What are the Earnings Restrictions for Railroad Retirement Survivor Beneficiaries

Transcript:

Are you on a survivor annuity? Learn your earnings restrictions going forward.

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 the survivor annuity. We've done quite a few number of videos on that, but I specifically want to talk about those survivors, they have to go back to work. The survivor annuity might not be enough to make ends meet, so to speak, or take care of the family, that type of thing. So let's just go back through the survivor annuity real quick, I'll start from there, and then I'll talk about the earnings restrictions going forward.

So survivor annuity will equal the tier one amount of the employee that has passed and also the tier two amount of the employee of passed. And it's important to remember, if you are already collecting, the spousal annuity that you're collecting will go away and you'll receive the tier one, tier two. That's very important. A lot of people think that they're due their survivor annuity and the spousal annuity. That is not correct. It's just the survivor annuity, which is going to be equal to the tier one and tier two of the deceased employee.

So now let's talk about going back to work, or even if you're in work and you're on the survivor annuity. So what earnings are going to count towards the earnings restrictions, the reductions, the penalties that come your way by working and collecting? So it's going to be W-2 income. So that's basically anything with a paycheck, twice a month paycheck, end of the month paycheck, whatever it is, that's W-2 income. They'll count that. All right. And then also, if you're self-employed, they're going to take your net earnings, and that's the income that they'll use for the reductions.

So how much can you earn before the reductions kick in? So when we're filming this, this is 2023 changes every year, always on the way up. On the tier one portion of your survivor annuity, the year of your full retirement age, you can earn up to $56,520. But for every $3 you earn over that amount, you're going to lose $1 of the survivor annuity. All right. Now, if you are significantly below, let's say under the full retirement age, starting at 62 or even before, anything over $21,240, you're going to lose $1 for every $2 that you earn in the tier one portion of the survivor annuity. So very important. You got to plan for this stuff.

Now on the tier two portion, that's where that last pre-retirement employer comes in. So if you're working already and you're collecting railroad retirement and you go back to work, that's where the last pre-retirement employer is, and you're going to lose $1 for every $2 earned up to 50%. And there's no income limit here. It just starts. And it goes up to 50% of that survivor annuity on the tier two portion. And that's not even restricted by full retirement age. So if you go past full retirement age, this will always be in there if you're working for that last pre-retirement employer.

So very, very important to understand this on the survivor annuity because this is all part of the estate planning picture, what happens, what ifs, all those type of things. You got to have those numbers in place so you can make really good decisions, all right, especially during that time when a survivor annuity comes into play, which could be very difficult. So I hope you found this helpful. Give you some food for thought. Feel free to reach out to me if you have any questions. If you're at or near retirement, I suggest you go through the Boarding for Railroad Retirement process. They'll go through things like this with railroaders. Please subscribe to my YouTube channel. I do appreciate it. Click on the notification bell to get the latest videos. And until next time, everyone, please stay safe, stay on track, and take care. So long, everybody. Bye.

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