Anyone have experience with Tier 1 RR Retirement?

[Greensboro]

My wife will retire as a rail road (RR) employee in a couple of years after being a RR contractor for over 15 years. I'm having trouble following the RR Retirement Board's explaination of Tier 1 and SS when contributions have been made to each. It seems like she will have both Tier 1 and SS payouts since she paid into both - proportionally to the benefit formula for each for her earnings and years of contribution. Is that right?

 

[evilanne]

I have not direct experience but I found this https://www.rrb.gov/RB17/For_use_with_survivor_annuity_applications/PartIX/TierIAndTierII
It looks like SSEB portion is treated the same as SS and the NSSEB is treated like a pension for tax purposes. Depending on how long she actually worked for the RR as an employee and the amount of her pension, actual SS for the work done as a contractor could subject her too WEP (Windfall Elimination Provision) law like CSRS employees. Since Social Security is based on top 35 years of earning and RR doesn't pay into SSA, the calculated amount would be less but she should be able to open her account at SSA.gov to see what they have on file for her. Maybe one of. our CSRS retirees can address when WEP works or see https://www.ssa.gov/benefits/retirement/planner/wep.html

 

[Greensboro]

Thanks so much for the reply. See page 28 of the RR Retirement Handbook. . . https://www.rrb.gov/sites/default/files/2021-07/2021 Railroad Retirement Handbook.pdf It says the Tier 1 RR benefit is reduced by the amount of the SS benefit which imples to me my wife needs to apply to SS to receive SS in addition to the Tier 1 (which is analogous to SS for RR retirement). The handbook never comes out and says that someone that has paid into both systems should apply to and receive benefits from both systems.

Looks like Q1 here https://rrb.gov/NewsRoom/NewsReleases/DualBenefitPayments is saying the RRB will pay out a combined Tier 1 and SS, with the SS portion removed from the Tier 1 payout to prevent duplication - which makes sense - however I just want affirmation that she gets what is coming to her from SS and Tier 1 proportional to what should be expected from each system for what she's contributed. I believe this is the case. . . maybe I'm reading too much into what is not being said?

 

[evilanne]

From the second link,

1. How are dual benefits paid to persons entitled to both railroad retirement and social security benefits?

If a railroad retirement annuitant is also awarded a social security benefit, the Social Security Administration determines the amount of the social security benefit due, but a combined monthly dual benefit payment should, in most cases, be issued by the RRB after the railroad retirement annuity has been reduced by the amount of the social security benefit.

it sounds like the SSA will calculate the amount for the employee based on RR & nonRR employment and the RR will issue the SSEB amount after reducing the NSSEB/Pension by the amount attributable to the SS portion of the benefit.

Your wife may want to request a retirement estimate from the RR or use contact info at the bottom of the article to clarify. Based on IRS Pub 915, it sounds like you get either an RR form or SS tax form, not both (https://www.irs.gov/forms-pubs/about-publication-915) but SS &. RR SSEB are handled the same way for tax purposes

It. is definitely confusing but it looks like they work together