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BenefitsLink > Q&A Columns >

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

Answers are provided by Robert S. Kaufman

Contributions to 401(k) Plan Are Subject to Railroad Retirement Taxes

(Posted April 17, 2008)

Question 662: Are Railroad Retirement Tier 1 and Tier 2 payroll taxes taken out of my 401(k) payroll contributions?

Answer: The tax treatment of 401(k) contributions under the Railroad Retirement Tax Act is different than it is for federal income tax purposes. Contributions to a 401(k) retirement plan are considered to be creditible compenstion under the Railroad Retirement Act and hence they are subject to Tier 1 & Tier 2 taxes.

The Railroad Retirement Tax Act is administered by the Internal Revenue Service and not by the Railroad Retirement Board.


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.


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