When Harry Met Sally Working for the Railroad

Transcript:

Learn of the penalties that the railroad retirement board imposes on married railroaders. Welcome, everyone, to another edition of the Highball Advisors Railroad Retirement Whiteboard. My name is John McNamara of High Ball Advisors, and today this is a niche-type video. It doesn't affect everybody, but there are railroaders that they fall in love and they get married and they live happily ever after. However, they have a different set of rules that the Railroad Retirement Board puts on them when it comes to collecting the railroad retirement.

So I thought I'd spend a couple of minutes just to help those people out, and you can understand. Or if you know somebody, you can share this video with them on the penalties for ... I don't want to say penalties, discounts, maybe it's a penalty, for railroaders that are married together.

So let's go for railroad employees married after 1974, and it can also apply to same-sex couples that are married. So anybody married after 1974, the Railroad Retirement Board puts in everybody has their tier two. However, they both can't collect their tier two in railroad retirement. So they get the higher tier two amount, and then the spouse goes to the spousal annuity. So it's not two full tier twos, right? It's a tier two and a spousal annuity.

So it's a hit. I don't understand that. I've never figured out why they did that that way, but that's the way it is. Maybe somebody can write in and explain to me why they did it. So you'll have the full annuity, and then you'll have the spousal annuity. So I'll just walk through it here.

So let's go to this example here. So let's say you have two railroaders, right? This is what their retirement will look like. Railroader one, tier one, let's say they get $3,000 a month, and tier two is $1,500 a month. And railroader number two will have $2,000 a month and $1,000 a month. So that's what they were expecting, right? Because of who they are and all that.

So that would add up to 5,000 here and another 2,500 in tier two. However, it doesn't work that way. So the couple will get the 1,500 here, right? But however, they get 45% of that, which is 675. So instead of getting $2,500 a month, they get 2,175 a month. So that's $425 marriage tax, if I may, that they'll be missing out on every month. So that adds up.

So I just wanted to show this to you. If it applies to you, nothing I can do about it. Bring it up with the Railroad Retirement Board, but do share this with other people that might be married because if you were planning on 2,500, now I'm at 2,175, hey, you know what? That's significant money, and that needs to be planned for. So I hope you found this video enjoyable. Like I say, share it, subscribe to the YouTube channel. It's growing really well. I do appreciate that. And until next time, everyone, please stay safe, stay on track and take care. So long, everybody. Bye.

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