Does My Work Annual Bonus Increase My Railroad Retirement?

Welcome back, everyone, to another edition of the Highball Advisors Railroad Retirement Mailbag! I’m John McNamara from Highball Advisors, and today’s question comes from Pop Pop Bill. He asks:

"Do bonuses count toward my income when determining my best 60 months?"

Great question, Bill. The short answer is—yes, bonuses do count. Bonuses are considered earned income and are taxed by the Railroad Retirement Board. That means they are included when calculating your highest 60 months for retirement purposes.

And it doesn’t stop at bonuses—equity compensation like restricted stock units (RSUs) also count. As long as it’s taxed as income, the Railroad Retirement Board takes its cut, particularly for the Tier II portion of your retirement benefits.

Just a reminder: when we're talking about your “best 60 months,” that calculation only affects the Tier II part of your Railroad Retirement annuity.

If you're interested in learning more about how stock compensation plays into all of this, check out my video: "Five Things Railroaders Should Know About Their Non-Qualified Stock Option Taxes." It dives deeper into the topic of earned income—what counts and what doesn’t.

I hope you found this video helpful. Keep sending in those questions, and I’ll keep making videos to answer them.

Until next time, stay safe, stay on track, and take care!
 So long, everybody. 

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.