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Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

Reduction in Tier 2 If Rail Worker Continues In 'Last Person Employment'

(Posted January 26, 2014)

Question 1103: I left the railroad industry in 2007 with 26 years of service. I have been working part-time for a warehouse since November of 2008. I am taking my early retirement in April 2014 when I turn 62. I was told that if I continue to work for the warehouse then my railroad retirement benefits will be reduced by $1,300. Why?

Answer: The restrictions on returning to rail work or continuing in "Last Person Employment" go back to the origin of the Railroad Retirement system in the mid-1930s. It was the heart of the Great Depression, with 25% of workers unemployed.

The Railroad Retirement Act was designed to help find jobs for younger workers by offering annuity payments to those over 65. Older workers who had to give up their jobs to receive an annuity probably couldn't find another job.

Under the original Railroad Retirement Act, an individual who formerly had worked for the rail industry and had begun working at a non-rail job was required to entirely give up the non-rail job in order for annuity payments to start. That requirement was modified in the 1980s, when "Last Person Employment" was introduced. Under this rule, if a former rail worker continues in non-rail employment with the same employer after reaching retirement age (i.e., the age at which he or she becomes entitled to annuity payments), the Tier 2 is reduced by $1 for each $2 of earnings from the non-rail employer, beginning with the first $2 of earnings. The reduction cannot exceed 50% of the Tier 2 benefit, though.

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.

Copyright 1997-2017 Robert S. Kaufman
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