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BenefitsLink > Q&A Columns >

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

Answers are provided by Robert S. Kaufman

If I Leave Railroad Early, Are My 60/30 Benefits Less?

(Posted March 11, 2004)

Question 408: My question is somewhat similar to Q&A 377, but I would be working for myself for a much longer period before retirement. I am 52 years old with 34 years of railroad service. If I went to work for myself the next 8 years and maintained my current connection, but made less than I would have if I had stayed working for the railroad and then retired at age 60, how much of a reduction would I take by making less than I could have if I had stayed with the railroad? Do they use the highest 3 years in the last 10?

Answer: First, an important note of caution about "working for yourself." Railroad Retirement generally considers that incorporating your business is not "self employment" within the meaning of the Railroad Retirment Act. So be careful in how you structure your businees so you won't inadvertly break your "Current Connection."

The Tier 1 benefit is based on lifetime Railroad and Social Security-covered earnings. Only the lowest 5 years are dropped before an average monthly earnings is calculated.

The Tier 2 benefit is based on the highest 60 months of Railroad-covered earnings.

Without knowing your entire earnings history, it's hard to say how much of a price you'll pay by leaving the railroad up to 8 years before you're 60. The local Railroad Retirement Board office can probably give you a rough idea.

A lot depends on your earnings potential with the railroad, what you can actually earn as a self employed person, and how much the Tier 1 and Tier 2 maximum earings limits will increase in the next 8 years.

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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