What Is Railroad Retirement?
Railroad retirement is a federal retirement and disability system that is similar to Social Security but provides different and to a certain extent greater benefits. A New York railroad retirement attorney emphasizes that the two systems are separate and that the railroad employee taxes are administered by the Railroad Retirement Board, or RRB.
How Are Railroad Retirement Benefits Different Than Social Security?
Unlike Social Security, railroad retirement benefits are divided into two tiers. According to a New York railroad retirement attorney, tier one benefits are similar to Social Security benefits and the tier two benefits more resemble a private pension.
How Does the Tier One System Work?
Tier one benefits are calculated using Social Security formulas but with different eligibility based on age and service. For instance, a New York railroad retirement lawyer reports that to be eligible for retirement benefits a worker must have:
- Worked for the railroad for at least five years if hired after 1995; or
- Worked for at least 10 years.
Full annuities are available for those employees with 30 years of service.
When Can a Worker Take Tier One Benefit?
A worker with 30 years of service is eligible at 60. Similarly to Social Security, a worker with less than 30 years can take early retirement at 62 or full retirement at 65, 66 or 67 depending on the year of the individual’s birth.
Do Tier One Benefits Include Disability?
The RRB uses the same definition of disability as Social Security:
- The worker’s disability must be severe enough to prevent any substantial gainful activity; and
- It is expected to last for at least one year.
To receive full benefits, the worker must have 10 years of railroad employment. In addition, the RRB provides benefits for what is called an occupational disability. An occupational disability is not a total disability but one that precludes the worker from performing their previous railroad job.
Are Any Other Benefits Available Under Tier One?
Yes. Tier one also includes unemployment benefits, sickness benefits, spousal benefits and survivor benefits. A separate tax is paid to fund unemployment and sickness benefits, and there is a dollar limit payable per day, currently $61, as well as a maximum number of days, 130, in a benefit period, which runs from July 1 through June 30. Spousal benefits are generally payable at approximately 50 percent of the railroad worker’s tier one benefit amount but may be less if the worker applied for early benefits. Survivor benefits are generally equivalent to those available under Social Security under similar circumstances.
What Benefits Are Available Under Tier Two?
Tier two benefits are like private pensions. The calculation is based on the average income of the worker’s five highest salaried years of employment.
What If a Worker Is Eligible for Both Railroad Benefits and Social Security?
Generally, tier one benefits are offset by amounts due under Social Security. There is an exception for workers who qualified before 1975. Those workers may receive an additional annuity payment to replace the offset under what is known as vested dual benefit payment. The tier two portions of benefits is based on railroad service only and is not reduced for any entitlement the worker may have for Social Security.
Contact a New York Railroad Retirement Attorney for Legal Advice
The calculation and awarding of railroad benefits can be a complicated process, especially for those workers who have paid into the Social Security system as well. Be certain you are receiving all you are entitled to. Hermann Law Group, PLLC offer a free case evaluation. Call their expert New York railroad retirement attorneys at their office today at 1-877-773-3030.