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For Publication 

August 2021 

Deemed Service Month Credits 

Railroad retirement benefits are based on months of service and earnings credits. Earnings are 

creditable, up to certain annual maximums, on the amount of compensation subject to railroad 

retirement taxes. 

Credit for a month of railroad service is earned for every month in which an employee had some 

compensated service covered by the Railroad Retirement Act. (Local lodge compensation is 

disregarded for any calendar month in which it is less than $25. However, work by a local lodge or 

division secretary collecting insurance premiums, regardless of the amount of salary, is creditable 

railroad work.) Also, under certain circumstances, additional service months may be deemed in some 

cases where an employee does not actually work in every month of the year. 

The following questions and answers describe the conditions under which an employee may 

receive additional railroad retirement service month credits under the deeming provisions of the 

Railroad Retirement Act. 

1. What requirements must be met before additional service months can be deemed? 

A service month can be deemed if an employee has less than twelve service months reported in the 

year, has sufficient compensation reported and is in an “employment relation” with a covered railroad 

employer, or is an employee representative, during that month. (An employee representative is a labor 

official of a noncovered labor organization who represents employees covered under the Acts 

administered by the Railroad Retirement Board.) 

For this purpose, an “employment relation” generally exists for an employee on an approved leave 

of absence (for example, furlough, sick leave, suspension, etc.). An “employment relation” is severed 

by retirement, resignation, relinquishing job rights in order to receive a separation allowance, or 

termination. 

2. How is credit for additional service months computed? 

For additional service months to be deemed, the employee’s compensation for the year, up to the 

annual 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 the next whole number, equals the maximum number of 

months that may be deemed as service months for that year. Fewer months may be deemed, if an 

employment relation, as defined in Question 1, does not exist. 

Railroad Retirement Information

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U.S. R a i l r o a d R e t i r e m e n t B o a r d 

RRB.gov 

877-772-5772 general information

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3. An employee works seven months in 2021 before being furloughed, but earns 

compensation of $108,000. How many deemed service months could be credited to the employee? 

The employee could be credited with five additional service months. One-twelfth of the 2021 

$106,200 tier II maximum ($8,850) times the employee’s actual service months (seven) equals 

$61,950. The employee’s compensation in excess of $61,950 up to the $106,200 maximum is $44,250, 

which divided by $8,850 equals five. Therefore, five deemed service months could be added to the 

seven months actually worked and the employee would receive credit for 12 service months in 2021. 

4. Another employee works for seven months in 2021 and earns compensation of $85,200. 

How many deemed service months could be credited to this employee? 

In this case, the excess amount ($85,200 minus $61,950) is $23,250, which divided by $8,850 

equals 2.627. After rounding, this employee could receive credit for three deemed service months and 

be credited with a total of 10 months of service in 2021. 

5. Another employee works for eight months in 2021 before resigning on August 15, but 

earns compensation of $91,000. How many deemed service months could be credited to this 

employee? 

None. Since the employee resigned in August, there is no employment relationship for the 

remaining months and no additional service months may be deemed and credited. 

6. Should an employee preparing to retire take deemed service months into account when 

designating the date his or her railroad retirement annuity begins? 

An employee may wish to consider credit for deemed service months in selecting an annuity 

beginning date. For instance, in some cases, a designated annuity beginning date that considers 

deemed service months could be used to establish basic eligibility for certain benefits, increase an 

annuity’s tier II amount, or establish a current connection, as illustrated in Questions 7, 8, and 9, 

respectively. It should be noted that service months cannot be deemed after the annuity beginning date.

7. What would be an example of using deemed service months to establish benefit 

eligibility? 

An example would be an employee between the ages of 60 and 62 who might be able to use 

deemed service months to establish the 360 months of service needed to qualify for an unreduced age 

annuity prior to full retirement age. 

For instance, a 60-year-old employee last performed service on May 15, 2021, and received 

$61,800 in compensation in 2021. She is credited with 358 months of creditable railroad service 

through May 2021. If the employee wishes to retire on age, she must wait until she is full retirement 

age, which ranges between 66 and 67 depending upon the employee’s year of birth, or age 62 if she is 

willing to accept an age-reduced annuity. She needs at least two additional months of service to 

establish eligibility for an unreduced annuity prior to full retirement age. 
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The employee’s excess amount ($61,800 minus $44,250) is $17,550, which divided by $8,850 

equals 1.983. Therefore, two deemed service months could be added to the five months actually 

worked and the employee would receive credit for seven service months in 2021 for a total of 360 

service months, allowing her to receive an unreduced annuity beginning July 2, 2021. 

8. How could deemed service months be used to increase an employee’s tier II amount? 

An employee worked in the first five months of 2021 and received compensation of $59,500. He 

does not relinquish his rights until July 2, 2021, and applies for an annuity to begin on that date. 

The excess amount ($59,500 minus $44,250) is $15,250, which divided by $8,850 equals 1.723, 

which yields two deemed service months for a total of seven service months in 2021. Had the 

employee relinquished his rights and applied for an annuity to begin on July 1, he would have been 

given credit for only six service months. 

The employee received the maximum compensation in all of the last five years and had 360 

months of service through 2020. The additional service and compensation increases his tier II from 

$1,726.75 to $1,746.92. However, delaying the annuity beginning date past the second day of the 

month after the date last worked solely to increase the tier II amount would not generally be to the 

employee’s advantage. 

9. Can deemed service months help an employee establish a current connection? 

Yes. For example, an employee left the railroad industry in 2002 and engaged in employment 

covered by the Social Security Act. In August 2020, she returned to railroad employment and worked 

through June 28, 2021. She received compensation of $53,650 in 2021. She does not relinquish her 

rights until July 2, 2021, and applies for an annuity to begin on July 2, 2021. 

In this case, the excess amount ($53,650 minus $53,100) is $550, which divided by $8,850 equals 

0.0621, which yields one deemed service month. Consequently, the employee is given credit for seven 

service months in 2021. With five months of service in 2020 and seven months in 2021, the employee 

establishes a current connection. Had she designated the earliest annuity beginning date permitted by 

law, she would not have met the 12-in-30-month requirement for a 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 survivor benefits.) 

10. Can an employee ever receive credit for more than 12 service months in any calendar 

year? 

No. Twelve service months are the maximum that can be credited for any calendar year. 

11. Where can an employee get more information on how deemed service months could affect 

his or her annuity? 

Employees with questions about deemed service months can send a secure message to their local 

RRB office by accessing Field Office Locator at RRB.gov and clicking on the link at the bottom of 

their local office’s page. If a customer needs to talk to an RRB employee, they can call the agency’s 
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toll-free number (1-877-772-5772). However, customers are asked to be patient because of the 

increase in call volume due to the closure to the public of RRB offices during the COVID-19 

pandemic. 

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