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How Military Service Effects Railroad Retirement

Tier 2 Annuity Retirement

The railroads have a long history of many of their employees serving in the ranks of Armed Forces of the United States. Under certain conditions, their military service may be credited as creditable rail service under the Railroad Retirement Act. In this blog article I'll provide information on how military service maybe credited towards railroad retirement benefits. Before I get into the subject, I would like to thank all those who have or are serving in defense of this great country. The sacrifices made by the men and women in service to this country are amazing. Also the families of these men and women should also be recognized as they bear the burden of their loved ones leaving the safety and love of their homes to protect the rights and freedoms of their fellow countrymen. Thank you.

Military Service Requirements for Credited Service

The intent behind the crediting of military service under the Railroad Retirement Act is to prevent career railroad employees from losing railroad retirement credits while performing active duty military service during a war or national emergency period. Therefore, to be creditable as compensation under the Railroad Retirement Act, service in the U.S. Armed Forces must be preceded by railroad service in the same or preceding calendar year. With the exceptions noted later, the employee must also have entered military service when the United States was at war or in a state of national emergency, or have served in the Armed Forces involuntarily. Military service is involuntary when an employee is required by law, such as Selective Service System conscription or troop call-up from a reserve unit, to leave railroad service to perform active duty military service.

Only active duty military service is creditable under the Railroad Retirement Act. A person is considered to have been on active duty while commissioned, or enrolled, in the active service of the Armed Forces of the United States (including the U.S. Coast Guard), or while ordered to Federal active duty from any reserve component of the uniformed Armed Forces.

A large part of military service performed by railroaders is through the reserve components of the military, such as the Army Reserve, Navy Reserve, etc.. Any military service a reservist was required to perform as a result of a call-up to active duty, such as during a partial mobilization, would be creditable under the Railroad Retirement Act, so long as the military service was preceded by railroad service in the same or preceding year.

A big part of being in the reserves is the annual training required of individuals. Annual training duty as a member of a reserve component of a uniformed service is also considered active duty and may be creditable, provided the railroad employee service requirement is met. The period of active duty for training also includes authorized travel time to and from any such training duty. However, weekend alone or evening reserve duty is not creditable.

Some railroaders serve their country through participation in their States National Guard and state Air National Guard. Only when their Guard units are called into active duty by the Congress or the President of the United States is that considered creditable rail service. Emergency call-up of the National Guard by a governor for riot or flood control would not be creditable.

Triggering Event

Creditable rail service while serving in the military is only earned while the nation is either at war or a declared national emergency. We are currently in a national emergency period. Here is a list of war or national emergency periods:

  • August 2, 1990, to date as yet undetermined
  • December 16,1950, through September 14,1978
  • September 8, 1939, through June 14, 1948

For those history buffs out there, the 1939 date was two years before we entered WWII. However September 8th, 1939 was 8 days after Nazi Germany invaded Poland. FDR declared a state of “limited national emergency.” The underfunded and undermanned U.S. military forces were strengthened, and the next year Congress provided major military budget increases, which led to the military services shaking themselves out of their peacetime stupor.

Effects on Railroad Retirement Annuity

Railroad retirement annuities are based on length of service and earnings. If military service is creditable as railroad service, a person will receive additional compensation credits for each month of creditable military service and railroad service credit for each active military service month not already credited by actual railroad service.

Creditable military service may be used in addition to regular railroad service to meet certain service requirements, such as the basic 5-year service requirements for a regular annuity, the 20-year requirement for an occupational disability annuity before age 60, or the 30-year requirement for early retirement benefits.

Military Pensions Reductions

While railroad retirement employee annuities are subject to reductions for dual entitlement to social security benefits and, under certain conditions, Federal, State, or local government pensions, as well as certain other payments, railroad retirement employee annuities are always exempt from reduction for military service pensions or payments by the Department of Veterans Affairs. You can check out my video on Non-Covered Pension Reductions if you are unsure.

You Earned It

You and your families have made tremendous sacrifices so make sure you are getting credit for your military service by having proof of service. Railroad employees are encouraged to file proofs of their military service well in advance of retirement. The information will be recorded and stored electronically with the RRB until they actually retire. This will expedite the annuity application process and avoid any delays resulting from inadequate proofs of military service. If employees do not have an official record of their military service, their local RRB office will explain how to get acceptable evidence. 

I hope you found this information useful and feel free to contact me if you have any questions. It is gives me great pleasure to say "Thank you for your service!!!" to all the railroading military veterans.

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Photo by Joseph Cermak

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.