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BenefitsLink > Q&A Columns >

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

Answers are provided by Robert S. Kaufman

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.

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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