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Tier 1 and Tier 2 Benefits Explained
(Posted August 2, 2013)
Question 1036: Please explain Tier 1 and Tier 2 for a railroad worker and a spouse who stay married.
Answer: Most Railroad Retirement Annuities consist of two separate components: Tier 1 and Tier 2.
Tier 1 is based on the rail worker's lifetime earnings while in rail service and, if any, earnings while in service covered by the Social Security program. A reduction applies when calculating the Tier 1 benefit, if the worker also receives a benefit from Social Security.
Tier 2 is based only on the rail worker's rail service. It is similar to a private employer's pension. It is not reduced by any Social Security benefit the worker receives.
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