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Maximum Amount of Earnings Credited Are Different For Tier 1 & Tier 2
(Posted November 7, 2001)
Question 141: I left the railroad in 1998 with 32 years of rail credits. I will be 60 in March 2002. I had figured what my Tier 2 will be, using the Tier 2 formula (highest 5 years of earnings multiplied by .07% multiplied by the number of years of service). It's quite a bit more than the estimate I received from the Railroad Retirement Board. What would explain the difference?
Answer: You have to take into account the difference in maximum earnings credited each year for Tier 1 and Tier 2. The ceiling for Tier 2 is considerably lower than it is for Tier 1. If you don't, your "high five" would be overstated and so would your estimate.
For example, in 2001 the Tier 1 ceiling is $80,400 and the Tier 2 ceiling is $59,700. For 2002, they will be increased to $84,900 and $63,000 respectively. You can ask the Railroad Retirement Board for the Tier 2 ceilings for 1994-1998 and then see if you and the Board agree.
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