates in the administration of the Federal Medicare 

health insurance program. In past years, the RRB assisted in the administration of 

certain employee protection provisions of the Regional Rail Reorganization Act, 

the Northeast Rail Service Act, the Milwaukee Railroad Restructuring Act, and 

the Bankrupt Railroad Service Preservation and Employee Protection Act. 

An independent agency in the executive branch of the Federal Government, 

the Railroad Retirement Board is administered by three members appointed by the 

President, with the advice and consent of the Senate. By law, the Labor Member is 

appointed upon recommendation of railroad labor organizations, the Management 

Member upon recommendation of railroad employers, and the third member, the 

Chairman, is, in effect, independent of employees and employers and represents 

the public interest. The terms of office are 5 years and are arranged so as to expire 

in different calendar years. The President also appoints an Inspector General for 

the RRB. 

The U.S. Railroad Retirement Board is an independent agency 

in the executive branch of the Federal Government. 
150 2017 INFORMATIONAL CONFERENCE HANDBOOK

The primary function of the RRB is the determination and payment of benefits 

under the retirement-survivor and unemployment-sickness programs. To this end, 

the agency employs field representatives to assist railroad personnel and their families in filing 

claims for benefits; examiners to 

adjudicate the claims; and information technology staff to ensure 

equipment and programs maintain earnings records, calculate 

benefits, and process payments.

The RRB also employs actuaries to predict the future income and outlays of 

the railroad retirement trust funds; statisticians and economists to provide vital 

data; and attorneys to interpret legislation and represent the agency in litigation. 

The Inspector General employs auditors and investigators to detect any waste, 

fraud, or abuse in the benefit programs. 

The headquarters of the RRB is located in the William O. Lipinski Federal 

Building, at 844 North Rush Street, Chicago, Illinois 60611-1275. The agency 

also maintains field offices across the country in localities easily accessible to 

large numbers of railroad workers. 

Relations Between the RRB and Other Agencies 

As an independent agency in the executive branch of the Federal Government, 

the RRB has many dealings with a number of other Federal agencies and with 

some State agencies. Its dealings with some of these agencies, such as the President’s Office of Management and Budget, the Office of Personnel Management, 

the Government Accountability Office, and the Department of the Treasury, are 

similar to the dealings of other executive branch agencies with these units. The 

RRB’s relations with certain others—principally, the Social Security Administration, the Centers for Medicare & Medicaid Services, State employment security 

The primary function of the 

RRB is to determine and process payment of benefits under 

the retirement-survivor and 

unemployment-sickness 

programs.
 ADMINISTRATION OF THE RAILROAD RETIREMENT SYSTEM 151

departments, and on a smaller scale, the Department of Labor—are related directly 

or indirectly to the various benefit programs. The RRB participates in the Treasury 

Offset Program which reduces benefit payments to recover delinquent debts owed 

to other Federal agencies. 

The RRB’s relationship with the Social Security Administration is particularly 

extensive because of the coordination between the two systems. Railroad retirement annuities may be based in part on social security credits and social security 

benefit amounts awarded after 1974 to railroad retirement annuitants are paid 

through the RRB as part of combined railroad retirement-social security monthly 

benefit payments. The Railroad Retirement Board and the Social Security Administration have an interagency agreement providing for system-to-system access 

between the two agencies. This allows RRB computer systems to access information as it is needed, thus improving customer service and reducing errors. 

Relations Between the RRB and Congress 

The RRB has numerous contacts with the Congress as a whole and with its 

individual members and committees. It sends the President and Congress an annual report on its operations and, on request, supplies additional information on the 

agency’s programs. Officials of the RRB testify at congressional hearings on proposed legislation to amend the Railroad Retirement and Railroad Unemployment 

Insurance Acts, and the agency prepares reports on such legislation. Congress has 

jurisdiction over the amounts available to the railroad retirement system for benefit payments and for administration. 

Relations Between the RRB and Railroads 

The administrative organization of the RRB fosters close relations with railroad employers, employees, and their representatives. As mentioned earlier, two of 

the Board’s three members are appointed on the recommendations of railway labor 

and management associations, and labor and management officials have been 

active in the development of the railroad retirement and unemployment insurance 

programs since their inception. 

In addition, the RRB relies on labor groups and railroad employers for assis-
152 2017 INFORMATIONAL CONFERENCE HANDBOOK

tance in keeping railroad personnel informed about the agency’s benefit programs. 

The RRB conducts informational programs for railroad labor and management 

officials to acquaint them with the details of the benefit programs. These officials, 

in turn, educate railroad workers as to their benefit rights and responsibilities. 

Railroad employers and railway labor groups also cooperate with the RRB in a 

joint placement program to find jobs for unemployed personnel. These joint placement efforts help to reduce the costs of the unemployment insurance program. 

The RRB has direct contact with railroad employees through its field offices 

where its personnel explain benefit rights and responsibilities on an individual 

basis, assist employees in applying for benefits, provide related services for annuitants, and answer any questions related to the benefit programs. 

Through various publications and press releases, the RRB disseminates, as 

widely as possible, information on its operations and the provisions of the laws it 

administers. Its publications include annual reports, triennial actuarial valuations, 

and benefit booklets and leaflets. 

Relations Between the RRB and the 

National Railroad Retirement Investment Trust 

The National Railroad Retirement Investment Trust was established by the 

Railroad Retirement and Survivors’ Improvement Act of 2001. The sole purpose 

of the Trust is to manage and invest railroad retirement assets. The Trust is a 

tax-exempt entity independent from the Federal Government. 

The Act authorizes the Trust to invest the assets of the Railroad Retirement 

Account in a diversified investment portfolio in the same manner as those of private sector retirement plans. Prior to the Act, investment of Railroad Retirement 

Account assets was limited to U.S. Government securities. 

While the Act does not delegate any authority to the Railroad Retirement 

Board with respect to day-to-day activities of the Trust, the Act does provide that 

the RRB may bring a civil action to enjoin any act or practice of the Trust that 

violates the provisions of the Act or to enforce any provision of the Act. The Trust 

has no powers or authority over the administration of benefits under the Railroad 

Retirement Act. 
 ADMINISTRATION OF THE RAILROAD RETIREMENT SYSTEM 153

Budget Estimates 

Each year, Congress specifies in an appropriation act how much of the 

money derived from employer and employee taxes the RRB may spend to administer the benefit programs. The appropriation is based on budget estimates prepared by the RRB. The requested appropriation is sent to the Congress at the same 

time it is sent to the President’s Office of Management and Budget. In addition, 

as explained in the retirement financing chapter, the level of certain dual benefit 

payments for a fiscal year is determined by the Federal budget and appropriations 

process. 

Relation of Administrative Costs to Benefit Payments 

The RRB has always had an exceptionally good record of administrative economy. Total administrative expenses currently average about one percent of benefit 

payments, despite the complexity of the Railroad Retirement Board’s programs. 

Fiscal year 2016 administrative expenses were $141.8 million. 

KEEPING BENEFICIARIES INFORMED 

The RRB conducts informational programs to keep railroad employees informed of their benefit rights and responsibilities under the Railroad Retirement 

and Railroad Unemployment Insurance Acts, with emphasis on the necessity of 

prompt application for benefits. Yet cases still occur in which qualified railroad 

employees or their family members forfeit benefits either because they do not 

know that these benefits are available or because they are unaware of the steps 

they themselves must take to claim them. 

The Railroad Retirement Act limits the retroactivity of retirement and survivor annuity applications. Depending on the type of annuity application, the 

retroactivity can be as long as one year or there can be no retroactivity at all. The 

RRB’s regulations do allow the granting of an earlier annuity beginning date if 

an annuitant can establish that he or she was deterred from filing an application 

at an earlier date by some action or statement of an agency employee. However, 
154 2017 INFORMATIONAL CONFERENCE HANDBOOK

while the RRB attempts to keep potential annuitants informed of their rights under 

the Railroad Retirement Act through press releases, informational bulletins and 

booklets, that information might not reach everyone. This is especially true when 

an individual left the railroad industry well in advance of retirement. Ultimately, 

the burden falls on the individual to secure benefit information. 

Likewise, under the Railroad Unemployment Insurance Act, while the RRB 

may permit retroactive registration beyond the normal period when it can be 

shown that the employee was not at fault and that failure to apply for benefits was 

due to circumstances beyond the employee’s control, it cannot approve delayed 

claims if the only reason for a delay in filing was lack of knowledge of the law. 

PROGRAM INTEGRITY 

Railroad employees, by and large, are honest and law-abiding, but any large 

group may include a few persons who either deliberately or through lack of 

knowledge seek benefits to which they are not entitled. Various procedures for 

detecting and discouraging such actions include reviews of employer records for 

work on days claimed as days of unemployment or sickness and checks with State 

agencies to detect duplication of benefit payments. The RRB has wage matching 

agreements with all 50 States, the District of Columbia, and Puerto Rico to cover 

the entire rail population. Electronic data exchange programs with railroads, as 

well as Federal and State agencies, have significantly enhanced the RRB’s capability to detect fraud and abuse of the railroad unemployment and sickness insurance system. A 75-day disqualification is applied in all cases in which fraud is 

discovered. In some cases, prosecution is also recommended. 

Other program activities designed to protect the railroad retirement trust funds 

include the investigation of uncashed annuity payments, matches with the Social 

Security Administration and the Centers for Medicare & Medicaid Services, and 

development of an online system to monitor railroad retirement/social security 

trust fund transfers. In addition to conducting audits of the RRB’s operations, the 

Office of Inspector General identifies and refers cases for prosecution of individuals who commit fraud against the agency’s benefit programs. 
 ADMINISTRATION OF THE RAILROAD RETIREMENT SYSTEM 155

OFFICE OF INSPECTOR GENERAL 

The Railroad Retirement Board’s Office of Inspector General is responsible 

for promoting economy, efficiency, and effectiveness; and for identifying and 

preventing fraud, waste, and abuse in agency programs. The Office of Inspector 

General conducts audits, investigations, and management reviews of agency operations. 

The Office of Inspector General identifies current and potential program 

weaknesses, and provides findings and recommendations for corrective action to 

management. It works with the agency’s staff to ensure delivery of the highest 

quality service to the railroad community. It also aggressively pursues individuals 

who engage in activities to fraudulently receive monies from the Railroad Retirement Board. The Office of Inspector General endeavors to ensure the integrity of 

the trust funds through nationwide investigations of fraud and abuse. 

Information about the Office of Inspector General and reports issued by that 

office are available by accessing the Office of Inspector General web pages at 

www.rrb.gov. The Office of Inspector General also maintains a fraud and abuse 

Hotline at 1-800-772-4258, or via email at hotline@oig.rrb.gov. Information on 

using the Hotline can be found on the inside back cover of this Handbook. 
Index

A

Accelerated unemployment-

	 sickness benefits, 130

Account,

	 dual benefits payments, 90

	 railroad retirement, 11-14,

	 	 16-17, 19, 83-88, 100, 102,

	 	 117, 119-120, 145-147, 152

	 railroad retirement supple-

	 	 mental, 21

	 railroad unemployment insurance

	 	 12, 116, 119, 121, 143-148

	 social security equivalent

	 	 benefit, 83, 85, 87

Administration, 149-155

Age reductions, 15, 27, 31-32,

	 44, 69-80

Annuity estimates, 33, 48

Appeals,

	 Medicare, 112

	 Railroad Retirement Act, 67

	 Railroad Unemployment Insurance 	 	

	 	 Act, 136-137

Applying for benefits,

	 retirement-survivor, 54-57

	 unemployment-sickness, 133, 134,

	 	 135, 136

Appropriations, 12, 14, 36, 83,

	 	 88-91,153

B

BA-6 form, 26-27

Base year, 125, 129

Beneficiaries, retirement-

	 survivor,

 life expectancy of, 59

	 	 number of, 22, 45, 46

Beneficiaries, unemployment-

	 sickness,

	 	 number of, 124, 142

Benefit Online Services, 26, 33,

	 55, 66, 134, 135

Benefit year, 123-124, 125, 127

Benefits, retirement-survivor,

	 amounts, 45, 46

	 applying for, 54-57

	 child’s, 38, 42, 43, 44, 45, 46,

	 	 47, 48, 51, 52, 56-57

	 computation of, 68-81

	 disability, 27, 28-29, 32, 34, 41-42, 44,

	 	 45, 46, 47, 51, 52, 54, 56-57, 	 	

	 	 66, 72, 76	

	 divorced spouses, 32-33, 42-43,	 	

	 	 44, 45, 46, 76

	 employee, 22, 27-29, 33-37, 	 	 	

	 	 38-43, 45-46, 54-61, 68-74 	 	

	 lump-sum, 43, 45, 53-54, 57, 62-63

	 parent’s, 43, 45, 46, 48, 52, 57	 	

	 	 79, 80

	 residual, 43, 45, 54, 57

	 spouse, 22, 31-33, 34, 37-41, 42-43, 	 	

	 	 45, 46, 55-57, 74-77

	 supplemental annuity, 21, 29, 45,

	 	 46, 74

	 surviving divorced spouse, 45, 46, 47,

	 	 55-57, 78-80

	 survivor’s, 22, 30-31, 43-54, 56-57,

	 	 78-80

	 widow(er)’s, 43-54, 56-57, 59, 78-81

157
158 2016 INFORMATIONAL CONFERENCE HANDBOOK

Benefits, unemployment-sickness,

	 accelerated, 130

	 amount, 116-120, 123, 125, 139,

	 	 140-141, 142, 143	 	 	

	 claiming, 134, 135

	 daily benefit rate 116-118, 120,

	 	 123, 127, 139

	 day of sickness, 123, 126, 127

	 day of unemployment, 123, 125-126, 	 	

	 	 127-128

	 disqualifications, 132

	 earnings test, 123, 126-127

	 eligibility, 125-126

	 extended, 117-118, 123, 129, 139

	 normal, 117, 129, 139, 143

	 number of, 124, 139	

	 registration period, 123, 126-127 	 	

	 sickness, 125-142

	 State benefits compared,

	 	 140-141

	 unemployment, 125-142

	 waiting period, 116-120, 123,

	 	 127, 129

C

Certificate of Service Months and

	 Compensation, 26

Child’s annuity, 42, 43, 44, 45, 46,

	 47, 51, 52

Commission on Railroad 	 	 	

	 Retirement, 6, 7

Compensation, 22, 23, 24, 25, 26, 	 	

	 54, 60-63,125, 126-127, 130-131

Consumer Price Index, 9, 39

Cost-of-living increases, 8, 9, 11, 	 	

	 14, 19, 39, 50, 71, 73, 80

Covered employer, 23, 60, 83, 91

Covered hospital services, 105

Creditable service, 27, 58

Current connection, 11, 30-31, 34, 36,	 	

	 43, 53, 58

D

Daily benefit rate, 116-118, 120, 127, 	 	

	 139

Deemed service, 24, 26

Delayed retirement credits, 69

Dependent grandchild, 47

Direct Deposit, 55, 136

Disability benefits, 29, 34, 41-42, 44, 	 	

	 45, 46, 47, 51, 52, 54-57, 	 	 	

	 59, 66, 68, 72, 76

Disqualifications, 132

Divorced spouses, 32-33, 41, 42-43, 	 	

	 45-46, 76

Dual benefits, 7, 8-9, 10, 12, 13,	 	 	

	 15, 33, 35-36, 37, 38, 49-50,	 	 	

	 57, 64, 88-91

Dual Benefits Payments 	 	 	

	 Account, 90

Dual tax payments, 60, 62

Duration of benefits, 59

E

Early retirement, 14, 18, 27, 31,	 	 	

	 64, 70-71, 73-74, 76, 78

Earnings, 3-6, 10-12 13, 16, 17, 18-19, 	 	

	 23, 	26, 33, 35, 38-42, 49, 51, 53, 	 	

	 58, 60, 61, 62, 66, 68-69, 72, 76,	 	

	 78, 79, 85, 89-91, 96-100, 

	 116-121, 125-127, 129-130, 139

Earnings base, RRA, 61, 96-97,

	 98-100

Earnings base, RUIA, 116-118, 119-120,		

	 143-145

Earnings limitations, 39-42, 51

Earnings test, 123, 126-127

Employee annuities, 22, 27-29,

	 33-37, 38-43, 45-46, 54-61, 68-74

Employee representative, 23, 24, 60, 	 	

	 84, 146
 INDEX 159

Employment, 1-2, 6, 7, 9, 12, 16, 	 	

	 	 22, 29, 30-31, 34, 35-38, 39-42, 	 	

	 	 44, 50, 88-89, 91, 124, 125-127, 	 	

	 	 132, 133, 143

Experience rating, 120,144-145

Extended unemployment-

	 sickness benefits, 117-118, 122,	 	

	 	 129, 139

F

Financial interchange, 5, 7, 11, 	 	 	

	 14, 83, 85, 86-87, 88-89

Financial statements, 88, 94, 95, 	 	

	 148

Financial reports, 93, 122, 147

Financing, 5-6, 10, 12-16, 	 	 	

	 18-21, 22, 83-100, 143-148

Five-month waiting period, 14, 	 	 	

	 29, 44

Foreign pensions, 37, 72

Full retirement age, 27-29, 39-43, 	 	

	 44, 45, 46, 51, 56, 69-70, 73-77

G

Garnishment, 57

Good cause, 117, 129

Gramm/Rudman Act, 15, 17, 122

H

Health insurance, 58, 101-113

Home health care, 105, 107

Hospice care, 104, 105

Hospital Insurance, 61, 84, 86, 	 	 	

	 101-106

I

Income taxes,

retirement-survivor, 13, 15-16, 17,

	 	 60-65, 83, 91

	 unemployment-sickness, 119-120, 	 	

	 	 137

Insured status, 43, 53, 69

Investments, 83, 87-88, 117, 145

L

Labor organizations, 18, 20, 23, 39,

	 60, 74, 134, 135, 149

Last pre-retirement nonrailroad 	 	

	 employer, 16, 39-40

Life expectancy, 58

Loan repayment tax, 119-120,

	 147

Local lodge compensation, 23, 39

Lump-sum benefits, 45, 53-54,

	 57, 62-63

M

Maternity benefits, 116, 130

Medical Insurance, 101-114

Medicare, 5, 17, 22, 62-63, 65,

	 84, 101-113, 149, 150

Medicare Advantage Plans, 110-111

Medicare plan choices, 109-111

Medigap, 110

Military service, 10, 15, 16, 23, 25, 	 	

	 26, 37, 49, 55, 58

Monitoring programs, 66
160 2016 INFORMATIONAL CONFERENCE HANDBOOK

N

National Railroad Retirement 	 	 	

	 Investment Trust, 19, 21, 83, 84,

	 	 85, 87-88, 93, 95, 152

Non-profit pensions, 37, 72

Normal unemployment-sickness 

	 benefits, 117, 129, 139, 143

O

Occupational disability, 4, 15,

	 29, 64

On-the-job injury, 23, 119, 127

Original Medicare Plan, 108-110

P

Parents’ annuities, 43, 45-46, 48, 52, 	 	

	 57, 79, 80-81

Payroll taxes, 13, 16-17, 19, 20, 22, 	 	

	 60-62, 83, 84-85, 91, 94, 96-97, 98-99,

	 116, 127, 143-145

Period of continuing sickness, 

	 128, 135

Period of continuing unem-	 	 	

	 ployment, 128

Placement service, 116, 133

Prescription drug coverage, 111-112

Private pensions, 1, 3, 63-64, 74, 91

Program integrity, 154

Property settlements, 57

Public pensions, 37-38, 49, 72 	 	 	

R

Railroad Retirement Account,

	 11-14, 16-17, 19, 83-88, 100, 102, 	 	

	 117,119-120, 145-147, 152

Railroad Retirement Act,

benefit provisions, 11-12, 14, 23-81

	 financing, 83-100

	 history, 1-22

	 administration, 149-155

Railroad Retirement and 	 	 	

	 Survivors’ Improvement Act,

	 	 14, 18-21, 84, 87, 152

Railroad Retirement 	 	 	 	

	 Supplemental Annuity Account, 21

Railroad Retirement Tax Act, 6, 102, 149

Railroad Unemployment 	 	 	

	 Compensation Committee,

	 	 119-120, 146-147

Railroad Unemployment 	 	 	

	 Insurance Account, 12, 116,

	 	 119, 121, 143-148

Railroad Unemployment 	 	 	

	 Insurance Act,

	 	 benefit provisions, 125-142

	 	 financing, 143-148

	 	 history, 115-124

	 	 administration, 149-155

Railroad Unemployment 	 	 	

Insurance Administration Fund, 145

Railway labor, 23, 39, 128-129, 132, 	 	

	 	 149, 151-152

Railway Labor Act, 128-129, 132

Registration period, 123, 126-128

Remarried widow(er)s, 43, 44, 45, 46

Repayment tax, 119-120, 121, 146-147

Representative payees, 58, 66

Residual lump-sum death

	 benefit, 43, 45, 54, 57

S

Separation or severance

	 payments, 16, 62-63, 132

Service, 2, 5, 6, 8, 14-19, 22, 	 	 	

	 23-36, 53-57, 69-70, 118

Service months, 23-24, 26-27

Sickness benefits, 115-124, 125-138

Skilled nursing care, 104, 105, 107
 INDEX 161

Social Security Act, 7, 9, 11, 14-15, 17, 	 	

	 38, 49, 69, 86, 115, 130

Social Security Administration,

	 4, 35, 44, 49, 56, 58, 66,

	 150, 154

Social Security Equivalent 	 	 	

	 Benefit Account, 83, 85, 87

Special minimum guaranty, 38

Spouse annuities, 31-35, 39-41, 		 	

	 42-43, 45-46, 54-59, 74-77

Statement of sickness, 126, 135

Strikes, 118, 119, 132

Subsidiary remuneration, 120, 126, 127

Supplemental annuity, 29, 45, 46,

	 74

Surviving divorced spouse, 32, 		 	

	 45, 46, 47, 56-57, 78-81

Survivor benefits, 22, 30-31, 43-54,

	 56-57, 78-81

Survivor-spouse guaranty, 81

T

Taxes, income,

	 retirement-survivor, 13, 15, 17,

	 	 60-65, 83, 91

	 unemployment-sickness, 120, 	 	

	 	 137

Taxes, payroll,

	 retirement-survivor, 13, 17,

	 	 20, 22, 60-62, 83, 96-97,

	 	 98-100

	 unemployment-sickness,

	 	 116, 127, 143-145

Toll-free service, 65, 138

Two-tier annuities, 8, 11-12, 16, 		 	

	 33, 35, 48-49, 68-77, 78-81

U

Unemployment benefits, 115-124,

	 125-142

V

Vested dual benefits, 8-12,13, 	 	 	

	 15, 35-36, 39-40, 57, 68, 	 	 	

	 73-74, 77, 89-91

W

Waiting periods, 116-120, 123,	 	 	

	 127-128,129

Websites, 26, 33, 55, 65, 88, 	 	 	

	 105, 107, 109, 110, 112, 113, 133,

	 134, 135, 138, 155

Widow(er)’s annuity, 44-54, 56-57,

	 59, 78-81

Widow(er)’s Initial Minimum 	 	 	

	 Amount, 19, 50, 79-80

Work deductions, 39-42, 51
162 2016 INFORMATIONAL CONFERENCE HANDBOOK

NONDISCRIMINATION 

ON THE BASIS OF DISABILITY

Under Section 504 of the Rehabilitation Act of 1973 

and Railroad Retirement Board regulations, no qualified person may be discriminated against on the basis of 

disability. The RRB’s programs and activities must be 

accessible to all qualified applicants and beneficiaries, 

including those with impaired vision and/or hearing. 

Individuals with disabilities needing assistance (including auxiliary aids or program information in accessible 

formats) should contact the nearest RRB office. Complaints of alleged discrimination by the RRB on the basis 

of disability must be filed within 90 days in writing with 

the Director of Administration, U.S. Railroad Retirement 

Board, 844 North Rush Street, Chicago, Illinois 60611-

1275. Questions about individual rights under this regulation may be directed to the RRB’s Director of Equal 

Opportunity at the above address.

Comments? If you have any comments or suggestions regarding

the presentation of information in this publication, please let us know. 

You can fax us at 312-751-7154, email us at opa@rrb.gov, or write us

at the following address: 

Public Affairs 

U.S. Railroad Retirement Board 

844 North Rush Street

Chicago, Illinois 60611-1275
FRAUD, WASTE, AND ABUSE HOTLINE

1-800-772-4258

The Railroad Retirement Board’s Office of Inspector General established 

its Hotline as a public service. The Hotline provides individuals with a 

means to report or discuss any suspected misconduct relating to the Railroad 

Retirement Board, its programs or employees.

If you believe a doctor, hospital, or other health care provider is billing 

Medicare for services not provided or for unnecessary medical procedures or 

supplies; someone is illegally receiving Railroad Retirement Board benefits; 

or you wish to report or discuss any other suspected misconduct relating to 

the Railroad Retirement Board, its programs or employees, please contact 

the Office of Inspector General at:

Toll-Free Hotline: 1-800-772-4258

U.S. Mail:

RRB-OIG Hotline Officer

844 North Rush Street, 4th Floor

Chicago, IL 60611-1275

Fax: (312) 751-4342

Email: hotline@oig.rrb.gov

Please review the Railroad Retirement Board’s email notice and Internet 

privacy policy at www.rrb.gov before submitting information online.

Note: Please do not contact the Office of Inspector General’s Hotline with 

questions regarding benefit eligibility requirements, delayed payments, 

or similar issues. These types of matters should be directed to a Railroad 

Retirement Board office. 
U.S. RAILROAD RETIREMENT BOARD

Office of the Labor Member

844 North Rush Street

Chicago, IL 60611-1275

www.rrb.gov

Toll Free: (877) 772-5772