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How Will the Special One Year Rule Affect My Railroad Retirement? Thumbnail

How Will the Special One Year Rule Affect My Railroad Retirement?

Tier 1 Tier 2 Video Annuity Retirement

Learn about the work deductions heading your way in that first year of railroad retirement. 

Welcome everyone to another edition of the Highball Advisors Railroad retirement whiteboard. My name's John McNamara of Highball Advisors, and today we're going to talk about that tricky first year of railroad retirement. So you're thinking of retiring, but hey, you might still work a little bit. So I'm going to talk about those work deductions on just the tier one portion that might or might not be happening to your annuity. Alright? So again, it applies to the earnings for that, just that first year. Those first couple of months. So let's say if you retire in June, there's still six more months inside that year. So that's how they come up with that special, what they term the special one year rule. So it only affects that first year. It's that special one year rule. So you get a full railroad retirement tier one check regardless of your earnings. 

Alright? So what does that all mean? Right? Because I talk a lot about, all we're really talking about is the work deductions that are heading towards you in railroad retirement. If you collect your annuity and continue to do some sort of work on your tier one portion, alright? So if you're under the full retirement age, and that's important also. So understand what your full retirement age you are considered retired if your earnings are under $1,860 per month, okay? This is 2024 when this video is shot, okay? So that's retirement. If you have earnings less than that, therefore there'll be no work deductions in your tier one portion of your annuity if it's under 1860 a month. So let's just look at a quick example. So let's say you've worked January through October, you earned $60,000 for those first 10 months, okay? And that's over the work deduction limit of $22,320, right? 

So you say, oh, I'm going to have work deductions on my railroad retirement because I'm retiring and I've already, no, that's not going to come into play. What they're going to look now is, did you earn over $1,860 for November and December? So each individually, so that's, what is that? That's 36, 37, 20, right? Over those two months. Now if you did, then you're not going to receive your tier one benefit check on that. Alright? Once again, not related to tier two. So that's the special one year rule at all. It just happens for that one year. It could be, hey, I retired in November, it can only affect one month December, or I could retire in January. And then you have 11 months of that special one year rule. So it starts on the calendar year is how it works. Alright? So that's understanding the special one year rule. So reach out to me if you're at or near retirement, we'll understand what the deductions possibly having at your railroad retirement are coming. If you need help with that, go through my boarding for railroad retirement process. Very, very helpful. Click on the notification bell to get to the latest video, share the video. I do appreciate that. Subscribe to the channel. Alright? It's grown really well. Okay. And until next time, everyone, please stay safe, stay on track, and take care. So long everybody. Bye

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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.