BNSF News

Railroad Retirement Board Offers Additional Information on Spousal Benefits

2009-10-08

Editor's Note: This is the second of two parts on this topic. For the first part see the Oct. 5 issue of BNSF News.

Monthly benefits may be payable under the Railroad Retirement Act to the surviving widow(er), children and certain other dependents of a railroad employee if the employee was "insured" under that act at the time of death.

Lump-sum death benefits may also be payable to qualified survivors in some cases. The following questions and answers describe Railroad Retirement Board (RRB)-payable survivor benefits and the eligibility requirements for these benefits.

Question: How are railroad retirement widow(er)s' benefits computed?

The tier I amount of a two-tier survivor benefit is based on the deceased employee's combined Railroad Retirement and Social Security earnings credits, and it is computed using Social Security formulas. In general, the survivor tier I amount is equal to the amount of survivor benefits that would have been payable under Social Security.

December 2001 legislation established an "initial minimum amount" which yields, in effect, a widow(er)'s tier II benefit equal to the tier II benefit the employee would have received at the time of the award of the widow(er)'s annuity, minus any applicable age reduction.

However, such a tier II benefit will not receive annual cost-of-living increases until such time as the widow(er)'s annuity, as computed under prior law with all interim cost-of-living increases otherwise payable, exceeds the widow(er)'s annuity as computed under the initial minimum amount formula.

The average annuity awarded to widow(er)s in fiscal year 2008, excluding remarried widow(er)s and surviving divorced spouses, was $1,625 a month. Children received $1,153 a month, on the average. Total family benefits for widow(er)s with children averaged $3,390 a month. The average annuity awarded to remarried widow(er)s or surviving divorced spouses in fiscal year 2008 was $914 a month.

A widow(er) who received a spouse annuity from the RRB is guaranteed that the amount of any widow(er)'s benefit payable will never be less than the annuity she or he was receiving as a spouse in the month before the employee died.

Question: Are survivor benefits subject to any reduction for early retirement or disability retirement?

Yes. A widow(er), surviving divorced spouse or remarried widow(er) whose annuity begins at full retirement age or later receives the full tier I amount unless the deceased employee received an annuity that was reduced for early retirement. The eligibility age for a full widow(er)'s annuity is gradually rising from age 65 to age 67. The maximum age reductions will range from 17.1 percent to 20.36 percent, depending on the widow(er)'s date of birth. For a surviving divorced spouse or remarried widow(er), full retirement age increases but the maximum reduction is 28.5 percent. For a disabled widow(er), disabled surviving divorced spouse or disabled remarried widow(er), the maximum reduction is 28.5 percent, even if the annuity begins at age 50.

Question: Are these benefits subject to offset for the receipt of other benefits?

Under the Railroad Retirement Act, the tier I portion of a survivor annuity is subject to reduction if any Social Security benefits are also payable, even if the Social Security benefit is based on the survivor's own earnings. This reduction follows the principles of Social Security law which, in effect, limit payment to the highest of any two or more benefits payable to an individual at one time.

The tier I portion of a widow(er)'s annuity may also be reduced for the receipt of any federal, state or local government pension based on the widow(er)'s own earnings. The reduction generally does not apply if the employment on which the public pension is based was covered under the Social Security Act throughout the last 60 months of public employment. (Note: There are some exceptions to this 60-month requirement.) However, most military service pensions and payments from the U.S. Department of Veterans Affairs will not cause a reduction. For those subject to the public pension reduction, the tier I reduction is equal to two-thirds of the amount of the public pension.

A survivor annuitant should notify the RRB promptly if she or he becomes entitled to any such benefits.

Question: What if a widow(er) was also a railroad employee and is eligible for a Railroad Retirement employee annuity as well as monthly survivor benefits?

If both the widow (er) and the deceased employee started railroad employment after 1974, the survivor annuity payable to the widow(er) is reduced by the amount of the employee annuity.

If either the deceased employee or the survivor annuitant had some service before 1975 but had not completed 120 months of railroad service before 1975, the employee annuity and the tier II portion of the survivor annuity would be payable to the widow(er). The tier I portion of the survivor annuity would be payable only to the extent that it exceeds the tier I portion of the employee annuity.

A special guaranty applies if either the deceased employee or the survivor annuitant completed 120 months of railroad service before 1975. In effect, the widow, or dependent widower, would receive both an employee annuity and a survivor benefit, without a full dual benefit reduction.

Question: What types of lump-sum death benefits are payable under the Railroad Retirement Act?

A lump-sum death benefit is payable to certain survivors of an employee with 10 or more years of railroad service, or less than 10 years if at least 5 years were after 1995, and a current connection with the railroad industry if there is no survivor immediately eligible for a monthly annuity upon the employee's death.

If the employee did not have 10 years of service before 1975, the lump sum is limited to $255 and is payable only to the widow(er) living in the same household as the employee at the time of the employee's death.

If the employee had less than 10 years of service but had five years after 1995, he or she must have met Social Security's insured status requirements for the lump sum to be payable.

If the employee had 10 years of service before 1975, the lump sum is payable to the living-with widow(er). If there is no such widow(er), the lump sum may be paid to the funeral home or the payer of the funeral expenses. These lump sums averaged $989 in fiscal year 2008.

The Railroad Retirement system also provides, under certain conditions, a residual lump-sum death benefit which ensures that a railroad family receives at least as much in benefits as the employee paid in railroad retirement taxes before 1975. This benefit is, in effect, a refund of an employee's pre-1975 railroad retirement taxes, after subtraction of any benefits previously paid on the basis of the employee's service. This benefit is seldom payable.

Question: How does a person get an estimate of, or apply for, survivor benefits?

Active or retired employees who are concerned about the amount of benefits which would be payable to their survivors may receive estimates from the nearest RRB field office.

Applications for Railroad Retirement or survivor benefits are generally filed at one of the RRB's field offices, with an RRB representative at one of the office's Customer OutReach Program (CORP) service locations, or by telephone and mail. Contact an office of the Railroad Retirement Board by calling 1-877-772-5772 toll-free or at www.rrb.gov. Most RRB offices are open to the public from 9 a.m. to 3:30 p.m. Monday through Friday, except on federal holidays.

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