What is the Railroad Retirement Board?

The U. S. Railroad Retirement Board (RRB) is an independent agency in the executive branch of the federal government. The primary function of the RRB is to pay retirement-survivor and unemployment-sickness benefits under the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA) to the nation's railroad workers and their families. The benefit payments administered by the RRB are based on earnings credits, called creditable service and compensation. The service and compensation information is collected from employer reports.

Within the RRB, the Division of Compensation and Certification (DCC) maintains lifetime records of creditable service and earnings, secured from employer reports, for each railroad employee for purposes of determining benefit payments. The DCC is a division in the Bureau of Research and Employment Accounts at the RRB.

Employer reports are mandated by law. The RRB's is authorized to require an employer to submit information by Regulations of the RRB ( 20 CFR 209.2 ) and by sections 7(b)(6) and 9 of the RRA and sections 6 and 12(1) of the RUIA, respectively. Both Acts make provision for enforcement of reporting requirements.

Coverage Status

A sickness payor may be an employer under the RRA, although the reporting requirements for a sickness payor under the RRA differ from the requirements imposed upon regular railroad employers. An initial status determination must be made to determine if sick payments disbursed to railroad employees are creditable compensation under section 1(h)8 of the Railroad Retirement Act (RRA). Investigators from the Railroad Retirement Board's (RRB's) Office of Audit and Compliance obtain the information necessary to determine if the payments are creditable.

If sickness payments are determined creditable, the DCC arranges to notify the payor of the determination and to provide reporting instructions and materials. A four digit identifying number, commonly known as the BA number, is assigned to the payor for use with all reports and correspondence with the RRB. The BA number should not be confused with the Internal Revenue Service employer identification number, (EIN).

A third party which disburses creditable sickness payments is not necessarily an employer under the RRA It may merely be acting as the regular railroad employer's agent for the payment of sick pay. See "Other Sickness Payors" in Chapter 4.

Changes in Coverage Status

Under the law, it is a payor's responsibility to notify the RRB of any changes which affect its coverage status. The coverage status is then reconsidered. Send a notice of a possible coverage status change to:

Sick Pay Affects Retirement Benefit Payments

It is helpful in completing railroad retirement reports to understand the relationships between creditable sick pay, employment tax, and benefits under the RRA. Under the RRA, creditable compensation and retirement-survivor benefits are all based on a corresponding structure of two separate "layers" known as tiers. Railroad retirement taxes under the Railroad Retirement Tax Act are also computed using the tier structure. Consequently, a direct relationship exists between creditable compensation, the corresponding taxes paid to the Internal Revenue Service (IRS), and the benefits paid under the RRA. For a sick pay payor, only the Tier I relationships are important

Tier I is the railroad retirement equivalent of social security. Railroad retirement and the social security systems are coordinated by law. The Tier I tax is computed on the same percentage rate and annual maximum tax base as social security. Like social security tax, Tier I tax is shared equally by employee and employer.

The Tier I portion of regular railroad retirement annuities is calculated by using the social security benefit formula. It is based on an employee's lifetime combined Tier I compensation from sick pay payors and regular railroad employers together with non-railroad social security credits.