Tier 1 Benefits for Railroad Employees
Railroad employees are not eligible for social security and their retirement benefits are divided into Tier 1 and Tier 2 benefits.
Tier 1 benefits are basically equal to the amount the railroad employee would have received under social security and are not subject to characterization.
Note: Tier 2 benefits are an additional monthly benefit paid over and above Tier 1 benefit payments, based upon the employee’s salary and years of service. Thus, Tier 2 benefits are treated as a defined benefit plan and are characterized according to the apportionment rules of defined benefit plans.