UTU Local 867

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Q & A – Comparison of benefits under Railroad Retirement and Social Security - 3/9/2016

Q & A – Comparison of benefits under Railroad Retirement and Social Security

RRB_seal_150pxEmployers and employees covered by the Railroad Retirement Act pay higher retirement taxes than those covered by the Social Security Act, so that railroad retirement benefits remain higher than social security benefits, especially for “career” employees who have 30 or more years of service.

The following questions and answers show the differences in railroad retirement and social security benefits payable at the close of the fiscal year ending September 30, 2015. They also show the differences in age requirements and payroll taxes under the two systems.

1. How do the average monthly railroad retirement and social security benefits paid to retired employees and spouses compare?

The average age annuity being paid by the Railroad Retirement Board (RRB) at the end of fiscal year 2015 to career rail employees was $3,285 a month, and for all retired rail employees the average was $2,625. The average age retirement benefit being paid under social security was nearly $1,340 a month. Spouse benefits averaged $975 a month under railroad retirement compared to $665 under social security.

The Railroad Retirement Act also provides supplemental railroad retirement annuities of between $23 and $43 a month, which are payable to employees who retire directly from the rail industry with 25 or more years of service.

2. Are the benefits awarded to recent retirees generally greater than the benefits payable to those who retired years ago?

Yes, because recent awards are based on higher average earnings. Age annuities awarded to career railroad employees retiring at the end of fiscal year 2015 averaged almost $3,805 a month while monthly benefits awarded to workers retiring at full retirement age under social security averaged nearly $1,840. If spouse benefits are added, the combined benefits for the employee and spouse would total $5,325 under railroad retirement coverage, compared to $2,755 under social security. Adding a supplemental annuity to the railroad family’s benefit increases average total benefits for current career rail retirees to nearly $5,360 a month.

3. How much are the disability benefits currently awarded?

Disabled railroad workers retiring directly from the railroad industry at the end of fiscal year 2015 were awarded more than $2,820 a month on the average while awards for disabled workers under social security averaged over $1,270.

While both the Railroad Retirement and Social Security Acts provide benefits to workers who are totally disabled for any regular work, the Railroad Retirement Act also provides disability benefits specifically for employees who are disabled for work in their regular railroad occupation. Employees may be eligible for such an occupational disability annuity at age 60 with 10 years of service, or at any age with 20 years of service.

4. Can railroaders receive benefits at earlier ages than workers under social security?

Railroad employees with 30 or more years of creditable service are eligible for regular annuities based on age and service the first full month they are age 60, and rail employees with less than 30 years of creditable service are eligible for regular annuities based on age and service the first full month they are age 62.

No early retirement reduction applies if a rail employee retires at age 60 or older with 30 years of service and his or her retirement is after 2001, or if the employee retired before 2002 at age 62 or older with 30 years of service.

Early retirement reductions are otherwise applied to annuities awarded before full retirement age, the age at which an employee can receive full benefits with no reduction for early retirement. This ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the same as under social security.

Under social security, a worker cannot begin receiving retirement benefits based on age until age 62, regardless of how long he or she worked, and social security retirement benefits are reduced for retirement prior to full retirement age regardless of years of coverage.

5. Can the spouse of a railroader receive a benefit at an earlier age than the spouse of a worker under social security?

If a retired railroad employee with 30 or more years of service is age 60, the employee’s spouse is also eligible for an annuity the first full month the spouse is age 60.

Certain early retirement reductions are applied if the employee first became eligible for a 60/30 annuity July 1, 1984, or later, and retired at ages 60 or 61 before 2002. If the employee was awarded a disability annuity, has attained age 60 and has 30 years of service, the spouse can receive an unreduced annuity the first full month she or he is age 60, regardless of whether the employee annuity began before or after 2002, as long as the spouse’s annuity beginning date is after 2001.

  To qualify for a spouse’s benefit under social security, an applicant must be at least age 62, or any age if caring for a child who is entitled to receive benefits based on the applicant’s spouse’s record.

6. Does social security offer any benefits that are not available under railroad retirement?

Social security does pay certain types of benefits that are not available under railroad retirement. For example, social security provides children’s benefits when an employee is disabled, retired or deceased. Under current law, the Railroad Retirement Act only provides children’s benefits if the employee is deceased.

However, the Railroad Retirement Act includes a special minimum guaranty provision which ensures that railroad families will not receive less in monthly benefits than they would have if railroad earnings were covered by social security rather than railroad retirement laws. This guaranty is intended to cover situations in which one or more members of a family would otherwise be eligible for a type of social security benefit that is not provided under the Railroad Retirement Act. Therefore, if a retired rail employee has children who would otherwise be eligible for a benefit under social security, the employee’s annuity can be increased to reflect what social security would pay the family.

7. How much are monthly benefits for survivors under railroad retirement and social security?

Survivor benefits are generally higher if payable by the RRB rather than social security. At the end of fiscal year 2015, the average annuity being paid to all aged and disabled widow(er)s was $1,565 a month, compared to $1,250 under social security.

Benefits awarded by the RRB at the end of fiscal year 2015 to aged and disabled widow(er)s of railroaders averaged nearly $2,065 a month, compared to more than $1,195 under social security.

The annuities being paid at the end of fiscal year 2015 to widowed mothers/fathers averaged $1,835 a month and children’s annuities averaged $1,055, compared to $940 and $830 a month for widowed mothers/fathers and children, respectively, under social security.

Those awarded at the end of fiscal year 2015 averaged $1,670 a month for widowed mothers/fathers and $1,320 a month for children under railroad retirement, compared to $900 and $815 for widowed mothers/fathers and children, respectively, under social security.

8. How do railroad retirement and social security lump-sum death benefit provisions differ?

Both the railroad retirement and social security systems provide a lump-sum death benefit. The railroad retirement lump-sum benefit is generally payable only if survivor annuities are not immediately due upon an employee’s death. The social security lump-sum benefit may be payable regardless of whether monthly benefits are also due. Both railroad retirement and social security provide a lump-sum benefit of $255. However, if a railroad employee completed 10 years of creditable railroad service before 1975, the average railroad retirement lump-sum benefit payable is $1,010. Also, if an employee had less than 10 years of service, but had at least 5 years of such service after 1995, he or she would have to have had an insured status under social security law (counting both railroad retirement and social security credits) in order for the $255 lump-sum benefit to be payable.

The social security lump sum is generally only payable to the widow(er) living with the employee at the time of death. Under railroad retirement, if the employee had 10 years of service before 1975, and was not survived by a living-with widow(er), the lump sum may be paid to the funeral home or the payer of the funeral expenses.

9. How do railroad retirement and social security payroll taxes compare?

Railroad retirement payroll taxes, like railroad retirement benefits, are calculated on a two-tier basis. Rail employees and employers pay tier I taxes at the same rate as social security taxes, 7.65 percent, consisting of 6.20 percent for retirement on earnings up to $118,500 in 2016, and
1.45 percent for Medicare hospital insurance on all earnings. An additional 0.9 percent in Medicare taxes (2.35 percent in total) will be withheld from employees on earnings above $200,000.

In addition, rail employees and employers both pay tier II taxes which are used to finance railroad retirement benefit payments over and above social security levels.

In 2016, the tier II tax rate on earnings up to $88,200 is 4.9 percent for employees and 13.1 percent for employers.

10. How much are regular railroad retirement taxes for an employee earning $118,500 in 2016 compared to social security taxes?

The maximum amount of regular railroad retirement taxes that an employee earning $118,500 can pay in 2016 is $13,387.05, compared to $9,065.25 under social security. For railroad employers, the maximum annual regular retirement taxes on an employee earning $118,500 are $20,619.45, compared to $9,065.25 under social security. Employees earning over $118,500, and their employers, will pay more in retirement taxes than the above amounts because the Medicare hospital insurance tax is applied to all earnings.

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Railroad Retirement annuities not taxable by state - 3/4/2016

Railroad Retirement annuities not taxable by state

RRB_seal_150pxAccording to Section 14 (45 U.S.C. Section 231m) of the Railroad Retirement Act retirement annuities are not taxable for individual state income tax purposes.

Bruce Rodman, of the Public Affairs/Office of Administration of the U.S. Railroad Retirement Board says, “Both of our primary enabling statutes – the Railroad Retirement Act and the Railroad Unemployment Insurance Act – specifically exempt the benefits paid under them from state income taxes. However, if a person doesn’t know this – and sometimes this might stem from people using free tax-prep software or obtaining volunteer assistance in filing their returns – and declares it as taxable income, the state tax collection agencies probably won’t know any better.”

The Railroad Retirement Board (RRB) also states on the FAQ section (see #18) of their website that railroad retirement, unemployment and sickness benefits paid by the RRB are not subject to state income tax. However, these benefits are taxable on the federal level.

Many tax preparers and even states are not aware of these statutes and may attempt to tax your annuities. It is up to us to make sure that our annuities are not taxed by the states in which we live.

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Furloughed members: FAQs about medical benefits - 3/3/2016

Furloughed members: FAQs about medical benefits

caduceusMembers who have been furloughed should be aware that their health care coverage benefits from their employer extends through the end of the fourth month after being furloughed. Below are Frequently Asked Questions that may be useful to our furloughed members.

Q: How long does my insurance coverage last if I am furloughed?
A: Employee and eligible dependent coverage extends through the end of the fourth month following the month in which you last render compensated service. For example, an employee last rendering compensated service in January, who is then furloughed in February, will have coverage extended through the end of May.

Q: Will vacation pay extend coverage beyond four months?
A: With regard to furlough – no.

Q: Will I be able to continue coverage under COBRA when coverage for me and/or my dependents end?
A: The COBRA eligibility period (18, 29 or 36 months) is measured from the date of the “qualifying event.” For the health and welfare plans, the “qualifying event” is the date you last worked, NOT the date your coverage ends.

The COBRA eligibility period, therefore, runs concurrently with the extended coverage as state above so that COBRA continuation is available for the remaining months, if any, after the extended coverage ends.

For example – An employee is furloughed in January and coverage extends through May. COBRA continuation is available beginning June 1 and thereafter for an additional 13 months. In these circumstances, no more than 18 months of COBRA is available, less the five months during which the employee remained covered by the Plan after the qualifying event in January.

Q: How will I be notified that COBRA is available to me and/or my dependents?
A: When the railroad reports an employee as not being eligible for benefits, a COBRA notice is automatically sent to the employee’s address of record. The form must be completed and returned to UnitedHealthcare in a timely manner in order to establish COBRA coverage.

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For other benefits that furloughed members may be eligible for click on the following links:

http://utu.org/2015/07/24/furloughed-members-may-be-entitled-to-benefits/

http://www.utu.org/worksite/newspdfs/2015/October_2015_TD_News_center_final.pdf

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It should be noted by all furloughed members that it is your responsibility to keep your contact information up-to-date not only with your employer, but also with your union. This includes your phone number, mailing address and email address.

Your employer will need your correct contact information to call you back to work. Many SMART TD legislative boards and locals are holding informational sessions for furloughed workers and need your correct contact information to keep you informed.

To update your phone number or address call your local officers or call SMART TD headquarters at 216-228-9400 ext. 3908. You may update your address electronically with the union here or by going to utu.org and clicking on the ‘Address Change‘ button on the right side of the home page.

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Long-term disability open enrollment begins June 29 - 7/1/2015

Long-term disability open enrollment begins June 29

disability-insurance_image

Beginning June 29, 2015 through August 31, 2015, an open enrollment period will be available for Transportation Division members to enroll in the new Voluntary Long-Term Disability (VLTD) Plan.  

Members will have two options for enrollment into the VLTD plan. For Railmembers, Part “A” allows the member to purchase coverage to protect their income should they become disabled after a 238 day elimination period with a monthly benefit of 50 percent of salary to a maximum benefit of $7,000. Part “B” contains the same 238 day elimination period, but offers a monthly benefit of 60 percent of salary up to a maximum benefit of $7,000.

For Bus members, Part “A” allows the member to purchase coverage to protect their income should they become disabled after a 365 day elimination period with a monthly benefit of 50 percent of salary to a maximum benefit of $6,000. Part “B” contains the same 365 day elimination period, but offers a monthly benefit of 60 percent of salary up to a maximum benefit of $6,000. Additionally, rail or bus members will have the option of combining one of the above options for the VLTD with the Short Term Disability (VSTD) plan or elect the VLTDplan on its own.

It is important to note that members who have previously opted out of the VSTD plan or were previously denied coverage, are now eligible to enroll with no pre-existing condition restrictions during this enrollment period.

For members currently enrolled in the short-term disability plan (VSTD) and are not seeking coverage in the long-term disability plan (VLTD), no action is required at this time.

It is recommended that members review the detailed FAQs to gather more information on the plan offerings and eligibility requirements. Additional questions should be directed to your regional field supervisor (contacts) or to the VLTD hotline at (866)-753-3632.

Rail VLTD FAQ
Rail VLTD Enrollment Form

Bus VLTD FAQ
Bus VLTD Enrollment Form

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Long-term disability open enrollment extended to September 30 - 7/1/2015

http://utu.org/2015/06/27/long-term-disability-open-enrollment-extended-to-september-30/

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Welcome to the website for  Smart TD-UTU Local 867

E-mail us your questions and suggestions

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Monthly Meetings---1st Wednesday of each month at 7pm @ the Machinist Hall 2000 Walker St. Des Moines, IA

As a reminder, The Smart TD Annual Picnic is Saturday July 9th @ the Union Labor Park 4640 Morningstar Drive in Des Moines. Luch will be served at noon. Come out for some food and fun. Hope to see you all there!

Q & A – Comparison of benefits under Railroad Retirement and Social Security

Railroad Retirement annuities not taxable by state

 

Furloughed members: FAQs about medical benefits

 

 

 

 

 

 

If you are furloughed or on the AWTS board you need to call the RRB and apply for unemployment benefits. You may qualify for benefits even if you are getting a check from the railroad. 

 

Location Federal Building, Room 921
210 Walnut Street
Des Moines, IA 50309-2116
Hours 9:00 AM THRU 3:30 PM
Monday through Friday except Federal Holidays
Telephone (515) 284-4344
Fax (515) 284-4616