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

Answers are provided by Robert S. Kaufman

Can Railroad Retirement Contributions Be Deducted From Federal Income Taxes?

(Posted April 12, 2001)

Question 92: If a worker leaves the railroad industry before vesting(10 Years), are the contributions to the Railroad Retirement fund tax deductible?

Answer: No! But it's certainly a good idea!

Railroad Retirement contributions are actually federal payroll taxes paid by rail workers and railroads. The worker portion is never deductible under federal income tax law. The Internal Revenue Service, not the Railroad Retirement Board, is responsible for the correct enforcement & administration of the payroll taxes.

I should point out that this differs from how worker contributions to private pension plans are protected by ERISA. If the worker leaves the pension plan before vesting, the contributions are refunded by the plan.

At this point, Railroad Retirement is not covered by ERISA. But if pending legislation is enacted (H.R. 180), turning the Tier 2 trust fund into a pension trust, it would seem logical that ERISA-type protections would, at some point, be extended to the Tier 2 portion of Railroad Retirement.

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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