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BenefitsLink > Q&A Columns >

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

Answers are provided by Robert S. Kaufman

What is a Tier 2 Benefit?

(Posted March 31, 2009)

Question 691: What is Tier 2?

Answer: Railroad Retirement benefits consist of two components called Tiers.

Tier 1 is similar to a Social Security benefit. It is based on earnings under both the Railroad Retirement and the Social Security systems. Tier 1 is reduced for any Social Security benefits payable. Most of Tier 1 benefits are taxed liked Social Security.

Tier 2 is more like a private employer pension. It is based only on earnings in the railroad industry. Tier 2 is not reduced for Social Security benefits payable. Tier 2 benefits are taxed as a private contributory pension.


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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