Questions and Answers From The Railroad Retirement Board
Q. How are the annuities paid under the Railroad Retirement Act treated under the Federal Income Tax law?
A. Generally, part of a railroad retirement annuity is treated like a Social Security benefit for income tax purposes, while other parts of the annuity are treated like private and public service pensions for tax purposes. As a result, most annuitants are sent two benefit information statements from the Railroad Retirement Board each January, even though they receive only a single annuity payment each month.
Q. Which railroad retirement benefits are treated as Social Security benefits for Federal Income Tax purposes?
A. That part of a railroad retirement annuity equivalent to a Social Security benefit based on comparable earnings is treated for Federal Income Tax purposes the same way as a Social Security benefit. The amount of the benefit subject to Federal Income Tax depends on the beneficiaries' income.
Q. Which railroad retirement benefits are treated like private and public service pensions for Federal Income Tax purposes?
A. Railroad retirement annuity payments exceeding Social Security equivalent payments plus any vested dual benefits and supplemental annuities are all treated like private and public service 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 and the entire annuity may be treated like a private or public service pensions.
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