Increases in RRB annuity payouts, earning limits go into effect

Published: January 4, 2018

Most railroad retirement annuities, like Social Security benefits, were scheduled to increase Jan. 1 on the basis of the rise in the Consumer Price Index (CPI) from the third quarter of 2016 to the corresponding period of 2017.

The Railroad Retirement Board (RRB) reports that Tier I benefits, like Social Security benefits, will increase by 2 percent, which is the percentage of the CPI rise. Tier II benefits will go up by 0.7 percent. Vested dual benefit payments and supplemental annuities also paid by RRB are not adjusted for the CPI change.

In January 2018, the average regular railroad retirement employee annuity will increase $42 a month to $2,711 and the average of combined benefits for an employee and spouse will increase $60 a month to $3,937. For those retirement-aged widow(er)s eligible for an increase, the average annuity will increase $24 a month to $1,353. However, widow(er)s whose annuities are being paid under the Railroad Retirement and Survivors’ Improvement Act of 2001 will not receive annual cost-of-living adjustments until their annuity amount is exceeded by the amount that would have been paid under prior law, counting all interim cost-of-living increases otherwise payable. Some 50 percent of the widow(er)s on the RRB’s rolls are being paid under the 2001 law.

The cost-of-living increase is the largest since 2012, and follows a Tier I increase of 0.3 percent in January 2017.

The RRB was mailing notices in December to all annuitants providing a breakdown of the annuity rates payable to them in January 2018.

Earning limit increases

The RRB also announced that railroad retirement annuitants subject to earnings restrictions can earn more in 2018 without having their benefits reduced as a result of increases in earnings limits indexed to average national wage increases.

For those under full retirement age throughout 2018, the exempt earnings amount rises to $17,040 from $16,920 in 2017. For beneficiaries attaining full retirement age in 2018, the exempt earnings amount for the months before the month full retirement age is attained increases to $45,360 in 2018 from $44,880 in 2017.

For those under full retirement age, the earnings deduction is $1 in benefits for every $2 of earnings over the exempt amount. For those attaining full retirement age in 2018, the deduction is $1 for every $3 of earnings over the exempt amount in the months before the month full retirement age is attained.

For employee and spouse annuitants, full retirement age ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later. For survivor annuitants, full retirement age ranges from age 65 for those born before 1940 to age 67 for those born in 1962 or later.

When applicable, earnings deductions are assessed on the Tier I and vested dual benefit portions of railroad retirement employee and spouse annuities, and the Tier I, Tier II, and vested dual benefit portions of survivor benefits.

All earnings received for services rendered, plus any net earnings from self-employment, are considered when assessing deductions for earnings. Interest, dividends, certain rental income, or income from stocks, bonds, or other investments are not considered earnings.

Retired employees and spouses, regardless of age, who work for their last pre-retirement non-railroad employer are also subject to an additional earnings deduction in their Tier II and supplemental benefits of $1 for every $2 in earnings up to a maximum reduction of 50 percent. This earnings restriction does not change from year to year and does not allow for an exempt amount.

A spouse benefit is subject to reduction not only for the spouse’s earnings, but also for the earnings of the employee, regardless of whether the earnings are from service for the last pre-retirement non-railroad employer or other post-retirement employment.

Special work restrictions continue to be applicable to disability annuitants in 2018. The monthly disability earnings limit increases to $920 in 2018 from $910 in 2017.

Regardless of age and/or earnings, no railroad retirement annuity is payable for any month in which an annuitant (retired employee, spouse or survivor) works for a railroad employer or railroad union.

More information about RRB benefits is available at the agency’s website at www.rrb.gov or by contacting the RRB toll free at 1-877-772-5772.