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Tier 2 Benefit Formula
(Posted August 4, 2004)
Question 497: What is the formula the Railroad Retirement Board uses to determine a person's Tier 2 benefit?
Answer: Here's how Tier 2 benefit is computed:
Step 1. Determine the 60 highest months of railroad earnings.
Step 2. Determine the "Average Monthly Compensation" (AMC) by dividing the total earnings for the 60 highest months by 60. The result is the AMC.
Step 3. Determine the Tier 2 factor. Multiply the AMC by the total years and months of railroad service. Do not round or drop fractional years.
Step 4. Multiply the Tier 2 factor(Step 3) by 0.7%. The result is the Tier 2 benefit.
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