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Do Rail Workers Own Their Railroad Retirement Accounts?
(Posted July 3, 2011)
Question 825: What happens to the "balance" in your Railroad Retirement account after the death of the rail worker? Can the worker ever expect to actually get all of the money that is stated on the yearly form? It looks impressive at $800,000 dollars!
Answer: Railroad Retirement is not like a 401(k) plan where each worker has a separate account. It is a government retirement system where payroll taxes and income from investment of those funds are used to pay benefits to current retirees and their eligible family members. Each worker does not have a separate account nor title to the funds he or she has contributed.
If a worker dies before he or she receives benefits at least equal to his or her personal contributions, the "balance" is not paid to survivors.
The $800,000 figure appears to be your total earnings under Railroad Retirement, not your personal contributions to the system. At the current payroll tax rate, your personal contributions to date are about $50,000.
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