A Railroad Retirement pension is not available with a survivor’s option in the normal sense.
Tier I and II:
You should think of it as Social Security with an added tier. The tier II amount is what was contributed to above and beyond the SSA amount and this will give the retiree both a tier I (SSA equivalent) amount and a Tier II amount once they turn 65. Until that time there is no SSA equivalent amount.
RRT allows full retirement at age 60 with 30 years of service and it is reported on form RRB 1099R. Once turning 65, the SSA equivalent amount will be reported on form RRB 1099. The retiree will then get a reduced amount on form RRB 1099R, but the totals will be the same except for any COLAs.
The retiree’s spouse will be entitled to 50% of the RRT upon turning 60 if they have been married for 10 years. An ex-spouse, if not remarried will be entitled to 50% of the RRT upon turning 62 if they were married for 10 years. None of this affects the retiree’s RRT.
Calculating contribution return amount:
Calculate the exclusion as if the retiree was single.
NY DC TRS
Retired railroad employee.
State tax return considerations:
The Federal taxable amounts of Tier I and Tier II benefits are not taxable on state returns.☣ SOFTWARE ERROR : TaxSlayer does not handle this correctly. It includes the Tier I and Tier II benefits in the pension exclusion line thus unfairly limiting the exclusion if other pension amounts exceed the 20K/24K cap. For Colorado, the RR benefits have a separate exclusion line.