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

Answers are provided by Robert S. Kaufman

How Spouse Benefits Are Affected By Worker's Post Retirement Work and Spouse's Public Pension

(Posted February 6, 2007)

Question 618: I am 58 years old with 34 years of railroad service. I am thinking of retiring early (before 60). I am now an officer of the company and can retire at 55, with reduced benefits. I have been offered another job as Chief Deputy with a law enforcement agency. How would this affect my wife's benefit when she reaches 60?

I have a second question. My wife will retire from a federal job. She will have a good retirement. Because of that, will she be able to draw full retirement from Railroad Retirement? Reading some of your other answers and questions, I think she will not be able to draw Tier 1. I am not sure I know what Tier 1 and Tier 2 are; can you explain?

Answer: Railroad Retirement benefits consist of two components, commonly called "Tiers". Tier 1 is similar to a Social Security benefit. It is based on your combined earnings from employers whose employees are covered by Railroad Retirement or Social Security. Tier 1 is reduced by the amount of any Social Security benefit you receive.

Tier 2 is similar to a private employer's pension. It is based only on railroad earnings. There is no reduction for Social Security.

Tier 1 benefits are subject to the same annual earnings limitation as Social Security. Tier 2 benefits are subject only to a special earnings reduction if the rail worker continues to work for the same non-railroad employer after becoming eligible for railroad retirement benefits. The Tier 2 earnings reduction is limited to 50% of the Tier 2 benefit.

A spouse usually receives 50% of the rail worker's Tier 1 plus 45% of the Tier 2. Tier 1 for a spouse is reduced by any Social Security that she receives and by 2/3 of the amount of any public pension paid by a government entity. If the rail worker's Tier 2 is reduced for earnings from the last non-railroad employer, then the spouse's Tier 2 benefit is based on the reduced Tier 2 amount.

One other thing you need to be concerned about if you decide to start new employment outside the rail industry before reaching 60: if there is enough of a "gap" between your rail employment and age 60, you run the risk of losing your "Current Connection." If you do, you will not receive a Supplemental Annuity, currently worth $43 a month but reduced by any private pension paid by your railroad. More importantly, though, your wife would receive a widow's benefit only from Social Security, not Railroad Retirement, meaning that none of the Tier 2 could be paid to her. You should ask the Railroad Retirement Board exactly when your non-railroad earnings would break your "Current Connection."

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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