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Railroad Retirement Deemed Service Months

Tier 2 Retirement

Transcript:

Welcome everyone to the railroad retirement whiteboard. My name is John McNamara with HighBall visors. And this episode we're going to talk about a railroad retirement and deemed service months. Okay. This all has to do with about earnings and building up your tier two. The other benefits that come along with deemed service months. So it's gets a little tricky here, so I'm just going to have to kind of work through it. So when you get your BA -6 form from the railroad retirement board, There's basically three marks that they give you for your monthly service, right? You can have no service, which case you have a zero, then you have credible railroad service, which is a one or the other option is deemed a service month. And that's what we're gonna talk about is Deemed. So the credit over here on the right, the credit for once again for the, uh, for the work, you have work credits, which are the one, and those are working for a covered employer that's under the railroad retirement act or there's union activities that can also give you a credit, certain union activities.

Check that out. I don't want get too detailed on that. But, there are qualifiers to union activities in order to receive credible work month. Then we have the deemed and that's what we're going to discuss in this video is deemed. So to put it succinctly, it's working. It's being associated with the railroad, but not really receiving receiving any compensation, but you still have a relationship with that railroad. And, uh, so, uh, you were compensated the previous months before it. So it all kind of adds up. Uh, as we work through it. I'll explain it more. So, uh, deemed could be an individual who was out on furlough, perhaps sick leave or even a suspension. You could still, uh, acquired, made enough compensation in the previous months to build up these Deemed months, even though you're not showing up to work every day, but you still have a relationship with the railroad.

So when we talk about deemed, it's all about the tier two part of your railroad retirement annuity, right? We have tier one, tier two. This does not affect tier one. It's all about building up the tier two part of your, uh, uh, annuity, right? So tier two,tier deemed formula, so little tricky. Don't need to know, but I'll just walk through it. So it's one 12th of your tier two maximum soda than this year of 2019. It's 98,700. And then you take it times the number of months you've worked. So let's say if you worked six months, uh, you would take this number and then you times it by six months and that would generate ya a number for ya. And then what do you have? It gets, uh, like I say a little tricky here. You have your excess amount, which is basically, um, uh, your salary for the year for that six months.

Going back to my previous cause, uh, for the six months, uh, minus this number. Okay. You take that, like I said, very confusing. Uh, then you divide it by one 12 tons, your tier two max, it gives you a month steamed, right? Per, for those of you watch most of my videos, I'll go through an example. It just works it out a lot easier. So let's take an example of an employee. Um, $75,000, uh, they've made for the first seven months. Uh, they've got furloughed we'll just use that example. They are, they've been furloughed all right? And, um, so they still have a relationship with a railroad, but they're no longer, uh, you know, showing up for work every day per se. So we're just going to go through the math. So we take one 12 times the tier two maximum for 2019. It's 98,700. We get 8,000, $225.

Now we're going to times that by the number of months that this individual has worked during the year. So that's seven months. That gives us a total of $57,575 okay, that's it's important number. Now we go to how much money has this individual made for? The first seven months is $75,000 and we're gonna minus that by this number here that we came up. 57,005 75. This is the leftover or would they call the excess amount, which is $17,425. We're going to divide that again by this number up here. $8,225. It gives us 2.11 but you always round up when you do team service months. And so 2.11 rounded up is three. So this individual actually has, uh, 10 months of railroad service, has three from being employed, but he's paid so much into the tier two that they give an additional three months. So this individual has 10 months of, uh, of um, tier two benefits there.

So when you look back on that, you say, well, why is this important? Um, it's important for a couple of reasons. Uh, you, you can extend out your tier two benefits a little bit longer. Uh, Kurt connection is very important. That's another three months of current connection. So you look at that from a occupational disability, uh, duties, survivor annuities, right? That's another three months. And like I said, increased your tier two, uh, uh, benefits a little bit. Uh, you know, you can also do, um, you know, if you're closer to retirement, you know, you have some deem service months, maybe you'll have to uh, have, uh, those last couple months you can maybe have them deemed or something. So the little, there's little bells and whistles there that are an interesting. Uh, one other thing here is, let's just go back to this example. So let's say the employee seven months, 75,000 and a is like a, it was just terminated.

Okay. No team months, they're so on their BA six, it would just be seven months of service, would not get any benefits for the additional three months, has no more relationship with the railroad. Um, so that's kind of, that's an important thing to remember there also. Um, so anyway, I just wanted to break down team service months for you. It's uh, like I said, it's kinda tricky. A, there's some benefits. Once again, it's one of these tier two benefits that I'm a big, uh, I like to talk about. If you see a lot of my previous videos, there's a lot of Indian trickle C's and tier two, a lot of benefits, uh, to the railroaders. You really need to understand them. They can really, uh, uh, help you, uh, uh, plant his successful retirement. Uh, speaking of that, if you need any help, feel free to reach out to me. We can go through a lot of this stuff. I do that for my clients really, uh, using their tier two, uh, annuity benefits to power their retirement. Very important. Um, also subscribe to my YouTube channel. It's a, uh, channels going great. Spreading the word, getting a lot of great reviews from railroaders around the country. So I appreciate all that, uh, kindness coming in. Uh, it's great. Um, in the meantime, stay safe. Stay on track and take care so long everybody. Bye.

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