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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.
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