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              -  Home 
              -  Rail Employer Reporting Instructions (RERI) 
              -  Part IV - Particular Types of Compensation Payments 
              -                   Chapter 12: Exclusions to Creditable Compensation               

## Topics

-  Part I - Prerequisite Knowledge for Rail Employer Reporting  
-  Part II - Establishment of Employee Records 
-  Part III - Principles of Service and Compensation 
-  Part IV - Particular Types of Compensation Payments    -  Chapter 01: Regular Earnings 
  -  Chapter 02: Miscellaneous Compensation 
  -  Chapter 03: Sick Pay 
  -  Chapter 04: Vacation Pay 
  -  Chapter 05: Back Pay 
  -  Chapter 06: Pay for Time Lost 
  -  Chapter 07: Separation/Severance Payments and Dismissal Allowance  
  -  Chapter 08: Guarantee Payments  
  -  Chapter 09: Contract Services 
  -  Chapter 10: Various Non-Routine Payments  
  -  Chapter 11: Compensation for Multiple Employers 
  -  Chapter 12: Exclusions to Creditable Compensation  
  -  Chapter 13: Selected Fringe Benefits 
-  Part V - Reports of Creditable Service and Compensation 
-  Part VI - Reports Related to Service and Compensation 
-  Part VII - Additional Communications about Service and Compensation Reports 
-  Part VIII - Employer Reporting System (ERS) Internet User Instructions 
-  Appendices 

 

RERI-Part IV_CH 12
 

**Payments That Are Not Considered Creditable Compensation**

The following payments paid to an employee by an employer are not considered creditable compensation under the Railroad Retirement Act and the Railroad Unemployment Insurance Act:
                        - Sick pay paid subsequent to the sixth month following the month last worked, as described in  Part IV, Chapter 3  on sick pay and  Chapter 2  on miscellaneous compensation;
                        - Contributions and payments for pension or profit sharing made under a plan that qualifies for exclusion from income under the Internal Revenue Code. This exclusion does not apply to Section 401(k) plans;
                        - Payments made to an employee who has been called to active military service which are intended to supplement military pay;
                        - Payments made to an employee's survivor or to an estate in the year after the employee died. (Payments made after death but in the year of death are creditable compensation.);
                        - Interest paid on compensation earned but not timely paid;
                        - The value of "qualified" fringe benefits received under a Section 125 cafeteria plan, also known as a flexible benefit plan. However, a cash payment received under such a plan is compensation;
                        - The value of non-qualified stock options;
                        - Tip earnings of less than $20 per month;
                        - Compensation paid to a non-resident alien with a "F-1" or "J-1" visa;
                        - Compensation paid to the director of a railroad is not creditable. However, compensation paid to officers is creditable. Directors are not considered employees within the meaning of the Acts;
                        - Receivers and Trustees are designated employers and may not also be employees. This treatment is consistent with the position of the IRS;

The partners in a Limited Liability Company do not receive creditable compensation. Their pay is treated the same as that as of a director of a company. The exception would be if they were performing material work. In that case, the partner pays FICA taxes on their individual income tax return. There is no method by which a partner can pay RRTA taxes.

**Reimbursements**

The following reimbursements for employment-related expenses are not creditable compensation or subject to tax.
                        - Educational assistance that is excluded from compensation under Section 127 of the Internal Revenue Code.
                        - Allowances or provisions for meals and lodging that are excluded from compensation under Section 119 of the Internal Revenue Code. Section 119 covers meals and lodging provided by the employer.
                        - Allowances or reimbursements for travel, meals and lodging that are incurred while traveling in the business of the employer and where paid under a plan that requires an employee to account for their expenditures. Expenditures not accounted for are creditable compensation.
                        - Reimbursements for moving expenses are deductible under Section 217 of the Internal Revenue Code.

**Service Performed Outside the United States**

Earnings paid by a covered railroad employer for service performed outside the United States:
                        - for a non-US employer, regardless of citizenship of the employee, is not creditable;
                        - for a US employer, by citizens of the United States, is creditable;
                        - by non-US citizens, is generally not creditable, but there may be exceptions.

   

**‹** Chapter 11: Compensation for Multiple Employers
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Chapter 13: Selected Fringe Benefits  **›**

   

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								Last updated: 11/21/2022