Local 19 retiree Keith Gilmer

Thanks to the strong support of his SMART pension, retired SM Local 19 (Southeastern Pa.) member Keith Gilmer has been able to spend plenty of time pursuing one of his passions: the outdoors.

“As a member, I was able to retire at the age of 55, and enjoy a few more years of good health than a lot of friends I know,” he explained. “I have been fortunate enough to make several hunting trips, and on my most recent one, I traveled to Newfoundland on a moose hunt.” Gilmer joined Mountaintop Outfitters — including the owner of the company, Art — for a successful trip: “I harvested a nice bull with a 40-and-a-half-inch spread … Previously I harvested, along with other bulls, a woodland caribou that is currently in the Boone and Crockett world record books.”

Because he was able to retire at 55 years old, Gilmer has the opportunity to devote a great number of years to exploring the natural world. It’s not something he takes for granted. “Thanks to groups like the Union Sportsmen’s Alliance, along with our local unions, we get to enjoy parts of our ‘golden years’ outdoors,” he added. “Thank you for your past support, as well as the days and years to come.”

SMART General President Joseph Sellers meeting with sheet metal workers at the UBS Arena project in Long Island, N.Y. in September 2021.


On February 28, 2022, SMART General President Joseph Sellers, Jr. shared a piece of fantastic news with local union business managers: Effective January 1, 2022, the Sheet Metal Workers’ National Pension Fund is 81.5% funded and has been certified in the Green Zone. This means that SMART sheet metal workers and retirees can rest assured that their pensions are strong and healthy, giving them greater peace of mind that they can count on the National Pension Fund (NPF) in retirement.

“Our members and our industry have sacrificed a great deal to get the NPF to this place, said President Sellers. “They have seen changes to their benefits, and they have made the needed pension fund contribution increases. The Green Zone certification is a proud moment for our members, local unions and employers but we must continue to be vigilant in our management of the Fund to protect the retirement security of our members.”

“The Green Zone certification is a proud moment for our members, local unions and employers but we must continue to be vigilant in our management of the Fund to protect the retirement security of our members.”

– SMART General President Joseph Sellers

The NPF has increased its funding percentage year over year for a decade, bringing it from critical status – as recently as 2013 – to its current level of strength. In 2010, the Washington Examiner listed the NPF as one of the worst-funded union pension plans in the country. Now, 12 years later, the hard work and sacrifice of participants, local unions and employers have led to an extraordinary turnaround that will benefit members for years to come. After a long period of hard work, this is a moment worth celebrating.

It is also a moment for vigilance and foresight: there is more work to be done to ensure the NPF continues to grow in strength. As General President Sellers pointed out, the volatile markets we have experienced in 2022 demonstrate that we must continue to be attentive in our management of the NPF in order to protect the retirement security of SMART members. Nonetheless, growth in funding percentage from 52.3% in 2008 to 81.5% in 2022 is a notable signifier of the strength and commitment of our union – now and in the future.

Facts about the NPF’s Green Zone certification:

  • Although the Funding Improvement Plan is no longer applicable, Trustee approval continues to be required for any changes in contribution rates that could lower expected contributions into the Fund. This is a stipulation of the NPF Trust Document.
  • Benefit improvements, or any changes to the NPF that increase benefits, continue to be prohibited. The NPF elected to utilize an amortization extension allowed by regulations some years ago. Until we are no longer using this extension, the Internal Revenue Service prohibits any improvements to the NPF unless there is a corresponding contribution increase intended to fund the cost of improvement.  This prohibition applies to the Fund’s Working After Retirement rules, which means that the Fund must retain its requirement that a participant has a permanent cessation from covered employment before commencing benefits – irrespective of his or her age. 
  • The NPF must also continue to enforce the rules limiting retirees to returning to work for up to 40 hours per month until the April following his or her attainment of age 70½.
  • The NPF continues to have withdrawal liability. Withdrawal liability is a result of the NPF not being fully funded. The NPF, at 81.5%, is not fully funded.
  • The NPF is not expected to flip back and forth from the Green Zone to the Yellow Zone (endangered). If, for example, 2022 continues to be a challenging year for investments and the NPF realizes an investment loss to the extent that it drops our funding level below 80%, we will not automatically fall into the Yellow Zone. As long as the NPF is projected to return to above 80% funding level within a reasonable period of time, the NPF will continue to be certified in the Green Zone.
  • For 2021, hours are estimated at 107,000,000, and the investment return is estimated at 15%. These numbers will be certified in October of 2022.

As General President Sellers announced, years of hard work and sacrifices made by National Pension Fund participants, locals and employers have paid off.

In addition to this, the Biden Administration announced the Clean Air in Buildings Challenge in late March. This challenge is a call to action and a set of best practices to assist building owners with reducing risks from airborne viruses and other contaminants.

The Clean Air in Buildings Challenge relies on significant input from SMART and our experts at the National Energy Management Institute (NEMI), who assisted in devising its goals and objectives.

The challenge includes the creation of a clean indoor air action plan, practices for optimizing fresh air ventilation, the enhancement of air filtration and cleaning, and community engagement around the importance of enhanced air ventilation to ensure this issue — and its solution — is prioritized by leaders in the public and private sectors. This ensures the expanded contribution of our signatory contractors employing SMART sheet metal workers to lead this challenge.

As the Biden Administration rolls out the historic bipartisan infrastructure bill, modernizing the prevailing wages attached to these projects will ensure fair wages and protect workers employed in the sheet metal industry.

In early March, the U.S. Department of Labor announced that it was updating its Davis-Bacon rules, which affect members employed in the construction industry — especially those working for employers who compete on publicly funded projects. This is the first time in 40 years the Department of Labor has performed a comprehensive review of these regulations, and it couldn’t come at a better time. As the Biden Administration rolls out the historic bipartisan infrastructure bill, modernizing the prevailing wages attached to these projects will ensure fair wages and protect workers employed in the sheet metal industry. Structural changes to the administration of these new projects are what will make the difference in guaranteeing that not only are they built on time and under budget, but also that unscrupulous employers do not undermine the wages and standards SMART and our signatory employers have spent decades creating.

As you will find within this issue of the Members’ Journal, SMART has also updated our union’s website at www.smart-union.org. The website is all-inclusive and interactive, with landing pages for content and material found nowhere else online — such as an updated Resources section for sheet metal workers, TD material and forms, Canadian resources, an easier-to-use Sheet Metal Job Bank, membership information only available to you, links to fund material, dozens of resource libraries and more. Member information is accessed via a Member Portal and customized to each individual member’s needs and experience. Visit the website at www.smart-union.org and click on the Member Portal to create an account. Instructions for SM and TD members are linked through the QR Code below.

Brothers and sisters, we live in exciting times — we are taking advantage of new technologies to update our services to you. Make sure you continue to revisit the Member Portal, as we will update information there with breaking news and the latest resources.

Fraternally,

Joseph Powell
SMART General Secretary Treasurer

Certain portions of a Railroad Retirement annuity are treated differently for federal income tax purposes. The following questions and answers explain these differences and address the importance of individuals establishing accurate tax withholding from their annuities. Certain beneficiaries, including those retiring at age 60 with at least 30 years of service, and some occupational disability annuitants, need to pay close attention to changes in tax withholding when they turn age 62.

1. How are annuities paid under the Railroad Retirement Act treated under federal income tax laws?

A Railroad Retirement annuity is a single payment comprised of one or more of the following components, depending on the annuitant’s age, the type of annuity being paid, and eligibility requirements: a Social Security Equivalent Benefit (SSEB) portion of Tier I, a non-Social Security Equivalent Benefit (NSSEB) portion of Tier I, a Tier II benefit and a supplemental annuity.

In most cases, part of a Railroad Retirement annuity is treated like a Social Security benefit for federal income tax purposes while other parts of the annuity are treated like private pensions for tax purposes. Consequently, most annuitants who are U.S. citizens or residents are sent two tax statements from the Railroad Retirement Board (RRB) each January, even though they receive only a single annuity payment each month. While non–resident aliens also receive a single monthly annuity payment from the RRB, they are only sent one tax statement from the RRB.

2. What information is shown on the Railroad Retirement tax statements sent to annuitants in January?

One tax statement, Form RRB-1099 (only sent to U.S. citizens or residents), shows the SSEB portion of Tier I or special minimum guaranty payments made during the tax year, the amount of any such benefits that an annuitant may have repaid to the RRB during the tax year, and the net amount of these payments after subtracting the repaid amount. The amount of any offset for workers’ compensation and the amount of federal income tax withheld from these payments are also shown.

The other tax statement, Form RRB-1099-R (also only sent to U.S. citizens or residents), shows the NSSEB portion of Tier I, Tier II and supplemental annuity paid to the annuitant during the tax year, and may show an employee contribution amount. The NSSEB portion of Tier I along with Tier II are considered contributory pension amounts and are shown as a single combined amount in the Contributory Amount Paid box (Item 4) on the statement. The supplemental annuity is considered a noncontributory pension amount and is shown as a separate item on the statement.

Non–resident aliens are sent one tax statement, Form RRB-1042S, which shows the information included on both Form RRB-1099 and Form RRB-1099-R.

3. Can annuitants request federal income tax withholding from their benefit payments?

Yes. Annuitants may request that federal income tax be withheld from their annuity payments. To add or change federal income taxes withheld from SSEB payments, an annuitant must complete Internal Revenue Service (IRS) Form W-4V, Voluntary Withholding Request, and send it to the RRB. To add or change the amount of federal taxes withheld from NSSEB payments, annuitants must file Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments, (available at the RRB’s website, RRB.gov) and send it to the RRB. If an annuitant does not file a Form RRB W-4P with the RRB and the taxable annuity components exceed the IRS minimum mandatory withholding amount, taxes will automatically be withheld as if the annuitant were married and claiming three allowances. Railroad Retirement benefits are not taxable by any state, so state tax withholding from Railroad Retirement payments is not possible. Annuitants that wish to add or change federal tax withholding from their annuity payments may contact an RRB field office for assistance. While the RRB may provide the necessary forms for withholding, it is the annuitant’s responsibility to determine how much federal income tax withholding is needed. Annuitants are encouraged to discuss the amount of withholding needed with a tax adviser or the IRS.

4. Which Railroad Retirement benefits are treated like Social Security benefits for federal income tax purposes?

The SSEB portion of Tier I – the part of a Railroad Retirement annuity equivalent to a Social Security benefit based on comparable earnings and included on Form RRB-1099 (or Form RRB-1042S for nonresident aliens) – must be reported on an individual’s federal income tax return, and is treated for tax purposes the same way as a Social Security benefit. The amount of these benefits that may be subject to federal income tax, if any, depends on the beneficiary’s income. (To determine if any amount of the SSEB portion is taxable, please refer to IRS publication 915, Social Security and Equivalent Railroad Retirement Benefits.) If part of the SSEB is taxable, how much is taxable depends on the total amount of a beneficiary’s benefits and other income. Usually, the higher that total amount, the greater the taxable part of a beneficiary’s benefit.

5. Which Railroad Retirement benefits are treated like private pensions for federal income tax purposes?

The NSSEB portion of Tier I, Tier II benefits, and supplemental annuities – which are included on Form RRB-1099-R (or Form RRB-1042S for nonresident aliens) – are all treated like private pensions for federal income tax purposes. In some cases, primarily those in which early retirement benefits are payable to retired employees and spouses between ages 60 and 62, some occupational disability benefits, and other categories of unique RRB entitlements, the entire annuity may be treated like a private pension. This is because Social Security benefits based on age and service are not payable before age 62, Social Security disability benefit entitlement requires total disability, and the Social Security Administration does not pay some categories of beneficiaries paid by the RRB.

6. How are 60/30 annuity payments taxed?

A railroad employee with 30 or more years of creditable rail service is eligible for a regular annuity based on age and service the first full month he or she is age 60. The employee’s spouse is also eligible for an annuity the first full month he or she is age 60. These “60/30” annuity payments are taxed as follows:

  • 60/30 annuity payments before the employee or spouse is age 62:All benefits paid to an employee before age 62 are considered NSSEB and are fully taxable and reported on Form RRB-1099-R (or Form RRB-1042S for nonresident aliens). This includes all Tier I and Tier II benefits and any supplemental annuity that might be payable. Spouse benefits are also fully taxable and reported on Form RRB-1099-R (or Form RRB-1042S for nonresident aliens) until both the employee and spouse are age 62.
  • 60/30 annuity payments after the employee is age 62:  Once the employee turns age 62, part of the Tier I benefit is still considered NSSEB, but some is now considered SSEB because equivalent Social Security benefits are payable at age 62. Since these equivalent Social Security benefits paid at age 62 would be reduced for early retirement, while 60/30 benefits are not reduced, the RRB computes the portion of the Tier I benefit comparable to that payable under Social Security, and reports the SSEB amount on Form RRB-1099 (or Form RRB-1042S for nonresident aliens). The SSEB portion of spouse benefits is calculated the same way, except the employee and spouse must both be at least 62 for spouse benefits to be considered SSEB.
  • WARNING for 60/30 annuitants who begin receiving annuities before age 62:  As noted previously, when the employee turns age 62 (or the spouse turns age 62, provided the employee is also at least age 62) the taxability of Tier I benefits changes from all private pension-equivalent benefits to a split between SSEB and NSSEB portions. For many annuitants, this means that the tax withholding in place will automatically decrease, and sometimes this change is significant. This is because any Form RRB W-4P on file with the RRB will not consider the SSEB portion of Tier I in the withholding calculation. In many cases, the SSEB portion will be subject to taxation because of the total amount of the annuitant’s income, and the decrease in withholding may result in an insufficient amount of taxes being withheld. Notices are released to annuitants advising of the change in the withholding amount, and they are encouraged to discuss the issue with a tax adviser or the IRS to determine the correct amount of withholding for them. Annuitants often need to file a new tax withholding election form with the RRB to increase withholding following this change, otherwise they may face a larger tax liability than expected when filing federal income tax returns the following year.

7. Are occupational disability annuitants subject to the same change in tax withholding at age 62?

Those occupational disability annuitants not qualified for a period of disability (also known as a “Disability Freeze”) as defined under the Social Security Act will similarly see the taxability of Tier I benefits change at age 62.

8. Where can an annuitant find more information about the taxability of Railroad Retirement annuities?

More information regarding the taxability of Railroad Retirement benefits can be found in RRB booklets TXB-25, Tax Withholding and Railroad Retirement Payments, and TXB-85, The Taxation of Railroad Retirement Act Annuities. These booklets are available at RRB.gov, or by contacting the RRB toll free at 1-877-772-5772.

Information is also available on the IRS website at www.irs.gov. To learn more about how SSEB payments, repayments and tax withholding amounts should be reported to the IRS, refer to IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. For additional information about how pension payments, repayments and tax withholding should be reported to the IRS, or how NSSEB contributory amounts paid are taxed, refer to IRS Publication 575, Pension and Annuity Income, and/or IRS Publication 939, General Rule for Pensions and Annuities.

How long will you live after you retire, and will you have enough money to live on comfortably?

Good question. That’s why – before you retire – you should think about post-retirement economic security, because few things could be worse than money running out during what are supposed to be carefree years.

A balanced retirement portfolio should resemble a three-legged stool.

The first leg is your Tier I Railroad Retirement, Social Security or CalPERS (the California retirement system for public employees), plus Tier II Railroad Retirement and/or an employer pension.

The second leg is the equity in your home, plus your personal savings, such as certificates of deposit and mutual funds.

The third leg of this financial stool are annuities, IRAs, 401(k) plans and whole life insurance.

These three financial legs are the assets to support you through retirement. The fewer legs, or the lower value of any legs, could mean a less secure financial situation during retirement.

Determining available assets before you retire is essential. You may, for example, choose to wait another year or two before retiring and build up assets in one or more legs of your financial stool.

Younger members are wise to consider these financial legs long before they retire.

The UTUIA can help build the third leg of your financial stool prior to, and even during, retirement.

UTUIA whole life policies provide a death benefit while accumulating cash value. The death benefit protects your surviving family if you die; and the cash value becomes a source of tax-deferred savings available during your retirement years.

UTUIA annuities and individual retirement accounts (IRAs) earn guaranteed interest that is tax deferred until you draw down the balance. You may invest in UTUIA annuities up to age 85.

Existing IRAs and/or employer 401(k) plans may be rolled over into a UTUIA IRA.

To learn how the UTUIA can help make your retirement more secure, talk with a UTUIA regional insurance manager, call the UTUIA toll-free line at (800) 558-8842, or click here.