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Rail retirees can earn more in 1999

Railroad retirement annuitants who work after retirement can earn more in 1999 without having their benefits reduced, as a result of increases in earnings limits indexed to average national wage increases.

Railroad retirement annuities generally consist of Tier I and Tier II benefits and may include certain vested dual benefit payments and/or a supplemental benefit. Like social security benefits, railroad retirement Tier I benefits and vested dual benefits paid to employees and spouses, and Tier I, Tier II and vested dual benefits paid to survivors, are subject to earnings deductions if post-retirement earnings exceed certain exempt amounts.

For those under age 65, the exempt earnings amount rises to $9,600 in 1999 from $9,120 in 1998. For beneficiaries ages 65-69, the exempt earnings amount rises to $15,500 in 1999 from $14,500 in 1998. These earnings limitations do not apply to any annuitants age 70 or older, starting with the month in which they are 70.

For those under age 65, the earnings deduction is $1 in benefits for every $2 of earnings over the exempt amount. For those ages 65-69, the deduction is $1 for every $3 of earnings over the exempt amount.

Earnings consist for this purpose of all wages received for services rendered, plus any net earnings from self-employment. Interest, dividends, certain rental income or income from stocks, bonds, or other investments are not considered earnings for this purpose.

Retired employees and spouses, regardless of age, who work for their last pre-retirement nonrailroad employer are also subject to an earnings deduction, in their Tier II and supplemental benefits, of $1 for every $2 in earnings up to a maximum reduction of 50 percent. This earnings restriction does not change from year to year and does not allow for an exempt amount.

A spouse benefit is subject to reduction not only for the spouse's earnings, but also for the earnings of the employee, regardless of whether the earnings are from service for the last pre-retirement nonrailroad employer or other post-retirement employment.

Special work restrictions applicable to disability annuitants also do not change in 1999. Regardless of age and/or earnings, no railroad retirement annuity is payable for any month in which an annuitant (retired employee, spouse or survivor) works for a railroad employer or railroad union.

Send in your photos!

New feature! BLE Retiree Scrapbook

As part of a new series in the Locomotive Engineer Newsletter, we are actively seeking photographs from BLE members for publication in the "BLE Retiree Scrapbook."

"We know that our members remain very active after retirement, and we want to show just how active they are," BLE President Monin said.

The editorial staff of the Newsletter asks that BLE members send in photographs of their retirement activities, along with a brief note describing the picture. Select photographs will be published on the "BLE Senior Report" page of the Newsletter.

Photographs should be submitted to: Locomotive Engineer Newsletter, Attn: Retiree Scrapbook, 1370 Ontario St., Mezzanine, Cleveland, OH 44113-1702. All photographs will be returned after publication.

In this month's debut installment, we hear from Truman Koehn of BLE Division 405 in Milwaukee, Wisc. This past summer, Brother Koehn visited Marshall, Mich., the birthplace of the BLE.

In the photo above, he stands by a historical marker outside the home of Jared C. "Yankee" Thompson, one of the original founders of the BLE.

The BLE's founding fathers had several meetings in Brother Thompson's house in 1862 and 1863 to lay the foundation for the Brotherhood. The home is still standing and is now an official state of Michigan historical site.

Brother Koehn reports that while he enjoyed the trip to Marshall, he was disappointed with the residents' lack of knowledge of the BLE.

"I cannot help but feel something should be done to make this site in Marshall more noticeable," he said. "Something this nice and this important should not be lost in the shuffle."

BLE Monument dedicated May 8, 1943 in Marshall, Mich.

Tax rates remain the same; amount taxed will increase

While regular railroad retirement tax rates are not changed for 1999, the amounts of compensation subject to these payroll taxes are scheduled to increase in January 1999 as a result of indexing to average national wage increases.

The railroad retirement Tier I tax rate of 7.65 percent for employers and employees (which is the same as the social security tax and for withholding and reporting purposes) remains the same. The 7.65 percent is divided into 6.20 percent for retirement and 1.45 percent for Medicare hospital insurance.

However, the maximum amount of an employee's earnings subject to the 6.20 percent rate will increase to $72,600 in 1999 from $68,400 in 1998. There is no maximum on earnings subject to the 1.45 percent Medicare rate; all of an employee's compensation is subject to the Medicare tax.

The maximum amount of earnings subject to the railroad retirement Tier II tax of 4.90 percent on employees, and 16.10 percent on employers, will increase to $53,700 from $50,700.

In 1998, the regular railroad retirement tax on an employee earning $68,400 was $7,716.90, and the employer's regular railroad retirement tax on such an employee was $13,395.30. In 1999, the railroad retirement tax on an employee earning $72,600 will be $8,185.20 compared to $5,553.90 under social security, and the employer's tax will be $14,199.60.

The rate of the supplemental railroad retirement annuity tax paid solely by rail employers is determined quarterly by the Railroad Retirement Board. The rate for all four quarters of 1998 has been 35 cents per work-hour; the rate for the first quarter of 1999 will be announced later in 1998.

Employers, but not employees, also pay railroad unemployment insurance taxes, which are experience rated by employer. The basic rates range from a minimum of 0.65 percent to a maximum of 12 percent.

However, as the Railroad Unemployment Insurance Account balance was less than $100.6 million but more than $50.3 million on June 30, 1998, the surcharge of 1.5 percent, which was added to the basic tax rates in 1998, will remain in effect for 1999. This will not, however, increase the maximum rate.



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