U.S. RAILROAD RETIREMENT BOARD

Office of the Labor Member

844 North Rush Street

Chicago, IL 60611-1275

RRB.gov/LMO

Toll Free (877) 772-5772

TTY 312-751-4701
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 retirement 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.
RAILROAD RETIREMENT 

AND UNEMPLOYMENT 

INSURANCE SYSTEMS

U.S. RAILROAD RETIREMENT BOARD

Office of the Labor Member

844 North Rush Street

Chicago, Illinois 60611-1275

RRB.gov/LMO

HANDBOOK

The Office of the Labor Member is pleased 

to welcome you to our Pre-Retirement Seminar. 

Many of you may be familiar with our office and 

the Informational Conference Program we had 

been offering to union officials since 1957. We 

conducted these conferences at the request of 

the Chief Executives of the railway labor unions 

to help educate local representatives about the 

benefits available to members and their families 

under the Railroad Retirement and Railroad Unemployment Insurance Acts.

Thousands of railroad labor representatives have attended our conferences 

over the years and 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 improve 

the effectiveness of our benefit program operations by passing on to their fellow 

railroad employees the information they acquired at our conferences. 

A few years ago, we broadened the scope of our educational efforts to reach 

another segment within the railroad community, specifically employees and 

spouses within 5 years of retirement. We designed our Pre-Retirement Seminar 

program to help those nearing retirement better understand the benefits available to them, and know what to expect during the application process. 

In recent years we’ve noticed a significant drop in conference attendance, 

while the seminars grew in popularity. The new-found interest and enthusiasm 

generated from our Pre-Retirement Seminars has encouraged us to reshape our 

platform. To ensure our outreach efforts fulfill your current needs, and to help 

us better manage costs and field office resources, we combined these usually 

separate programs into a single event (called Pre-Retirement Seminars) open to 

those nearing retirement and all local union officers. 

Introduction

John Bragg
These seminars are conducted using helpful informational materials that are 

updated frequently. While most of our program focuses on various aspects of 

railroad retirement benefits, each seminar closes with a brief presentation on 

railroad unemployment and sickness benefits to help prepare union officers for 

sharing reliable information with their members.

The informational kit you received today contains helpful publications and 

handouts as well as a program booklet of our presentation with detailed side 

notes and fact sheets. Online and downloadable versions of items included with 

seminar kits are available at RRB.gov/LMO/kits.

Please complete the evaluation form before you leave today to help us identify any ways we can improve our program in the future. 

Thank you very much for joining us today. We’re grateful for the opportunity 

to promote a better understanding of our benefit programs among the railroad 

community. 

John Bragg

Labor Member
CHAPTER 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 7

1981 Amendments 9

The 1983 Railroad Retirement Solvency Act 11

Legislation Enacted 1985-2000 13

The Railroad Retirement and Survivors’ Improvement Act of 2001 16

Court Decisions, Legislation Enacted 2006-2015 18

Employment, Payrolls, and Tax Collections 19

CHAPTER 2

Provisions of the Railroad Retirement Act 21

Creditable Military Service 22

Service and Earnings Records 23

Employee and Spouse Annuities 25

	 Survivor Benefits	 	 39

Retirement and Survivor Information 49

Employee and Spouse Annuity Formula Components 62

Survivor Annuity Formula Components 69

CHAPTER 3

Financing of the Railroad Retirement System 73

Payroll Taxes 74

Financial Interchange 76

Investments 77

Borrowing from General Revenues Related to the Financial Interchange 78

Appropriations from General Revenues 79

	 Taxation of Railroad Retirement Benefits	 	 81

Financial Position of the Railroad Retirement System 81

Financial Report 83

Tax Tables 86

Contents
CHAPTER 4

Medicare: Health Insurance for the Aged and Disabled 91

Eligibility 93

Part A and Part B Enrollment 93

	 Hospital Insurance Benefits (Part A)	 	 

	 Medical Insurance Benefits (Part B)	 	 

	 Medicare Advantage Plans (Part C)	 	 100

	 Medicare Prescription Drug Coverage (Part D)	 	 101

CHAPTER 5

Development of the Railroad Unemployment Insurance System 103

The Railroad Unemployment Insurance Act of 1938 and Later Amendments 104

The Technical and Miscellaneous Revenue Act of 1988 108

The Railroad Unemployment Insurance Amendments Act of 1996 110

	 Employment and Benefits	 	 112

CHAPTER 6

Provisions of the Railroad Unemployment Insurance Act 115

Disqualifications	 	 121

Free Placement Service 122

Payments 123

	 Getting Unemployment Benefits	 	 124

	 Getting Sickness Benefits	 	 125

CHAPTER 7

Financing Unemployment and Sickness Insurance 133

Contributions 133

Railroad Unemployment Insurance Account 135

Financial Report 137

CHAPTER 8

Administration of the Railroad Retirement System 139

Keeping Beneficiaries Informed	 	 143

Program Integrity 144

Contents
1

CHAPTER 1

Development of the

Railroad Retirement System

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 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.

1
2 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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.

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.
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 3

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 

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.
4 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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.

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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 5

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 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 corre-
6 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

Commission on Railroad Retirement

REPORT

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 they 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.

spondingly 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

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, provided 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 

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.
8 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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.

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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 9

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.

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 RRB 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-
10 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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 their 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.

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 RRB 

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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 11

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.

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 
12 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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.

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 16-18, 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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 13

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 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.
14 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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 non-covered 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 15

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.
16 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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.

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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 17

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 two-tier 

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 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. 
18 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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 unchanged through 2024.

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 
 DEVELOPMENT OF THE RAILROAD RETIREMENT SYSTEM 19

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.

EMPLOYMENT, PAYROLLS, AND TAX COLLECTIONS

Railroad employment has varied considerably over the years. The total number of employees with some service in a given year has ranged from a high of 3 

million in the war year 1945 to its lowest level of 209,000 in calendar year 2021.

Total employment rose to 217,000 in calendar year 2022. The average number 

employed has varied between a high of 1.7 million in the war years 1944-45 to a 

low of approximately 186,000 in 2021, before increasing to 190,000 in 2022.

In 2023, total railroad payroll was an estimated $21.7 billion, while the taxable payrolls (on the $160,200 tier I and the $118,800 tier II annual bases) were 

an estimated $20.7 billion and $19.3 billion, respectively. Tier I payroll includes 

miscellaneous compensation, such as sick pay. The employee tax rates for 2023 

were 7.65 percent for tier I and 4.9 percent for tier II. Employer rates were 7.65 
20 2024 INFORMATIONAL HANDBOOK | CHAPTER 1

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 $160,200 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 fiscal year 2023, including general 

revenue transfers due to pandemic legislation, were approximately $6.9 billion.

SCOPE OF RRB OPERATIONS

Benefits awarded since the inception of the railroad retirement program 

through fiscal year 2023:

AT THE END OF FISCAL YEAR 2023

$14.0 BILLION

IN BENEFITS WERE BEING PAID TO

467,000

BENEFICIARIES

2.111 MILLION

1.282 MILLION

2.586 MILLION
CHAPTER 2

Provisions of the

Railroad Retirement Act

21

Railroad retirement benefits are based on months of service and earnings credits. Service performed for a covered employer or as an employee 

representative is creditable toward all types of benefits under the Railroad 

Retirement Act. 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.

An employee will receive credit for a month of railroad service for 

every month in which they had some compensated service for a covered 

employer (under the Railroad Retirement Act), even if the employee only 

performs one day of service in a given month. Service for an employer 

is creditable if it is compensated and the employee is subject to the continuing supervision of the employer. (However, any local lodge compensation earned after 1974 is disregarded if it is less than $25 for any calendar 

month.) Covered employers include interstate railroads and their affiliates 

engaged in railroad-connected operations, as well as employer associations 

and national railway labor organizations and their subordinate units.

Service months need not be consecutive, and, in some cases, military 

service may be counted as railroad service. Special rules may apply for 

crediting of service months resulting from a settlement for an on-the-job 

injury. 

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, 
22 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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.

CREDITABLE MILITARY SERVICE 

Active 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. 

How much creditable railroad service is 

needed for a regular employee annuity?

10 YEARS (120 MONTHS)

5 YEARS (60 MONTHS) IF PERFORMED AFTER 1995

OR
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 23

If an employee's military service began during a war or national emergency 

period, any active duty service they were required to continue in beyond the end 

of the war or national emergency is creditable. 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.

Veterans should contact the RRB well in advance of retirement regarding required proof of military service.

SERVICE AND EARNINGS RECORDS

Employers are required to report their employees' service and earnings compensation to the RRB, which maintains a record of all covered railroad service 

and creditable earnings after 1936. The RRB saves this information under each 

employee's social security number (as reported by the employer).

Each June, the RRB sends a Certificate of Service Months and Compensation

(Form BA-6) to employees who worked in the rail industry during the previous 

year. This statement is important because it provides employees with a current 

and cumulative record of their railroad service and compensation. It includes 

deemed service months, separation (or severance) allowances, and miscellaneous 

🏴 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
24 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

compensation, such as taxable sickness payments. It also includes cumulative 

amounts of railroad retirement payroll taxes paid by the employee over and above 

social security equivalent payroll taxes, reflects creditable military service previously reported to the RRB, and indicates if the employee is qualified to claim 

unemployment or sickness benefits. 

Employees are encouraged to carefully review Form BA-6 for accuracy upon 

receipt. If an employee disagrees with the information shown on Form BA-6, they 

should notify the RRB as soon as possible. The law limits the period during which 

corrections can be made to 4 years. All correspondence reporting an inaccuracy 

on Form BA-6 must include the employee’s social security number, as well as any 

supporting documentation, such as copies of pay stubs. Employees can mail this 

information to RRB headquarters at:

 Protest Unit - CESC

U.S. Railroad Retirement Board

844 North Rush Street

Chicago, IL 60611-1275

Similar information is available online to employees who have an account at 

RRB.gov/myRRB. After signing in to myRRB, employees can view their individual railroad retirement records of service months and compensation through 

the feature labeled View Service & Compensation. Though this alternative record 

does not replace Form BA-6, it will display the employee's service and compensation as soon as their employer posts it to RRB systems. This feature is only available to employees with myRRB accounts.

Guidance on reviewing form BA-6 is available online at RRB.gov/BA6. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 25

AGE AND SERVICE, DISABILITY, AND SUPPLEMENTAL ANNUITIES 

The basic requirement for a regular employee annuity is at least 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. 

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. 

There is no age reduction for those who retire after 2001 with at least 30 years of 

service. 

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, which 

varies depending on an individual's year of birth, the same as under social security. 

Reduced annuities payable at age 62 to those with less than 30 years of service are subject to a maximum reduction of 30 percent. 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 in greater 

detail on page 31.

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 during which the application is filed. 

EMPLOYEE AND SPOUSE ANNUITIES

An AGE AND SERVICE ANNUITY can be paid to:
26 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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. 

Total disability, at any age, if an employee is 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 31) before retirement 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. 

BIRTH YEAR* FULL RETIREMENT AGE

 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 their 

birthday, and those born on the first or second 

day of a month are eligible for an annuity beginning date on the first of that month. 

Table 1.— Determining Full Retirement Age

A DISABILITY ANNUITY can be paid for:

A physical or mental disability that prevents any regular employment.

TOTAL DISABILITY
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 27

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 disabled for their 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. 

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. 

A SUPPLEMENTAL ANNUITY can be paid at:

An employee is disabled for their regular railroad occupation 

(generally, the job they worked the longest in the last 5 years) 

and the condition is expected to last at least 12 months or longer.

OCCUPATIONAL DISABILITY
28 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

CURRENT CONNECTION

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

immediately preceding the month their 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.)

A current connection determination is made when an employee files for a 

railroad retirement annuity. If an employee dies before applying for an annuity, 

it is made when an applicant files for a survivor annuity. Once a current connection is established at the time a railroad retirement annuity begins, an employee 

never loses it, no matter what kind of work they may perform thereafter.

If an employee does not qualify for a current connection on the above basis, 

but has 12 months of service in an earlier 30-month period, they 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 if earlier. 

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, and U.S. Coast Guard) 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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 29

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 their last job in the rail 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 

their 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 who were alive on that date, and who left 

the rail industry on or after October 1, 1975. 

SPOUSE ANNUITIES

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

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 

they are 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.

 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 

Retired employee age 60, with 30 years of service

Retired employee age 62, with less than 30 years of service

• age and date of retirement • years of railroad service
30 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 

varies, just as for an employee, depending on the year of birth. Reduced benefits 

payable at age 62 are subject to a maximum reduction of 35 percent. The tier II 

portion of a spouse annuity (as defined on page 31) 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 they are 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. A spouse of 

an employee is not eligible for railroad retirement benefits based solely on the 

spouse's own disability.

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 (tier I only) and therefore less than the amount of the spouse 

annuity otherwise payable. 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 

Spouse of an age and service employee, with child in care

Divorced spouse if marriage lasted for at least 10 years
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 31

and social security earnings. Also, a court-ordered 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 who have a myRRB account can get estimates of future 

annuities for themselves and their spouses online using the feature Get Retirement Benefits Estimate. 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 they can receive a reduced annuity. Employees can also contact any RRB field office to request annuity estimates 

with approximate figures. Estimates can only 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 earnings 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. 

 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. 

(Text continues on page 33.)
32 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

AVERAGE AVERAGE YEARS

 AWARD OF SERVICE

Employee $4,553 34.9

 Employee and spouse 6,368 35.2

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 2022 annuity awards 

to 30-year employees retiring before full retirement age 

Table 3.— Fiscal year 2022 annuity awards 

based on service averaging less than 30 years

AVERAGE AVERAGE YEARS

 AWARD OF SERVICE

Employee full retirement age or over $2,927 20.3

Employee full retirement age or over 

and spouse 4,058 22.1

Employee under full retirement age 

with less than 30 years of service 2,376 17.0

Employee under full retirement age

with less than 30 years of service

and spouse 3,251 17.3

Employee retiring because 

of disability 3,315 19.4
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 33

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 (tier I only) has been reduced by 

the amount of the social security benefit. 

The tier I portion of an employee annuity is based on their combined railroad 

retirement and social security credits, computed 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 adjustment) to avoid a 

railroad retirement benefit overpayment. 

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 non-profit 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. 
34 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 based 

on the spouse’s own earnings. For spouses subject to a public pension reduction, 

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

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.

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 or 

divorced spouse is also entitled. 

If either one had some railroad service before 1975, the spouse or divorced 

spouse tier I amount is reduced by the amount of the railroad employee tier I to 

which the spouse or divorced spouse is entitled. The spouse or divorced spouse 

tier I amount cannot be reduced below zero. The initial reduction is restored in 

the spouse tier II amount. Divorced spouses are not entitled to a tier II component and are not eligible to have the reduction restored.
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 35

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 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 5 percent, for example, the tier I portion increases by 5 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. Supplemental annuities are not increased by these costof-living adjustments. 
36 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

WORKING AFTER RETIREMENT 

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

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

works for an employer covered under the Railroad Retirement Act. This includes 

work for 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 always considered railroad work and therefore, no annuity 

is payable for any month in which such activity occurs.

Retired employees and spouses, regardless of age, who work for their last 

pre-retirement nonrailroad employer are also subject to an earnings deduction in 

their tier II and supplemental annuity benefits, if applicable, of $1 for every $2 in 

earnings up to a maximum reduction of 50 percent. Last pre-retirement nonrailroad employment is employment that continues through the annuity beginning 

date or ended within 6 months of the annuity beginning date. 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 66 and six months for those born in 1957 

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 benefit of these employee and spouse annuities 

is subject to deduction 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 ($22,320 in 2024). 

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 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 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 37

annual exempt amount nor has substantial self-employment. Non-work 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 the tier I benefit for every $3 earned in 

excess of an exempt amount ($59,520 in 2024), but only counting those earnings 

in the months prior to the month full retirement age is attained. This tier I benefit deduction will stop effective with the month full retirement age is attained. 

Earnings received for services rendered, plus any net earnings from self-employment, 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. Annuitants should report final 

earnings by April 15 of the following year.

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. An annuity paid to a divorced spouse may continue despite the employee's work activity. However, the employee's nonrailroad earnings 

over the annual earnings exempt amount may reduce a divorced spouse benefit.

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 
38 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 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 2024 in which the disabled employee annuitant earns over 

$1,210 in any employment or net self-employment, except any disability-related 

work expenses. Withheld payments will be restored if earnings for the year are 

less than $15,125 after deduction of disability-related work expenses. Failure to 

report such earnings could involve a significant penalty charge. 

Disability work and earnings restrictions apply until the annuitant reaches 

full retirement age, which varies, depending on the year of birth. Work restrictions apply even if an annuitant has 30 years of railroad service. Earnings deductions continue to apply, regardless of age, to those working for their last pre-retirement nonrailroad employer. 

Any work performed by a disabled annuitant, whether for payment or not, 

may be considered an indication of recovery from disability and must be reported promptly. Failure to report work activity timely could result in overpaid 

annuities, which must be repaid, as well as severe financial 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 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 39

the spouse attains a qualifying age. 

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 they have 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 month of 

death, whichever occurs first. The current connection requirement is described 

earlier in this chapter (see page 28).

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.

Annuitants should notify the RRB timely if one of the above changes occurs. 

The RRB will take action to recover any overpayment (sometimes with interest 

or penalties) resulting from an annuitant's failure to report. Individuals who fail 

to report changes promptly or who make a false statement are also subject to a 

fine or imprisonment.

SURVIVOR BENEFITS
40 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 varies, depending on the 

year of birth. 

Ages 50-59 if the widow(er) is totally 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. 

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, 

even after the employee's death. 

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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 41

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 disabled before age 22.

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). 
42 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

Table 4.— Number and average amount of benefits awarded under 

 the Railroad Retirement Act, fiscal year 2022

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 1,900 $2,923

Less than full retirement age

Unreduced 1,900 4,541

Reduced 2,200 2,376

 Age retirements, total 5,900 3,233

 Disability retirements 1,400 3,315

 Regular employee

 annuities, total 7,400 3,248

Supplemental employee annuities1 1,100 39

Unreduced spouse annuities 4,600 1,342

Reduced spouse annuities 2,200 710

Divorced spouse annuities 600 806

Spouse and divorced

 spouse annuities, total 7,300 1,114

Aged widow(er)s 5,500 2,527

Disabled widow(er)s2 . . . . . . 1,892

Widowed mothers

and fathers 100 2,257

Remarried widow(er)s 100 1,378

Divorced widow(er)s 800 1,456

Children 500 1,719

Parents2 . . . . . . . . . . . .

Survivor annuities, total 7,000 2,329

 Total3 22,800 . . . . . . .

LUMP-SUM BENEFITS

Lump-sum death payments 1,700 $922

Residual payments2 . . . . . . 1,889

 Total 1,700 . . . . . . . 

TYPE OF BENEFIT NUMBER AVERAGE 

AMOUNT
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 43

Table 5.— Number and average amount of monthly benefits under the 

Railroad Retirement Act in current pay status on September 30, 2022

Full retirement age or over 24,200 $2,611

Less than full retirement age

 Unreduced 102,300 4,051

 Reduced 52,800 1,859

 Age retirements, total 179,300 3,211

Disability retirements1 

Under full retirement age 17,100 3,094 

Full retirement age and over 47,800 2,832

 Regular employee annuities, total 244,200 3,129

 Supplemental employee annuities2 105,200 41

Unreduced spouse annuities 97,200 1,429

Reduced spouse annuities 39,400 546

Divorced spouse annuities 4,900 765

 Spouse and divorced

 spouse annuities, total 141,600 1,160

Aged widow(er)s 75,100 1,987

Disabled widow(er)s 2,900 1,532

Widowed mothers

and fathers 600 2,129

Remarried widow(er)s 2,300 1,314

Divorced widow(er)s 9,700 1,337

Children 7,300 1,331

Parents3 . . . . . . 1,144

 Survivor annuities, total 97,900 1,844

Partition payments4 2,600 336

 Total 591,500 . . . . . . .

TYPE OF BENEFIT NUMBER AVERAGE 

AMOUNT

Full retirement age varies depending on an individual's year of birth. Those 

born before 1938 have a full retirement age of 65, and those born after 1959 

have a full retirement age of 67. Annuities to disability retirees at full retirement age and over are payable as age annuities.

Averages are after court-ordered partitions.

Fewer than 50.

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.

1

2

3

4
44 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

SURVIVOR ANNUITY ESTIMATES 

Survivors can call the agency toll-free (1-877-772-5772) to speak with a field 

service representative and request an annuity estimate. Active or retired employees who are concerned about the amount of benefits which would be payable 

to their survivors may also receive estimates from field service staff. Pre-retirement counseling is also available by appointment at any 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 2022, excluding 

re-married widow(er)s and surviving divorced spouses, was $2,516 a month. On 

average, children received $1,719 a month, while total family benefits for widow(er)s with children averaged $4,870 a month. The average annuity awarded 

to remarried widow(er)s or surviving divorced spouses in fiscal year 2022 was 

$1,448 a month. 

SURVIVOR ANNUITY TIERS 

Like retirement annuities, survivor annuities consist of

tier I and tier II components. 

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 annuity 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. 

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.

Percentages of deceased employee’s tier II amount; (similar to a 

private pension, tier II is based on employee's railroad earnings 

and service months).

TIER II

TIER I
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 45

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 costof-living adjustment to avoid a railroad retirement benefit overpayment. 

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. For those subject to a public pension reduction, the tier I reduction is equal 

to 2/3 of the amount of the public pension.

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.

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 the widow, dependent widower, or the deceased employee had at least 120 

months of service before 1975, the tier I portion of the survivor annuity is reduced by the net tier I portion of the widow(er)'s own employee annuity. The
46 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

tier I reduction may, under certain circumstances, be partially restored in the 

survivor tier II amount. This restored amount is only payable if the survivor benefit calculated under the Railroad Retirement Act of 1937 would result in a higher 

annuity than the amount awarded under current law.

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. 

WORK AND EARNINGS LIMITATIONS

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 ($22,320 

in 2024). The deduction is $1 for every $3 earned over an exempt amount ($59,520 

in 2024) 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 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 47

be paid for those months in which the survivor had low earnings or did not have 

substantial self-employment, 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.

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 they marry, reach age 18, or recover from the disability upon which the 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, 

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.
48 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 annuity component. 

Any of the above occurrences must be reported promptly to the RRB in order 

to prevent an overpayment. 

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, 

they 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 $1,039 in fiscal year 2022. 

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 lumpsum benefit. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 49

The average for all types of lump sums was $922 in fiscal year 2022. 

The railroad retirement system also provides, under certain conditions, a residual lump-sum death benefit which ensures that a railroad family receives at 

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. 

Persons applying for railroad retirement or survivor 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 

A lump-sum death benefit may be payable if there is no survivor

immediately eligible for a monthly annuity.

RETIREMENT AND SURVIVOR INFORMATION
50 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

payments to an individual’s Direct Express-issued Debit MasterCard®. Enrollment waivers are available only under very limited conditions. 

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.

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 at RRB.gov and in field offices.

To expedite filing, applicants should contact an RRB field office to schedule 

a pre-retirement consultation with field staff who will review benefit requirements and answer questions. Certain documents are required when filing a railroad retirement annuity application, including:

• 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 applying for

 an annuity based on caring for the employee’s child.

• Information about any public service pension for which the 

 applicant qualifies.

• Banking information for direct deposit of annuity payments (needed

 at time application is filed).

FOR EMPLOYEES AND SPOUSES:
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 51

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 are 

paid through the RRB. Even though the RRB processes payment, the Social Security Administration is responsible for all adjudication. 

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.

A photocopy of a record is not accepted as an official 

document. To avoid delays in application processing, any 

proof submitted must be an original or certified copy.

FOR SURVIVORS:
52 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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. 

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 an employee's death. There is no time limit for a residual payment.

GARNISHMENT AND 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 

Tier I benefits are not subject to property settlements. Employee tier II benefits and supplemental annuities are subject to court-ordered property settlements in proceedings related to divorce, annulment, or legal separation.

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 their 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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 53

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 (tier I) credits are treated as social security credits by the Social Security Administration. 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 their retirement (tier II) taxes. Like social security taxes, railroad retirement taxes are not refundable unless retirement tax withholding has exceeded annual maximums (see pages 54-55).

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 non-disabled male employee

retiring at age 60 has a life expectancy of 22.7 years, while a non-disabled female employee retiring at 

age 60 may expect to receive her 

annuity for 25.3 years.

AGE OF BENEFICIARY

WHEN ANNUITY BEGINS

AVERAGE DURATION

(YEARS)

Retired male employee

 60 22.7 65 18.5 70 14.6

Retired female employee

 60 25.3

 65 20.8 70 16.6

Disabled annuitant1

 60 18.2

Spouse1

 60 25.6 65 21.3 70 17.2

Aged widow(er)1

 60 23.3 65 19.1 70 15.4

1 For both sexes combined.

Table 6.— Duration of benefits
54 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 2024. 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 2024. 

An employee representative is a labor official of a non-covered labor organization 

who represents employees covered under the Acts administered by the RRB. 

Railroad retirement taxes apply to earnings received on an annual basis. The 

amounts of earnings subject to these taxes are determined each year 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. 

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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 55

Dual Railroad Retirement-Social Security Taxes Paid, 1951-74 

An employee with 10 or more years of railroad service may be entitled to a 

refund of excess social security taxes if their 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. 

Table 7.— 2024 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 2024 maximum earnings base for railroad retirement is 

$168,600, 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 $168,600.

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.

 MAXIMUM

ANNUAL

 TAXABLE

TAX RATE EARNINGS

 

TIER I

Employees & Employers 7.65% * $168,600

TIER II

Employees 4.90% $125,100

Employers 13.10% $125,100

 Annual regular taxes on

 employees earning $168,600

TIER I TIER II TOTAL

Employees $12,897.90 $6,129.90 $19,027.80

Employers $12,897.90 $16,388.10 $29,286.00
56 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 

their 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 

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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 57

FEDERAL INCOME TAX AND RAILROAD RETIREMENT BENEFITS 

Regular railroad retirement annuities consisting of tier I and tier II components have been subject to U.S. 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 RRB 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 like private pensions for tax purposes. Most annuitants are sent two tax 

statements from the RRB 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 their 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 their spouse

at any time during the year.
58 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

An annuitant can choose to have federal income taxes withheld from the social security equivalent benefit portion of their tier I amount by filing IRS Form 

W-4V, Voluntary Withholding Request, at any RRB office. IRS Form W-4V is available at IRS.gov or 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 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 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 RRB. 

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 IRS W-4P, Withholding Certificate for Periodic 

Pension or Annuity Payments, and send it to the RRB. This form is available to 

download and print at IRS.gov.

An annuitant is not required to file Form IRS 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 annuitant is 

single. 

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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 59

SELF-SERVICE OPTIONS & MORE INFORMATION 

The RRB's toll-free service lets callers take care of 

their business without speaking to a representative. By following the automated menu prompts, 

callers can access a variety of self-serve options:

• Request personal documents, including a replacement Medicare card, a letter showing their current monthly benefit rate, a duplicate tax statement for 

the most recently completed tax year, or a statement of creditable railroad 

service and compensation.

• Get information about unemployment and sickness claims (railroad employees).

• Locate the nearest RRB office and listen to general benefit information and 

special announcements.

In addition, callers may opt to be transferred to an office to speak with a representative or request a callback using virtual hold. (Note that virtual hold may not be 

available during periods when call volume exceeds maximum capacity.)

TOLL-FREE SERVICE

1-877-772-5772

The agency also maintains a TTY number, 312-751-4701, to accommodate 

those with hearing or speech impairments.

Self-serve options are also available online at RRB.gov/myRRB.

• Railroad employees with myRRB accounts can log in to: get annuity estimates, apply for or claim unemployment benefits, claim sickness benefits, access RUIA tax documents, view RUIA account statements, and review service 

and compensation history.

• No myRRB account required to request documents, including a replacement Medicare card, a letter showing the current monthly benefit rate, a duplicate tax statement for the most recently completed tax year, or a statement 

of creditable railroad service and compensation.

All RRB publications covering benefits and other related topics are available at RRB.gov under the Benefits tab of the main menu. In addition, 

frequently asked questions are answered online at RRB.gov/FAQ. 
60 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

MONITORING 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 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, their 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 their full retirement age. 

THE RIGHT TO APPEAL

The RRB has a three-stage review and appeals process for all claims under 

the Railroad Retirement Act. Persons claiming retirement, disability, or survivor 

annuities from the RRB have the right to appeal unfavorable determinations on 

their claims.

Individuals dissatisfied with the RRB’s initial decision on a claim have 60 days 

from the mailing date of the decision notice to submit a written request for review 

by the agency’s reconsideration section. This step is mandatory before an appeal 

may be filed with the RRB’s Bureau of Hearings and Appeals (H&A).
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 61

In cases involving overpayments, individuals have the right to request waiver 

of overpayment recovery by the RRB, in addition to reconsideration of the overpayment decision. Persons requesting waiver may be asked to complete a financial 

statement form provided by the RRB. If currently entitled to a railroad retirement 

annuity, they may also elect to have a personal conference as part of that request.

While review of an overpayment must be requested within the legal timeframes, a request for a waiver may be made any time. However, for overpayment 

recovery 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 the overpayment notice was mailed. A request for waiver received after 60 days will be 

considered but will not defer collection of the overpayment, and any portion of 

the overpayment recovered prior to the date on which the waiver request is filed 

will not be subject to waiver.

If dissatisfied with the reconsideration or waiver decision, individuals have 

60 days from the mailing date of the reconsideration or waiver decision to file 

an appeal with H&A, a bureau independent of the units responsible for reconsideration decisions. This appeal must be filed using RRB Form HA-1, which is 

available at RRB.gov/Resources/Appeals or any RRB field office, and submitted 

to H&A by mail, fax, or email. If necessary, H&A may further investigate the case 

and obtain pertinent information through RRB field representatives, designated 

medical examiners, and others. When the appeal involves a question of fact, an 

appellant has the right to an oral hearing, which can be held over the phone or 

videoconferencing. In-person hearings are generally held at the RRB office closest 

to the appellant’s home or another location designated by the H&A officer.

Appellants who are dissatisfied with H&A’s decision may further appeal to 

the RRB’s three-member Board, which heads the agency, within 60 days from the 

mailing date of H&A’s decision. This appeal must be filed using RRB Form HA-1 

and submitted to H&A. Appellants should note that the three-member Board ordinarily will not accept additional evidence or conduct a hearing regarding the 

applicable matter.

Appellants dissatisfied with the three-member Board’s final decision may file 

a petition with the appropriate U.S. Court of Appeals to review the Board’s decision. The petition for review must be filed within one year after the mailing date 

of the Board’s decision.
62 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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.

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 their railroad 

retirement credits for tier I computation purposes. 

An employee’s creditable earnings are adjusted to consider the changes in 

wage levels over a worker’s lifetime. This procedure, called indexing, increases 

creditable earnings from past years to reflect average 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 benefit formula is then applied 

to determine the gross tier I amount. 

For those first eligible in 2024, the gross tier I is equal to: 

◂ 90 percent of the first $1,174 of average indexed monthly earnings,

 plus

◂ 32 percent of the amount of these earnings over $1,174 up to $7,078,

 plus 

◂ 15 percent of these earnings in excess of $7,078. 

For employees with less than 10 years of railroad service, their tier I is 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. 

TIER I

EMPLOYEE AND SPOUSE ANNUITY

 FORMULA COMPONENTS
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 63

Delayed Retirement Credits 

The tier I amount is 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 their 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 their 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 rose just like the social security requirements. The minimum age 

requirements for railroad retirement benefits have not changed, but the maximum early retirement annuity reduction has increased. 

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 varies, depending on 

the year of birth. There is no age reduction for those who retire after 2001 with 

30 years of service. 

The full retirement age is 66 and six months for employees and spouses born 

in 1957. The full retirement age increases gradually for those born from 1958 to 

1960, until it reaches age 67. For people born in 1960 or later, the full retirement 

age is age 67.

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. For those employees born 

in 1960 or later, the maximum reduction at age 62 is 30 percent. 
64 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 their 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 their railroad retirement annuity. 

Age reductions were 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 were 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 was 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 was frozen until the first month throughout which the employee was age 62. It was then recomputed to reflect interim increases in national 

wage levels and became subject to future cost-of-living increases. There was 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. 

Table 8.— Employee Retiring with Less than 30 Years of Service

*A person attains a given age the day before their birthday, and those 

born on either the first or second day of a month are eligible for an 

annuity beginning date on the first of that month.

YEAR

OF

BIRTH*

FULL

RETIREMENT

AGE

ANNUITY

REDUCTION

AT AGE 62

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%
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 65

Workers’ Compensation or Public Disability Benefit Reductions 

For employees who are under full retirement age 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 amount will not be reduced by more than 1/2 of 

their pension from noncovered employment. However, if the employee is under 

full retirement age and is receiving a disability annuity, their tier I portion 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. The tier II amount is 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 their years of service in the rail industry. 

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 full retirement age when their annuity begins and 

1/240 for each additional month (if any). 

TIER II
66 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

Full retirement age varies. However, if an employee had any creditable railroad service before August 12, 1983, full retirement age for tier II purposes is age 

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.

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.

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.

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. 

TIER I

SUPPLEMENTAL ANNUITY FORMULA
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 67

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 

varies, just as for an employee. The tier I reduction is 1/144 for each of the first 

36 months the spouse is under full retirement age when their annuity begins and 

decreases to 1/240 for each month (if any) over 36. For spouses born in 1960 or 

later, the maximum reduction at age 62 is 35 percent. 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 their 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 began 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. 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 
68 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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 received 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 full retirement age 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. 

The spouse tier II amount, before any applicable reductions, is 45 percent of 

the employee’s unreduced tier II amount.

TIER II
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 69

Age Reductions 

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. 

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. 

SURVIVOR ANNUITY FORMULA COMPONENTS

TIER I
70 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

The gross survivor tier I amount (before reductions for early retirement, 

or other benefits) is generally equivalent to the unreduced tier I retirement portion 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 tier I is based, may be 

reindexed using a later year if it would result in a higher amount, 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 an annuity. This provides an amount 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 varies. The maximum age reduction also varies, depending on the widow(er)’s date of birth, and is 

20.36 percent for those born in 1962 or later. 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. 

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. 
 PROVISIONS OF THE RAILROAD RETIREMENT ACT 71

Dual Benefit Reduction 

The tier I amount described previously 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. If a widow or dependent widower 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, under certain circumstances, 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 amount equal to the tier II amount the employee 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 portion, initially set at 50 percent of the employee’s tier II amount, to the 100 percent tier I and 50 percent tier II amounts provided under prior law. 

This additional amount is offset each year by the dollar amount of the costof-living increases payable in both the tier I and tier II annuity components provided under prior law. Consequently, such a widow(er)’s net annuity rate 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 

TIER II
72 2024 INFORMATIONAL HANDBOOK | CHAPTER 2

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.

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.

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. 

A tier II portion 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 portion 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 annuity payable will not be less than the annuity 

they were 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 a higher annuity than the spouse guaranty. At that point, 

annuity components are based on the regular survivor formula and both tier I 

and tier II amounts are increased for the cost of living. 
CHAPTER 3

Financing of the

Railroad Retirement System

73

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 Retirement

 Investment Trust for investment as explained on pages 77-78.

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 annuities.

Each of these income sources is described briefly in this chapter. 

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 only 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 combined Railroad Retirement and SSEB Accounts. 

Railroad retirement and survivor annuities are 

financed by the following sources of income:
74 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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 2024, 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 2024, 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 75

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 RRB 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 77-78 (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. 
76 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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 2023 net transfer alone 

amounted to $5.0 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 

2. FINANCIAL INTERCHANGE
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 77

benefits which social security would have paid to 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 RRB, 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
78 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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 at RRB.gov under Financial & Reporting.

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 2021 through September 2022 took 

place in June 2023. 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. 

BORROWING FROM GENERAL REVENUES 4. RELATED TO THE FINANCIAL INTERCHANGE
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 79

As previously noted, under the financial interchange, the railroad retirement 

system gives the social security system the taxes social security would have 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 their 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 the gross tier I 

portion of their annuity. 

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. 

5. APPROPRIATIONS FROM GENERAL REVENUES
80 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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. 

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 RRB must reduce benefits to a level 

that the amount appropriated will cover. 
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 81

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 

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 annuity components 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 annuity 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. 

6. TAXATION OF RAILROAD RETIREMENT BENEFITS
82 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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. 

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, 2012-2022

234 237 242 247

231 225 224

217

195

186 190

0

50

100

150

200

250

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

(YEARS)

(THOUSANDS)
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 83

FINANCIAL REPORT

The Railroad Retirement Board’s 2023 railroad retirement financial report 

was submitted to Congress in June 2023. 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. 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, 2023, 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 $26.5 billion.
84 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

FOR THE FISCAL YEAR ENDED SEPTEMBER 30 2023 2022

Financing Sources:

Payroll Taxes $7,210.3 $6,112.9

Financial Interchange 5,131.2 5,166.7 

Interest on Investments and Other Revenue 70.5 40.8 

Federal Income Taxes 864.0 781.0

General Appropriations 35.9 174.6

Other2 1,257.1 (6,126.4)

Transfers to the National 

 Railroad Retirement Investment Trust 0.0 0.0

Transfers from the National 

 Railroad Retirement Investment Trust 1,415.0 1,964.0

 Total Financing Sources 15,984.0 8,113.6

Costs:

	 Benefit Payments	 14,109.8	 13,455.9

Interest Expense 112.9 89.6

Salaries and Expenses3,4 184.6 172.4

Other (10.6) (8.8)

 Total Costs 14,396.7 13,709.1

Financing Sources over Costs 1,587.3 (5,595.5)

Net Position - Beginning of Period 23,873.1 29,468.6

Adjustment to Beginning Balance5 (2.2) ...

Net Position - End of Period6 $25,458.2 $23,873.1

Table 10.— Railroad Retirement and Survivor Program - U.S. Treasury Accounts 

 Consolidated Financing Sources, Costs, and Net Position (Millions)1

1 Source of data is the RRB's Performance and Accountability Report.

2 Other financing sources of $1,257.1 million mainly consists of $1,253.1 million change in NRRIT net assets.

3 Includes unemployment and sickness insurance salaries and expenses of approximately $28.0 million

and $24.7 million in each of the fiscal years 2023 and 2022, respectivel

4 Includes funding from all sources.

5 Adjustment to clear intragovernmental differences from fiscal year 2022 effecting the beginning

balance for fiscal year 202

6 Totals may not sum due to rounding.
 FINANCING OF THE RAILROAD RETIREMENT SYSTEM 85

Market value of assets managed 

by NRRIT on September 30, 2023 $24.3 billion

Rate of return of investment portfolio 

managed by NRRIT for full year 

ended September 30, 2023 12.14%

Source: NRRIT

Note — All NRRIT annual management reports and quarterly updates are available 

at RRB.gov.

Table 11.— National Railroad Retirement Investment Trust (NRRIT) 

Fiscal Year 2023 Summary
86 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

Table 12.— Tax rates and maximum taxable earnings 

 under the social security program

See continuation of table and footnotes on next page.

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 87

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 128,400 No Limit 7.65 5.015 1.185 31.45 15.3 10.03 2.37 32.9

2019 132,900 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2020 137,700 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2021 142,800 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2022 147,000 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2023 160,200 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2024 168,600 No Limit 7.65 5.3 0.9 31.45 15.3 10.6 1.8 32.9

2025 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

Table 12.— Continued
88 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

See continuation of table on next page and footnotes on page 90.

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 89

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 128,400 95,400 9

7.65 13.1 4.9 1,560 2.15 - 12.0 1.5 1.97

2019 132,900 98,700 9

7.65 13.1 4.9 1,605 2.15 - 12.0 1.5 2.75

2020 137,700 102,300 9

7.65 13.1 4.9 1,655 .065 - 12.0 ... 3.10

2021 142,800 106,200 9

7.65 13.1 4.9 1,710 3.15 - 12.0 2.5 3.15

2022 147,000 109,200 9

7.65 13.1 4.9 1,755 4.15 - 12.5 3.5 2.62

2023 160,200 118,800 9

7.65 13.1 4.9 1,895 2.15 - 12.0 1.5 2.82

2024 168,600 125,100 9

7.65 13.1 4.9 1,985 0.65 - 12.0 ... 4.58

2025 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 90.
90 2024 INFORMATIONAL HANDBOOK | CHAPTER 3

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.

10 Beginning 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.
CHAPTER 4

Medicare: Health Insurance

for the Aged and Disabled

91

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 railroad retirement laws in 1965 and to the social security 

laws in 1972 gave the RRB 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. 
92 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

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 2023. 

PART A -- Hospital Insurance

PART B -- Medical Insurance

PART C -- Medicare Advantage Plans

PART D -- Medicare Prescription Drug Coverage

Medicare Palmetto GBA

Medicare.gov palmettogba.com/palmetto/rrb.nsf

1-800-MEDICARE

(1-800-633-4227) 1-800-833-4455

TTY: 1-877-486-2048 TTY/TDD: 1-877-566-3572

For more information about Medicare 

options, costs, and coverage.

For inquiries and additional information 

regarding Medicare Part B claims.

Medicare & You - covers Medicare benefits, costs, and health service options. 

Available at Medicare.gov, and mailed to Medicare beneficiary households each 

fall by the Centers for Medicare & Medicaid Services.

Medicare for Railroad Workers and Their Families (Form RB-20) - provides general 

information about Medicare for RRB annuitants. Available at RRB.gov under 

Benefits (Medicare), and also available at any RRB field office.

Free personalized counseling is available from the local State Health Insurance Assistance Program (SHIP) and other local and community-based organizations. Beneficiaries can visit Medicare.gov to find the organization nearest 

them. 

Medicare Publications

SHIP

MEDICARE BASICS & RESOURCES
 MEDICARE: HEALTH INSURANCE FOR THE AGED AND DISABLED 93

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, they are 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, they are generally eligible for Medicare at 

age 65. The standards for a disability freeze determination follow social 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 requiring hemodialysis or receipt of a kidney transplant is also available to employee 

annuitants, employees who have not retired but meet certain minimum service 

requirements, spouses, and dependent children. The Social Security Administration 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 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 de-
94 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

sired; this does not prevent them 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, they should contact the nearest RRB office before their 65th birthday to 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 of the individual's 65th birthday. They will then have both hospital and 

medical insurance beginning the month they turn age 65. If the individual does 

not sign up for Part B in the 3 months before turning age 65, they can enroll the 

month they turn age 65 or during the next 3 months, with their coverage effective the month after they enroll. Individuals who do not enroll during this initial 

enrollment period may sign up in any general enrollment period (January 1 

- March 31 each year), with their coverage beginning the month after they enroll. 

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, their 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. 

(Text continues on page 96.)
 MEDICARE: HEALTH INSURANCE FOR THE AGED AND DISABLED 95

EXPLANATION OF HOSPITAL INSURANCE BENEFITS

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.

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 ($1,632 in 

2024). From the 61st through the 90th day, Medicare hospital insurance pays for 

all covered services except for a coinsurance charge ($408 a day in 2024). 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 $816 a day in 2024 for these 

additional days. Covered hospital services include almost all those ordinarily 

furnished by a hospital to its patients. 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 $204 a day in 2024 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

MEDICARE PART A
96 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

Benefits under the hospital insurance 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. 

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 Medicare Part A

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. 

MEDICARE PART A - HOSPITAL INSURANCE

MEDICARE PART B - MEDICAL INSURANCE

(Text continues on page 98.)
 MEDICARE: HEALTH INSURANCE FOR THE AGED AND DISABLED 97

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 Medicare-approved 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.

Additional Coverage

Many other services are covered. 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

EXPLANATION OF MEDICAL INSURANCE BENEFITS

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. 

MEDICARE PART B
98 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

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 ($240 in 2024). 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 Medicare Part B

Part B medical insurance is paid for by premiums from persons who enroll in 

the program and by federal general revenue funds. The standard monthly premium rate in 2024 is $174.70.

 Monthly premiums for some Medicare beneficiaries are greater, depending on 

a beneficiary’s or married couple’s modified adjusted gross income. The incomerelated Part B premiums ($174.70 plus the monthly adjustment amount) for 2024 

are $244.60, $349.40, $454.20, $559.00, or $594.00, depending on how much an 

individual beneficiary’s modified adjusted gross income exceeds $103,000 (or a 

married couple’s income exceeds $206,000). Only beneficiaries whose modified 

adjusted gross income exceeds $500,000 (or $750,000 for a married couple) pay 

the highest premium. Some individuals also pay premium surcharges because 

they enrolled late for Part B. 
 MEDICARE: HEALTH INSURANCE FOR THE AGED AND DISABLED 99

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. 

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 

page 101, 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, they are 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. 

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.
100 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

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, they have 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. 

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 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 their Part C 

plan and requests that the RRB withhold Part C premiums. 

MEDICARE PART C - ADVANTAGE PLANS

MEDIGAP
 MEDICARE: HEALTH INSURANCE FOR THE AGED AND DISABLED 101

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 2024 are $12.90, $33.30, $53.80, $74.20, or $81.00, depending on 

the extent to which an individual beneficiary’s modified adjusted gross income 

exceeds $103,000 (or a married couple’s income exceeds $206,000), with the 

highest amounts only paid by beneficiaries whose incomes are over $500,000 (or 

$750,000 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 their 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 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 they do 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. 

MEDICARE PART D - PRESCRIPTION DRUG COVERAGE
102 2024 INFORMATIONAL HANDBOOK | CHAPTER 4

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, they have 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 their own health care decisions. Laws governing advance 

directives vary from state to state. 
CHAPTER 5

Development of the Railroad

Unemployment Insurance System

103

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 the railroad 

employers and administered by the RRB. Sickness benefits were added in 

1946. 

June 25, 1938

Railroad Unemployment Insurance Act enacted
104 2024 INFORMATIONAL HANDBOOK | CHAPTER 5

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. 

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 

1950s
DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 105

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 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. 

1960s
106 2024 INFORMATIONAL HANDBOOK | CHAPTER 5

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.

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. 

1970s

1980s
DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 107

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 

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. 
108 2024 INFORMATIONAL HANDBOOK | CHAPTER 5

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 recommendations from the Railroad Unemployment Compensation Committee and included in the Technical and Miscellaneous Revenue Act of 1988, was enacted on 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 2023, the rate increased to $87, and will be $94 

in July 2024. In July 2025, the rate will rise to $99.) 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. 

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 2024 is $1,985. 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 2024, they range from 0.65 percent to 12.0 

percent. New employers pay 4.58 percent in 2024. 

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 
DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 109

$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.

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 

(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. 

1990s
110 2024 INFORMATIONAL HANDBOOK | CHAPTER 5

The Railroad Unemployment Insurance Amendments Act of 1996

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 $87 in July 2023. It rises to $94 in July 2024, and will increase to $99 in July 

2025.

• 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.
DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 111

Under the Budget Control Act of 2011 and subsequent sequestration 

orders, 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, 7.3 percent in October 2014, 6.8 percent in October 2015, 6.9 percent 

in October 2016, 6.6 percent in October 2017, 6.2 percent in October 2018, 5.9 

percent in October 2019, and to 5.7 percent for days after September 30, 2020, 

and before January 3, 2021. 

As the United States grappled with the effects of the COVID-19 pandemic, 

the RRB implemented two major pieces of relief legislation in 2020 that affected 

railroad employees. Enacted on March 27, 2020, the Coronavirus Aid, Relief, 

and Economic Security (CARES) Act included three provisions that impacted 

payment of benefits under the Railroad Unemployment Insurance Act. In addition, the CARES Act exempted the benefits provided from reduction due to 

sequestration. These provisions included: 

• Special extended unemployment benefits for rail workers with jobless claims 

during the period from July 1, 2019, to June 30, 2020. Benefits had to begin by 

December 31, 2020.

• Enhanced unemployment benefits of $1,200 per 2-week registration period, for registration periods beginning on or after April 1, 2020, through July 31, 

2020. An appropriation of $425 million in the CARES Act funded the enhanced 

amount, which was payable until the end of a person’s entitlement or until the 

appropriation ran out, whichever came first.

• Elimination of waiting periods for unemployment and sickness benefits for 

registration periods beginning on or after March 28, 2020, and ending on or before December 31, 2020. A $50 million appropriation in the CARES Act funded 

the benefits payable in lieu of a waiting period, payable until the earlier of the 

end of the person’s entitlement or exhaustion of the appropriation.

Enacted on December 27, 2020, the Continued Assistance to Rail Workers 

Act of 2020 (CARWA) amended the CARES Act to continue the special extended unemployment benefits and the waiver of the waiting period, while providing 

a reduced level of enhanced unemployment benefits. CARWA also provided that 

2000s and later
112 2024 INFORMATIONAL HANDBOOK | CHAPTER 5

all unemployment and sickness benefits would be exempt from reduction due to 

sequestration from January 3, 2021, until 30 days after a presidential declaration 

of an end to the national emergency concerning the COVID-19 pandemic. (The 

President signed into law legislation ending the national emergency on April 10, 

2023, and sequestration resumed May 10, 2023. Benefits are being reduced by 

5.7 percent through September 30, 2031.)

The specific benefit extensions under CARWA were:

• Special extended unemployment benefits through April 5, 2021, for anyone

who received regular unemployment benefits in the benefit year beginning July 

1, 2020.

• Enhanced unemployment benefits of $600 per 2-week registration period for

registration periods beginning on or after December 27, 2020, through registration periods beginning on or before March 14, 2021.

• Waiver of waiting period extended to March 14, 2021.

The American Rescue Plan Act of 2021 (ARPA), enacted on March 11,

2021, included further extensions of railroad unemployment changes originally 

contained in the CARES Act. This included a continuation of special extended 

unemployment benefits and waiver of the waiting period through September 6, 

2021, along with an enhanced benefit amount of $600 per 2-week registration 

period provided by CARWA. 

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 197,400 in 

calendar year 2021, before increasing by 2,000 to 199,400 in 2022.

In the 2022-2023 benefit year, gross unemployment benefits totaled over $19 

million ($14.1 million net), and unemployment benefit claimants numbered almost 3,400. Net benefits decreased 77 percent while the number of claimants 

decreased 60 percent in comparison with the previous year.
DEVELOPMENT OF THE RAILROAD UNEMPLOYMENT INSURANCE SYSTEM 113

The number of sickness beneficiaries has ranged from 179,000 in 1948-49 to 

nearly 12,300 in 2022-2023, a new low. In the 2022-2023 benefit year, gross sickness benefits totaled approximately $79 million. Net sickness benefits totaled 

about $51.2 million, reflecting repayment of a large amount of benefits following 

settlements of suits for injuries. The number of claimants decreased 35 percent 

while net benefits decreased 29 percent in comparison with the previous year.

Note.- In accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, 

amounts reflect a reduction of 5.9 percent under sequestration for days of unemployment and sickness after 

September 30, 2019, and 5.7 percent for days after September 30, 2020, and before January 3, 2021. Beginning January 3, 2021, CARWA temporarily suspended sequestration until 30 days after a presidential declaration of an end to the national emergency concerning the COVID-19 pandemic. Sequestration resumed on 

May 10, 2023, and benefits are currently reduced by 5.7 percent through fiscal year 2031.

● By June 30, 2023, approximately $9.7 billion in unemployment-sickness benefits had

 been paid over the last 84 years.

● About two-thirds of this amount was for unemployment benefits.

SCOPE OF RRB OPERATIONS

CHAPTER 6

Provisions of the Railroad

Unemployment Insurance Act

115

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 health conditions related to an employee's pregnancy, miscarriage, or childbirth). 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 the 

employee does not work solely because 

of mileage-limitation or work-restriction agreements or solely because they 

are 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 their class of service during the 14-day claim 

period. Entitlement to benefits would also depend on earnings. 

Who is considered a qualified employee?

A qualified employee is one who earns qualifying creditable compensation in a base year 

($4,737.50 in 2023; $4,962.50 in 2024) counting no more than a certain amount in any month 

($1,895 in 2023; $1,985 in 2024). 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 ready, willing, and able to work, 

and be available for work.
116 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

A day of sickness is a day on which the employee is unable to work because 

of sickness or injury and for which they do 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 an RRB-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, 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 2023, the amount is $1,755; for the benefit year that 

begins July 2024, the amount rises to $1,895; and for the benefit year that begins 

July 2025, the amount will be $1,985. 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. 

To be eligible for sickness benefits, 

a qualified employee must be unable 

to work due to illness or injury (on or 

off the job).
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 117

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 2023-2024 (July 1, 

2023 - June 30, 2024) is $87; and, for biweekly claims, maximum benefits can 

total $870. The maximum daily benefit rate will be $94 in July 2024, and will rise 

to $99 in July 2025. 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. 

If an employee has at least 5 days of unemployment or 5 days of sickness in a 

14-day period, they 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 

What is the current daily benefit rate?
118 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

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 their 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 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. 

What are registration periods?

Are strike benefits available?
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 119

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 2023 

cannot exceed an employee’s railroad earnings in base year 2022, counting 

monthly earnings up to $2,267; in the benefit year beginning July 2024, monthly 

earnings up to $2,448 for base year 2023 will be counted; and in the benefit year 

beginning July 2025, monthly earnings up to $2,564 for base year 2024 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, they 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, 

they 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. 

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 sickWhat are normal benefits?

Can benefits be extended?

Can benefits be accelerated?
120 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

ness 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 them 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. 

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. Paternity benefits are not payable.

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 they are 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. 

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 UnemployAre maternity benefits available?

Can benefits be payable under more than one system?
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 121

ment 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. 

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 they 

refuse 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.

Can an employee be disqualified from receiving benefits?
122 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

A claimant who leaves either railroad or nonrailroad work voluntarily without good cause is disqualified, starting with the day they leave work, until they 

have 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 they could 

receive unemployment benefits under another law.

A claimant is also disqualified for any day on which they take 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 they are 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 they fail 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, they 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.

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, they also apply for employment service. The claimant will probably be interviewed by an RRB representative who will try to help secure employment if they do not have good 

prospects of returning to their former job. The claimant may be referred by the 
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 123

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 Railroad Jobs List is published online at RRB.gov and 

available at all RRB offices. The booklet, Guide to Finding the Right Job (Form UB12), is also available online and at any RRB office. 

PAYMENTS 

Under the RRB’s Customer Service Plan, when an employee files an application or claim for unemployment or sickness benefits, the agency will determine if 

they are eligible for benefits within 10 days of receiving the application or claim. 

If eligible, benefits will be paid generally within one week of that decision.

Handling may take longer than expected if the RRB has to get information 

from other people or organizations, or if a claim for benefits is especially complex. If a decision notice or payment is not received within the specified time 

period, claimants can check the status of their claims by calling the RRB toll-free 

at 1-877-772-5772. Employees using myRRB can check the status of their benefit 

claims or payments after signing into their account at RRB.gov/myRRB. 

Because railroad unemployment and sickness insurance benefits are paid by 

direct deposit, payments are issued directly to an employee’s bank, savings and 

loan, credit union, or other financial institution. The RRB will ask first time applicants to provide the information needed for direct deposit enrollment. 
124 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

Apply for and claim unemployment benefits online or by mail.

APPLY ONLINE

Employees using myRRB can sign in to conveniently apply for unemployment benefits online. 

Those who need to create an account should visit RRB.gov/myRRB and click on the button at the 

top of the page labeled SIGN IN WITH LOGIN.GOV. The RRB encourages employees to establish 

their myRRB accounts while still working to expedite the filing process for future unemployment 

benefits, and for access to other online services.

APPLY BY MAIL

Employees can obtain an Application for Unemployment Benefits (Form UI-1) from RRB.gov, railroad labor organizations, railroad employers, or any RRB field office. Once complete, the application 

should be mailed to the local RRB field office as soon as possible.

In any case, the application must be filed within 30 days from the date the employee became 

unemployed or the first day for which they wish to claim benefits. Benefits may be lost if the application or claim is filed late. If an employee knows in advance that they may be filing an unemployment 

application or claim late, they should include a signed statement explaining why they are unable to 

meet the required time frame.

Whether the employee files online or by mail, the local field office reviews their completed application 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.

BIWEEKLY CLAIMS

After the RRB processes the application, biweekly claim forms are made available online and 

are also mailed to the claimant, as long as they remain unemployed and eligible for benefits. Claim 

forms should be signed and submitted (online or by mail) on or after the last day of the claim. The 

completed claim must be received by an RRB office within 15 days of the end of the claim period, or 

within 15 days of the date the claim was made available online or mailed to the claimant, whichever 

is later.

Claimants must not file both online and paper claim forms for the same claim period(s). Also, 

once an individual submits a claim online, all subsequent claim forms will be made available online 

only, and will no longer be mailed.

Before making an initial determination, the RRB must notify the employee's base-year employer 

(and current year employer if different) each time they file a claim for unemployment benefits and 

give that employer an opportunity to submit information relevant to the claim. The RRB will also 

notify the base-year employer each time benefits are paid to the employee.

Only one application need be filed during a benefit year, even if a claimant becomes unemployed more than once. However, in that case, the employee must request a new claim form from 

an RRB office within 30 days of the first day for which they want to resume claiming benefits. These 

claims may then be filed by mail or online.

GETTING UNEMPLOYMENT BENEFITS
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 125

GETTING SICKNESS BENEFITS

File an application for sickness benefits by mail,

and claim sickness benefits online or by mail.

APPLICATION PROCESS

Employees can obtain an Application for Sickness Benefits (Form SI-1a) from RRB.gov, railroad 

labor organizations, railroad employers, or any RRB field office. 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 for sickness benefits on hand, 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 an application and then have 

their doctor complete the Statement of Sickness (Form SI-1b). If the employee is too sick to complete 

the application, someone else may do so on their behalf. In such cases, the person signing for the 

employee should also complete a Statement of Authority to Act for Employee (Form SI-10), which 

accompanies the statement of sickness.

Completed forms should be mailed to the RRB’s headquarters in Chicago within 10 days from 

when the employee became sick or injured. Once received, the RRB processes the application (with 

statement of sickness) and determines if the employee is eligible for benefits.

BIWEEKLY CLAIMS

Biweekly claims are then made available online and also mailed to the qualified employee, as 

long as they are unable to work due to illness or injury. Those choosing to file the paper claim received by mail should return the completed form to RRB headquarters for processing. 

Employees using myRRB can sign in at RRB.gov/myRRB to conveniently file sickness claims 

online. The RRB encourages employees to establish their myRRB accounts while still working to 

expedite the filing process for future sickness benefits, and for access to other online services.

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. If an employee knows 

in advance that they may be filing a sickness application or claim late, they should include a signed 

statement explaining why they are unable to meet the required time frame. Also, once an individual 

submits a claim online, all subsequent claim forms will be made available online only, and will no 

longer be mailed.

REMINDERS

• While claim forms for sickness benefits can be submitted online, applications must be mailed or 

faxed to the RRB at 713-405-2078.

• Statements of sickness may be included with the sickness application, or submitted separately by 

mail or fax.

• In order to prevent a delay in processing applications/claims, employees are advised against sending any sickness benefit forms to the RRB in Chicago via certified mail.
126 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

APPEALS

The RRB has a three-stage review and appeals process for all unemployment 

and sickness claims. 

Employees 

An employee dissatisfied with the RRB’s initial decision on a claim has 60 

days from the mailing date of the decision notice to submit a written request for 

review by the agency’s reconsideration section. This step is mandatory before 

an appeal may be filed with the RRB’s Bureau of Hearings and Appeals (H&A). 

Failing to request reconsideration or to file an appeal within the prescribed time 

limit forfeits further appeal rights unless there is good cause for the delay. 

In cases involving unemployment or sickness benefit overpayments, claimants may request waiver of overpayment recovery if the benefit overpayment is 

more than 10 times the maximum daily benefit rate. Persons requesting waiver 

may be asked to complete a financial statement form provided by the RRB.

While review of an overpayment must be requested within the legal timeframes, a request for a waiver may be made any time. However, for overpayment 

recovery 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 the overpayment notice was mailed. A request for waiver received after 60 days will be 

considered but will not defer collection of the overpayment, and any portion of 

the overpayment recovered prior to the date on which the waiver request is filed 

will not be subject to waiver.

If dissatisfied with the reconsideration or waiver decision, individuals have 

60 days from the mailing date of the reconsideration or waiver decision to file 

an appeal with H&A, a bureau independent of the units responsible for reconsideration decisions. This appeal must be filed using RRB Form HA-1, which is 

available at RRB.gov/Resources/Appeals or any RRB field office, and submitted 

to H&A by mail, fax, or email. If necessary, H&A may further investigate the case 

and obtain pertinent information through RRB field representatives, designated 

medical examiners, and others. When the appeal involves a question of fact, an 

appellant has the right to an oral hearing, which can be held over the phone or 

videoconferencing. In-person hearings are generally held at the RRB office closest 
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 127

to the appellant’s home or another location designated by the H&A officer.

Appellants who are dissatisfied with H&A’s decision may further appeal to 

the RRB’s three-member Board, which heads the agency, within 60 days from the 

mailing date of H&A’s decision. This appeal must be filed using RRB Form HA-1 

and submitted to H&A. Appellants should note that the three-member Board ordinarily will not accept additional evidence or conduct a hearing regarding the 

applicable matter.

Appellants dissatisfied with the three-member Board’s final decision may file 

a petition with the appropriate U.S. Court of Appeals to review the Board’s decision. The petition for review must be filed within 90 days after the mailing date 

of the Board’s decision.

Employers 

A railroad employer who is a party to a claim for unemployment or sickness 

benefits may protest the payment of those benefits. However, such protests do 

not prevent timely payment of benefits. If the employer’s protest is ultimately 

successful, a railroad employee may be required to repay benefits. The railroad 

employer also has the right to appeal an unfavorable decision to H&A.

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 issues railroad employees Form 1099-G showing the total amount of unemployment benefits paid during the previous year 

and/or Form W-2 showing the total amount of sickness benefits paid. 
128 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

TOLL-FREE SERVICE

1-877-772-5772

RRB.gov/myRRB

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. 

Railroad employees using myRRB can sign in to their accounts to utilize the 

following self-serve features:

• File UNEMPLOYMENT applications and claims

• File SICKNESS claims

• View ACCOUNT STATEMENT of benefit payments

• Access RUIA TAX DOCUMENTS
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 129

Table 14.— Benefits under the railroad unemployment insurance system

QUALIFYING WAGES

Base Year 2022 $4,387.50

Base Year 2023 $4,737.50

Base Year 2024 $4,962.50

DAILY BENEFIT RATE

Basic Rate (60% of Daily Rate of Pay)

Maximum

 Benefit Year 2023-20241$87.00

 Benefit Year 2024-2025 $94.00

 Benefit Year 2025-2026 $99.00

Minimum $12.70

MAXIMUM NORMAL BENEFITS

For 14-Day Period 

 Benefit Year 2023-2024 $870

 Benefit Year 2024-2025 $940

 Benefit Year 2025-2026 $990

For Benefit Year

 Duration (130 Compensable Days)

 Amount2

 Benefit Year 2023-2024 $11,310

 Benefit Year 2024-2025 $12,220

 Benefit Year 2025-2026 $12,870

MAXIMUM EXTENDED BENEFITS

10 or More Years of Service

 Duration (65 Compensable Days)

 Amount

 Benefit Year 2023-2024 $5,655

 Benefit Year 2024-2025 $6,110

 Benefit Year 2025-2026 $6,435

1A benefit year generally runs from July 1 of a calendar year through June 30 of the next calendar year.

2Not to exceed the employee’s taxable earnings in the base year, counting earnings up to $2,267 a month 

for benefit year 2023-2024 (base year 2022), $2,448 a month for benefit year 2024-2025 (base year 2023), 

and $2,564 a month for benefit year 2025-2026 (base year 2024).

Note.-- Amounts do not reflect sequestration. In accordance with the Balanced Budget and Emergency 

Deficit Control Act of 1985, as amended, benefits are reduced 5.7 percent for days of unemployment and 

sickness after September 30, 2020, and before January 3, 2021. Beginning January 3, 2021, CARWA temporarily suspended sequestration until 30 days after a presidential declaration of an end to the national 

emergency concerning the COVID-19 pandemic. Sequestration resumed on May 10, 2023, and benefits 

are currently reduced by 5.7 percent through fiscal year 2031.

Some net sickness benefit payments are somewhat less than the above amounts since they are subject to 

tier I railroad retirement taxes.
130 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

MAXIMUM WEEKLY

BENEFIT PLAN BENEFIT AMOUNT 

RAILROAD UNEMPLOYMENT INSURANCE ACT: $435

STATE LAW:

Alabama $275

Alaska 370-442

Arizona 320

Arkansas 451

California 450

Colorado 710 or 781

Connecticut 703-778

Delaware 450

District of Columbia 444

Florida 275

Georgia 365

Hawaii 763

Idaho 532

Illinois 578-790

Indiana 390

Iowa 582-714

Kansas 589

Kentucky 665

Louisiana 275

Maine 573-1,002

Maryland 430

Massachusetts 1,015-1,522

Michigan 362

Minnesota 552 or 857

Mississippi 235

Missouri 320

Montana 698

Table 15.— Maximum weekly benefit amount under the

 Railroad Unemployment Insurance Act and 

 state unemployment laws, July 2023

See continuation of table on next page.
PROVISIONS OF THE RAILROAD UNEMPLOYMENT INSURANCE ACT 131

 MAXIMUM WEEKLY

BENEFIT PLAN BENEFIT AMOUNT

STATE LAW:

Nebraska $514

Nevada 585

New Hampshire 427

New Jersey 830

New Mexico 542-592

New York 504

North Carolina 350

North Dakota 748

Ohio 561-757

Oklahoma 493

Oregon 812

Pennsylvania 605-613

Puerto Rico 240

Rhode Island 705-881

South Carolina 326

South Dakota 514

Tennessee 275

Texas 563

Utah 712

Vermont 705

Virginia 378

Virgin Islands 629

Washington 1,019

West Virginia 662

Wisconsin 370

Wyoming 595

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.

Table 15.— Continued
132 2024 INFORMATIONAL HANDBOOK | CHAPTER 6

 UNEMPLOYMENT SICKNESS 

BENEFIT ACTIVITY BENEFITS BENEFITS

Table 16.— Operations under the Railroad Unemployment Insurance Act,

 benefit year 2022-20231

Qualified employees 197,400 197,400

Applications received 6,000 16,000

Claims received 27,400 109,600

Payments:2

 Number 22,900 93,800

 Average amount per

 two-week claim period3, 4 $752 $746

Amount of benefits (gross)3, 4 $19,420,000 $78,617,000

Amount of benefits (net) $14,650,831 $51,242,746

Claimants 3,400 12,300

Accounts exhausted 800 2,900

1 July 1, 2022, through June 30, 2023.

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, amounts reflect a reduction of 5.9 percent under sequestration 

for days of unemployment and sickness after September 30, 2019, and 5.7 percent 

for days after September 30, 2020, and before January 3, 2021. Beginning January 

3, 2021, CARWA temporarily suspended sequestration until 30 days after a presidential declaration of an end to the national emergency concerning the COVID-19 

pandemic. Sequestration resumed on May 10, 2023, and benefits are reduced 5.7 

percent through fiscal year 2031.

4 Benefits include enhanced unemployment, special extended unemployment, and 

waiting period waiver unemployment and sickness benefits.

Note: Beginning in May 2020, RUIA claimants were also being paid under the CARES 

Act, CARWA, and ARPA with no benefits payable under these acts for registration periods beginning after September 6, 2021.
CHAPTER 7

Financing Unemployment

and Sickness Insurance

133

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 2023 ordinarily 

give rise to normal benefits only in the benefit year beginning July 1, 2024. 

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 they leave 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 2024, the taxable earnings base is the first $1,985 

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. 
134 2024 INFORMATIONAL HANDBOOK | CHAPTER 7

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 calendar year 2024, the basic tax rates on railroad employers, including 

covered commuter railroads, range from a minimum of 0.65 percent to a maximum of 12.0 percent. The 0.65 percent minimum rate is being paid by 87 percent 

of employers. New employers pay a tax of 4.58 percent in 2024, which represents 

the average rate paid by all employers in the period 2020-2022. No surcharge is 

added to the basic tax rate this year, as the Railroad Unemployment Insurance 

Account accrual balance of $363.1 million was greater than the indexed threshold 

of $150.3 million on June 30, 2023.

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. 

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. 
 FINANCING UNEMPLOYMENT AND SICKNESS INSURANCE 135

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. 

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. 

BORROWING AUTHORITY
136 2024 INFORMATIONAL HANDBOOK | CHAPTER 7

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 

large-scale 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, 

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. 
 FINANCING UNEMPLOYMENT AND SICKNESS INSURANCE 137

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), in 2009-2010 (repaid in 2011), and most recently in 2020-2021 (repaid in 2022). 

The RRB 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 2023 was generally favorable. Even as projected 

maximum benefit rates increase 54 percent (from $85 to $131) from 2022 to 2033, 

experience-based contribution rates maintain solvency.

The report also predicted average employer contribution rates below the maximum throughout the projection period. A surcharge of 1.5 percent was in effect for 

2023, but not for 2024. No surcharge is likely for either 2025 or 2026. No financing 

changes were recommended.

FINANCIAL REPORT
138 2024 INFORMATIONAL HANDBOOK | CHAPTER 7

FOR THE FISCAL YEAR ENDED SEPTEMBER 30 2023 2022

 

Financing Sources:

Employer Payroll Taxes $336.6 $278.8

Interest Income 5.1 0.9

General Appropriations2 (99.9) (4.7)

 Total Financing Sources 241.8 275.0

Costs:

	 Benefit Payments:	

 Unemployment3 20.6 24.1

 Sickness 59.8 76.8

 Other (20.8) (14.0)

 Total Costs 59.6 86.9

Financing Sources over Costs Net 182.2 188.1

Position - Beginning of Period Net 498.7 310.6

Position - End of Period4 $680.9 $498.7

1 Source of data is the RRB's Performance and Accountability Report.

2 General appropriations include unexpended appropriations used from CARES Act activity. 

 Fiscal year 2023 includes ($90.0) million COVID-19 funds returned to the General Fund due

 to rescission per public law 118-5.

3 Unemployment benefit payments include recoveries of ($0.4) million and benefit payment

recoveries of ($3.1) million for CARES Act activity in fiscal years 2023 and 2022, respectivel

4 Totals may not sum due to rounding.

Table 17.— Unemployment and Sickness Insurance Program

Consolidated Financing Sources, Costs, and Net Position (Millions)1
CHAPTER 8

Administration of the

Railroad Retirement System

139

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 RRB, 

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 RRB 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. 
140 2024 INFORMATIONAL HANDBOOK | CHAPTER 8

The primary function of the RRB is to determine and process benefit payments 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. 

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 interaction 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 

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 to railroad retirement annuitants are paid through 

the RRB as part of combined railroad retirement-social security monthly benefit 
 ADMINISTRATION OF THE RAILROAD RETIREMENT SYSTEM 141

payments. The RRB 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. 

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. 

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 assistance 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 
142 2024 INFORMATIONAL HANDBOOK | CHAPTER 8

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. 

RRB and the National Railroad Retirement Investment Trust (NRRIT)

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 RRB with respect to dayto-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. 

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. 
 ADMINISTRATION OF THE RAILROAD RETIREMENT SYSTEM 143

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 RRB's programs. Fiscal year 2023 

administrative expenses were $158.7 million from all funding sources. 

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 they were deterred from filing an application at an 

earlier date by some action or statement of an agency employee. However, 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. 
144 2024 INFORMATIONAL HANDBOOK | CHAPTER 8

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 145

OFFICE OF INSPECTOR GENERAL 

The RRB’s Office of Inspector General (OIG) is responsible for promoting 

economy, efficiency, and effectiveness; and for identifying and preventing fraud, 

waste, and abuse in agency programs. The office conducts audits, investigations, 

and management reviews of agency operations. 

The OIG 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 RRB. The OIG endeavors to ensure the 

integrity of the trust funds through nationwide investigations of fraud and abuse. 

The office manages its own pages of the agency's website (RRB.gov) where 

additional information is available, including reports issued by the office. The 

OIG also maintains a fraud and abuse Hotline at 1-800-772-4258, or email address at hotline@oig.rrb.gov. Information on using the Hotline can be found on 

the inside back cover of this Handbook. 
146 2024 INFORMATIONAL HANDBOOK | CHAPTER 8

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 Office of Equal Opportunity, 

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 (OIG) 

established its Hotline as a public service. The Hotline provides individuals with a means to report or discuss any suspected misconduct relating 

to the RRB, 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 RRB benefits; or you wish 

to report or discuss any other suspected misconduct relating to the RRB, 

its programs, or employees, please contact the OIG 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 RRB’s email notice and Internet privacy policy at 

RRB.gov before submitting information online.

Note: Please do not contact the OIG’s Hotline with questions regarding 

benefit eligibility requirements, delayed payments, or similar issues. These 

types of matters should be directed to a RRB field office for handling.