As a reward for years of loyal service, railroad employees and their survivors may be entitled to a pension administered by the Railroad Retirement Board (RRB). Widows, children, and other dependents of the employee are eligible for a monthly payment of survivor benefits through the RRB, which functionally resembles the Social Security Administration (SSA). This article examines the features of the RRB's survivor benefits and explains eligibility and benefit reduction considerations.
Qualifying for Railroad Retirement Survivor Benefits
Once qualified for survivor benefits, an employee never becomes ineligible. To become eligible, a deceased employee must be "insured" under the Railroad Retirement Act (RRA). Employees become insured if they have:
- 10 years or more of railroad service; and
- A "current connection" with the railroad industry in the month of retirement or death.
Employees generally demonstrate their current connection by working for a railroad a minimum of 12 of the 30 months immediately prior to the date their railroad retirement annuity begins. If an employee dies before retiring, railroad service of at least 12 of the 30 months before death satisfies the requirement for survivor benefits purposes. If the employee did not have insured status, the SSA processes any available survivor benefits.
Survivor Benefits Tiers
Monthly survivor benefits are classified as Tier I or Tier II depending on the level of income provided to an eligible beneficiary. Tier I benefits provide income upon the qualified employee's death. This benefit level matches the SSA survivor benefits that would otherwise be provided. Tier II benefits provide an additional payment to the beneficiary based on the employee's average monthly earnings for their last five years of work and their length of employment.
Upon the death of the qualified employee, the focus turns to whomever is in line to receive the survivor benefits. The categories of potential beneficiaries include:
- Surviving divorced spouses and remarried widow(er)s
- Dependent parents; and
- Surviving children and grandchildren.
Though the qualified categories are broad, beneficiaries in each must meet unique requirements to receive benefits. Also, if more than one survivor receives benefits it may limit the amount other beneficiaries receive.
Widow(er)'s benefits are generally payable upon reaching age 60. However, benefits may begin at any age if the widow(er) is caring for:
- The deceased employee's unmarried minor child, or
- A disabled child (any age) who became permanently disabled prior to 22 years of age.
Survivor benefits are also payable between ages 50 and 59 if the widow(er) is permanently disabled and cannot hold regular employment. There is a five month waiting period between onset of disability and the earliest date the widow(er) will receive benefits.
Surviving Divorced Spouses and Remarried Widow(er)s
Benefits may be available to a surviving divorced spouse or a remarried widow(er), but they are limited to Tier I levels. Surviving divorced spouses age 60 or older that were married to the employee for at least 10 years immediately prior to finalizing the divorce may qualify. A surviving divorced spouse who is currently unmarried may qualify at any age (and without satisfying the 10 year marriage rule) if caring for the employee's child who is either under age 16 or disabled.
A surviving parent age 60 or older who was dependent on the employee for at least 50 percent of their support is eligible. If the employee was also survived by another eligible beneficiary, the parent's annuity is limited to the tier I amount.
Surviving Children and Grandchildren
An unmarried child under age 18 who attends school full-time may receive survivor benefits until they reach age 19 or when the school term they are in progress at the age of 19 comes to an end. Marriage, graduation, or part-time attendance terminates the benefits. A child may also qualify if they become totally, permanently disabled before reaching age 22.
Surviving grandchildren are eligible if they meet the surviving children requirements and their parents are deceased or disabled under the SSA's standards.
Lump Sum Death Benefits
Lump sum death benefits may be available even if the employee was not insured under the RRA. If no survivor is immediately eligible for an annuity upon the employee's death, the lump sum is either payable to:
- The widow or widower living in the same household; or,
- If no such person exists, the funeral home or payor of funeral expenses.
To qualify, an employee must have had 10 years of service before 1975. If the employee had less than 10 years of service, the lump sum caps at $225. In this case, the employee must have at least 5 years of service after 1995 and meet social security's insured status requirements. A widow(er) may also be eligible for deferred lump-sum payments if they were unable to receive annuity payments due to excess deductions.
Another payment, the residual lump-sum death benefit, effectively refunds pre-1975 railroad retirement taxes paid by an employee. This benefit is rarely available, as it is payable only if all previously paid benefits have not equaled the paid tax amount.
Reductions in Railroad Retirement Survivor Benefits
Survivor benefits from the RRB may be reduced for several reasons. If a qualified employee retires early and receives a reduced annuity, the survivor's available benefit is also reduced. Additionally, a survivor's benefits from Social Security reduce RRB benefits -- even if the Social Security benefits are based on the beneficiary's own earnings. The same is true if the beneficiary receives a government pension based on their own earnings. Military pensions, however, do not reduce a beneficiary's available RRB survivor benefits.
Survivor benefits are the RRB's way to financially reward an employee and their survivors for hard work. However, the eligibility of a railroad employee's family members to receive that reward can be impacted by different circumstances. Marriage, remarriage, other qualified beneficiaries, and age all play a part in eligibility and the amount of benefits received. Additionally, choices by the employee such as taking early retirement may affect the available amount of survivor benefits. Though the RRB has attempted to address these issues, legal advice should be sought to understand how this framework applies a particular situation.