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Applying for an Annuity
Applications
for railroad retirement or survivor benefits are generally
filed at one of the Board's field offices, or with a traveling
Board representative at a customer outreach program service
location, or by telephone
and mail. The Board accepts applications up to three months
in advance of an annuity beginning date. However, applications
for employee disability annuities may not be filed until an
employee is no longer in compensated service. Compensated
service includes the receipt of pay for time lost, some wage
continuation payments, or any other employer compensation
preventing the payment of railroad retirement benefits.
Persons applying for railroad retirement
benefits will be automatically enrolled in the U.S. Treasury’s
Direct Deposit Program, which electronically transfers Federal
payments into individuals’ checking or savings accounts. However,
Direct Deposit waivers are available to individuals who
state that Direct Deposit would cause a hardship, and to individuals
without bank accounts.
Under the Board’s Customer Service
Plan, employees and spouses who file for their annuity in
advance will receive their first payment, or a decision, within
35 days of the beginning date of their annuity. If they did
not file in advance, they will receive their first payment,
or a decision, within 65 days of the date the application
was filed. Applicants for disability annuities will receive
a decision within 105 days of the date they filed their application;
if they are entitled to disability benefits, they will receive
their first payment within 25 days of the date of the decision
or the earliest payment date, whichever is later. Those filing
for a railroad retirement survivor annuity or lump-sum benefit
will receive the first payment, or a decision, within 65 days
of the date the application was filed, or entitlement to benefits
began, if later. Those already receiving a spouse annuity
will receive the first payment, or a decision, within 35 days
of the date the Board receives notice of the employee’s death.
To expedite filing, applicants should
telephone their local Board office for assistance. Certain
documents are required when filing a railroad retirement annuity
application, such as:
For Employees and Spouses:
- 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 also 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.
- Notice of any social security benefit
award or other
social security claim determination.
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 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. They
are sometimes asked to take a special medical examination
given by a doctor designated by the Board.
An annuity is payable as of the first
full month throughout which the employee and/or spouse is
age 60, or age 62 in the case of reduced annuities. An
annuity is payable the first day of the month full retirement
age is attained in the case of unreduced annuities with less
than 30 years of service.
The
retroactivity of a retirement annuity application is
limited to one year for disability annuities and six months
for full age annuities. There is generally no retroactivity for reduced
age annuities.
Any social security benefits due the retired employee or family
member which begin after 1974 are paid through the Railroad
Retirement Board. Even though the Board processes payment,
the Social Security Administration is responsible for all
adjudication.
For Survivors:
- 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.
- 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 one year for
disabled widow(er)s and six months for full retirement age
widow(er)s, mothers (fathers), children and parents. Retroactivity
for widow(er)s ages 60-61 is six 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 two years
after the death of the employee. There is no time limit on
filing for a residual payment.
Monitoring
Retirement and Survivor Benefit Payments
Under several monitoring programs
now in effect, the Board 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.
Right
of Appeal
Persons who believe that their claims
have not been adjudicated correctly may ask for reconsideration
from the Board unit that denied the claim. If not satisfied with that
review, the applicant may appeal to the Board’s Bureau of
Hearings and Appeals.
Further appeals can be carried to
the three-member Board itself, and beyond the Board to Federal
courts. The Board’s field office personnel will explain these
appeals procedures and the time limits on filing appeals to
those seeking reconsideration of their claims.
Garnishment/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
Employee tier II benefits, vested
dual benefits and supplemental annuities are subject to court-ordered
property settlements in proceedings related to divorce, annulment
or legal separation. Tier I benefits are not
subject to property settlements.
If
Requirements for Benefits Are not Met
Retirement annuities are not payable
by the Board unless the employee has 60 months of creditable
service after 1995 or 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 60 months of creditable service after
1995 or 120 months of service at any time.
In either of the above circumstances,
if the requirements are not met, the employee's railroad retirement
credits are transferred to the Social Security Administration
and treated as social security credits. 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 his or her retirement
taxes. Like social security taxes, railroad retirement taxes
are not refundable unless retirement tax withholding has exceeded
annual maximums.
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.
The tier I tax on rail employers and
employees is 7.65% in 2004. The tier II tax on employees
is 4.90%. The tier II tax rate on rail employers, rail labor organizations
and rail employee representatives is 13.10% in 2004. An employee
representative is a labor official of a non-covered labor
organization who represents employees covered under the Acts
administered by the Railroad Retirement Board.
Beginning with the taxes payable for calendar year 2004,
tier II taxes on both employers and employees are 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% and 22.10%, while the tier II tax rate for employees
is between 0% and 4.90%.
Railroad retirement taxes apply to
earnings on an annual basis. The amounts of earnings subject
to these taxes are determined annually on the basis of national
wage levels.
(See
Table
3 in IB-2 Facts for
more information)
Dual
Tax Payments
Since 1975, 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 Railroad Retirement Board sickness insurance 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.
Dual Railroad Retirement-Social
Security Taxes Paid, 1951-74
An employee with 10 or more years
of railroad service who is not entitled to a vested dual benefit
payment may be entitled to a refund of excess social security
taxes if his or her combined taxable earnings from the railroad
retirement and social security systems in any year in the
period 1951-1974 exceeded a maximum annual amount creditable
under the Railroad Retirement Act. Eligible employees will
receive their refunds from the Board 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.
Separation or Severance Payments
A lump sum, approximating railroad
retirement tier II payroll taxes deducted from separation or severance
payments, may be paid upon retirement to employees meeting
minimum service requirements or their survivors to the extent
the separation or severance payments did not yield additional
railroad retirement service or earnings credits. The lump-sum provision
applies to separation and severance payments made after 1984.
Federal
Income Tax on Railroad Retirement Benefits
The tier I portion of a railroad retirement
annuity that is actually equivalent to a social security benefit
is treated as a social security benefit for Federal income
tax purposes. Depending on the amount of other income received
in the taxable year, a portion of these benefit payments may
be subject to Federal income tax.
Tier I benefits exceeding social security
benefits, such as retirement benefits payable between ages
60 and 62, and many occupational disability annuities,
plus the tier II portions of railroad retirement annuities,
vested dual benefits, and supplemental annuities paid by
the Board are treated like private and public service pensions
for Federal income tax purposes. The Railroad Retirement
Act specifically exempts benefits paid by the Board from
State and local income tax.
The Railroad Retirement Board and
the Social Security Administration issue tax information statements
to annuitants each January. In the absence of a request not
to withhold, taxes are withheld from U.S. citizens or residents
whose railroad retirement benefits in excess of the social
security equivalent level total more than certain annual threshold
amounts. Any amounts withheld during the taxable year are
reflected on the annual statements.
Service
and Earnings Records
The Railroad Retirement Board maintains
a record of all covered railroad service and creditable earnings
after 1936. The information is recorded under the employee's
social security account number used by the employer to report
service and compensation to the Board.
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, 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, yields the number of deemed service months. 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.
Military Service
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.
The war and national emergency periods
that affect current entitlements are:
- September 8, 1939, to June 14,
1948.
- December 16, 1950, to September
14, 1978.
- August 2, 1990, to date as yet
undetermined.
If military service began during a
war or national emergency period, any active duty service
the employee was required to continue in beyond the end of
the war or national emergency is creditable, except that 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, 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.
Employees with military
service are encouraged to contact the Board well in advance
of retirement regarding required proof of military service.
Form BA-6
Each year, employees in the industry
receive a Certificate
of Service Months and Compensation (Form BA-6) from
the Board. This statement is important because it provides
both a current and cumulative record of an employee's railroad
service and compensation. It includes deemed service months,
separation allowances
and severance payments as well as miscellaneous compensation,
such as taxable sickness payments. It also reflects
creditable military service if the service has previously been
reported to the Board. The BA-6 form should be carefully
reviewed to make sure that it is correct.
If an employee disagrees with the
information shown on the BA-6 form, he or she should write
to the Board as early as possible. The law limits the period
during which corrections can be made. All letters concerning
BA-6 forms should show the employee's social security number
and should be addressed to:
Protest Unit - CESC
U.S. Railroad Retirement Board
844 North Rush Street
Chicago, Illinois 60611-2092
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