Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 3: Sick Pay

1

Chapter Overview

This chapter provides basic information regarding sick pay. If you make creditable sickness 

payments and need the Reporting Instructions for Creditable Sickness Payments, you may wish to 

call or write to the Quality Reporting Service Center (QRSC) at

Quality Reporting Service Center

Railroad Retirement Board 

844 North Rush Street 7th Floor

Chicago, Illinois 60611-1275

Phone: (312) 751-4992 

Fax: (312) 751-7123 

Email: QRSC@rrb.gov

Creditable Sick Pay Compensation

Sick pay is compensation paid under a plan or agreement available on the same basis to employees 

in a like class and payable for days not worked on account of injury, illness, pregnancy, or 

childbirth. 

The term "Sick Pay" means only an RRB-approved supplemental sick pay plan such that only 

supplemental benefits are limited to tier 1 tax and that other sick pay is to be reported like wages. 

Sick pay from a plan approved by the Board is:

• creditable as Tier I compensation only; 

• does not yield service months;

• not creditable as Tier II compensation; and

• is not creditable as compensation under the Railroad Unemployment Insurance Act 

(RUIA).

Regular earnings, wages, or salary an employee receives while off sick is not considered sick pay 

but regular earnings. 

Sick Pay Compensation Used in Annuity Calculation

Because Sick Pay is creditable only as Tier I compensation, it is reported separately on Form BA3 from regular earnings to help ensure the integrity of our records. Although sick pay is reported 

and maintained at the RRB in a record which is separate from the regular service and compensation 

record, all Tier I compensation is considered together in calculating the Tier I component of an 

employee's annuity. 

Employers previously reported Sick Pay on Form BA-10, Report of Sick Pay and Miscellaneous 

Payments. Form BA-10 is now obsolete. Sick Pay must now be reported on Form BA-3, Annual 
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 3: Sick Pay

2

Report of Creditable Compensation, and adjusted on Form BA-4, Report of Creditable 

Compensation Adjustments. 

See Part V, Chapter 3 and 4 respectively, for instructions on completing Forms BA-3 and BA-4 to 

report Sick Pay. 

Exceptions to Creditable Sick Pay Compensation

There are three exceptions where sick pay is not creditable or taxable as Tier I compensation. The 

exemptions are:

• sick pay is paid by the RRB under the Railroad Unemployment Insurance Act for an onthe-job injury; 

• sick pay is paid subsequent to the sixth month following the month the employee last 

worked; and

• sick pay is paid in the year after the employee died. 

The exemption for crediting sick pay through the sixth month following the month the employee 

last worked does not mean that creditable sick pay is limited to six months in a year. If an employee 

returns to work and is off sick again, a new six month period begins from the month following the 

latest date worked. 

Coordinating Supplemental Benefits with the RRB

If you are paying supplemental sick pay under a plan whereby you pay the difference between the 

sick benefits paid by the RRB and a set amount, such as the employee's regular salary, you will 

need to have your plan approved by the RRB. You may also want to establish a procedure to 

receive notification from the RRB of sickness benefit payments so that your payments are 

coordinated with RRB Sickness benefits. Contact the below section for information on getting a 

plan approved and on receiving benefit notification.

Chief of RUIA, Internet and Support

Railroad Retirement Board 

844 North Rush Street 

Chicago, Illinois 60611-1275

Phone: (312) 751-3389 

Sick Pay Paid by RRB, Provident, Trustmark, etc.

Sickness benefits paid by the RRB under the RUIA, Provident, Trustmark or other supplemental 

benefit payors, are considered for crediting and tax purposes to be paid by an agent of the 

employer. These sickness benefits are creditable and taxable in the same way as if the employer 

had made the payments.
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 3: Sick Pay

3

Compensation Reporting Responsibilities

The responsibility for reporting compensation and the liability for depositing and reporting taxes 

depend on the type of sickness benefit being paid and who is making the payment. The 

responsibilities for the three types of sickness benefit payors are explained below.

Sick Pay Paid By the Rail Employer

Employers who pay sickness benefits to their employees, are responsible for filing compensation 

reports and for withholding and paying all applicable taxes in regards to the sick pay. The employer 

files the reports under the employer's regular BA and EIN numbers. The employer can include the 

sick pay compensation with the other compensation on the employee's Form W-2.

Sick Pay Paid by the RRB or an Insurance Co who has Established Sick Pay Status under 

the RRA/RUIA

The RRB will assign insurance companies who pay creditable sick pay with a BA number for 

accounting purposes. Insurance companies having BA numbers are referred to in these instructions 

as sick pay employers. The responsibilities of the Sick Pay Employer and the Rail Employer are 

explained below.

RRB/Sick Pay Employer Responsibilities Railroad Employer Reporting

Responsibilities

1. Withhold the employee Tier I tax 

from the sick pay.

1. Pay the employer matching Tier I tax, up 

to the annual Tier I maximum on 

combined earnings, when notified of the 

sick pay.

2. Deposit the tax withheld with the 

IRS.

2. Include on form CT-1 filed with IRS, the 

employer matching Tier I tax on sick 

pay.*

3. Notify the employer of the sick pay 

paid to its employees.

4. File Form CT-1 with the IRS to 

report the employee Tier 1 tax on 

sick pay using the sick pay payor's 

EIN.

5. File Form BA-3 with the RRB 

using the sick pay payor's BA 

number.

6. File Forms W-2 and W-3 with the 

SSA. Regular and dummy forms 

may be required. See Part VI 

Chapter 6 and IRS Publication 952 

for detailed instructions.
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 3: Sick Pay

4

*For example, the RRB uses Form Letter ID-6, Transmittal Report of Tier I Tax Transactions, 

to notify railroad employers of the amount of sickness benefits paid.

Other Sickness Benefit Payors

An employer may arrange for a third party to act as the employer's agent for the payment of 

sickness benefits. The employer may or may not arrange for the third party to provide 

administrative services for the employer such as filing Forms CT-1 and BA-3. These 

responsibilities are divided by agreement between the employer and the third party. If the third 

party does provide such administrative services, they are doing so as an agent of the railroad 

employer and not as an employer under the RRA. Therefore, the third party would file Form BA3 using the rail employer's BA number. The employer would include the sick pay compensation 

on the employee's Form W-2 along with other compensation.