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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.
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