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

Answers are provided by Robert S. Kaufman

Does 5-Year Vesting Apply?

(Posted April 14, 2003)

Question 244: I have worked for the railroad for 6 years. The railroad closed my division before I could meet the 10 year vesting requirement. What happens to the Tier 2 taxes that I paid for 6 years?

Answer: The Railroad Retirement Act was amended recently to reduce the vesting requirement to 5 years, if the worker has earned
at least 5 years of service after 1995.

If you meet the new 5-year requirement, you can receive an annuity as early as 62. If you don't, the Tier 2 taxes you and your employer have paid remain in the Railroad Retirement trust fund. Unlike a pension plan in the private sector, there is no provision for refunding Tier 2 taxes to nonvested workers.

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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