Case of the Week: Railway Retirement Benefits

ERISA consultants at the Retirement Learning Center Resource regularly receive calls from financial advisors on a wide range of technical topics related to IRAs, qualified retirement plans, and other types of retirement savings plans. We bring you the case of the week to highlight the most relevant topics for your business.

A recent call with a financial advisor is representative of a common inquiry related to railroad retirement benefits. The adviser asked:

“I have a client who participates in a pension with the railroad. Can you give me information about the arrangement?

Discussion Highlights

The customer is likely covered by the Railroad Retirement Act and the Railroad Unemployment Insurance Act, federal laws that provide retirement and disability benefits for qualified railroad employees and their spouses, as well as survivor benefits for family members. The program is governed by the Railroad Retirement Board and has been around since the 1930s.

Railroad retirement benefits are provided through a federal program parallel to the operation of Social Security for non-railway workers. There are, however, several differences. For more information, visit US Railroad Retirement Board and An Overview of the Railroad Retirement Program.

Generally, railway retirement benefits have two levels. Tier I was designed to be equivalent to Social Security benefits, while Tier II was structured to provide additional benefits comparable to private pension plans. And those covered by Railroad Retirement Benefits can log in here to check their benefits:

The form of payment is an annuity at full retirement age, which approaches age 67 (like Social Security). Payments can start as early as age 62, with a reduction in the amount of benefits (also like social security). And if an individual has at least 30 years of service with the railroad, benefits can begin at age 60 with no reduction in benefits.

Annuities are payable to surviving widow(ers), children and certain other dependants. Lump sum benefits are only payable in limited circumstances (i.e. after the death of a railway employee if there are no qualified survivors of the employee, and in the case a residual lump sum death benefit).

Railway undertakings may also cover their employees with their own defined contribution or defined benefit schemes. Receipt of a private railroad pension (but not a 401(k) distribution) could reduce the amount of annuity benefits payable by the Railroad Retirement Board (see Private Railroad Pensions May Reduce Supplementary Annuities) .


Railroad employees may be eligible for one-time benefits paid through the Federal Railroad Retirement Commission. Railway companies could also sponsor private qualified pension plans for their employees.

Any information provided is for informational purposes only. It cannot be used for the purpose of avoiding penalties and taxes. Consumers should consult their tax advisor or attorney regarding their particular circumstances.

©2022, Retirement Learning Center, LLC. Used with permission.

Previous US Chamber of Commerce and others warn of practical impossibilities of EU subsidy plan
Next Texas Teachers' Retirement System votes for Pro-Choice Group's proposal at shareholder meeting