Is Working at NASCAR Races Slowing Down my Railroad Retirement?

Welcome to another edition of the Highball Advisors Railroad Retirement Mailbag. I’m John McNamara, and today’s question addresses a common concern about working outside the railroad while still employed in the industry.

A railroader asks: “Does earning W-2 income while still working at the railroad affect my benefits? I work at NASCAR races about 7 to 10 times a year.”

This is a great question, especially for those who take on occasional or seasonal work in addition to their railroad career.

First, it’s important to understand how W-2 income is treated. Earnings from non-railroad employment, such as working events like NASCAR races, are subject to Social Security taxes. These earnings contribute to your Social Security record and are factored into the Tier I portion of your Railroad Retirement benefits. Since Tier I is designed to mirror Social Security, additional W-2 income can influence that portion of your overall retirement benefit.

However, this type of outside income does not typically affect your “current connection” to the railroad, as long as you remain actively employed in railroad service.

Things may change once you exit railroad employment.  If you stop working for the railroad and continue working in a non-railroad job (like NASCAR events), you must meet the “current connection” requirement to preserve certain benefits. Specifically, you need at least 12 months of railroad service within the 30 months immediately preceding your retirement or death. Failing to meet this requirement could put certain benefits, such as a survivor annuity for your spouse, at risk.

In short, occasional W-2 income while still working for the railroad generally won’t cause issues. But your employment pattern after leaving the railroad can have important implications for your long-term benefits.

For a deeper dive into how your last non-railroad job may impact your Railroad Retirement, consider reviewing additional educational resources on this topic.

If you have a question you’d like featured in a future Mailbag, feel free to submit it.

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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.