RRR and 401K

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RRR and 401K

Postby trvr815 » Wed Sep 11, 2013 2:27 pm

Hey guys, new to UP and railroad as a whole.
Since my short 5 months here, I have been trying to learn as much as I can. Specifically, I wanted to talk about the 401K and railroad retirement and how the two interact.

Our managers and supervisors have COMPANY CONTRIBUTED 401K match. We, as agreement, do not. The rumor is that we may not get a raise in our next contract but get the same type of 4o1K company match such as supervisors and managers have now. Here is the problem with that.

The 401K company matching part (i.e. .50 on the $ up to 6%) is coming out of our tier 2 at a dollar for dollar lose. Another way of saying this is the company is giving one money to invest in their 401K. But when time to collect on your RRR annuity the company matching part will be subtracted from your tier 2 dollar for dollar. No gain!!

Doesn't seem to make much sense right? Well, the managers pensions work in a lot of the same way.

Now if you contribute to your Vanguard or any other 401K currently with no company match this will not affect your RRR annuity (only company contribution amounts).

Am I missing anything? What are your experiences - knowledge on this subject ect. Are we borrowing the inital $ the company gives us to have it grown in ones 401K and then have our RRR reduced just at the inital dollars given by the company?
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Re: RRR and 401K

Postby COEN77 » Sat Sep 14, 2013 7:57 am

Volunteering to contribute to a 401K wouldn't/shouldn't have any effect on the RRB employer contributions. In 1994 the BLE on the C&O side of CSX got us a 401K without any match that came later on under contract negotiations at .25 up to 6%. The match was only applied to CSX stock. The railroads contribution to RRB is manditory. They don't have a choice of not contributions or restructuring the payments. Check with the union for information.
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Re: RRR and 401K

Postby Freddy » Sat Sep 14, 2013 10:38 am

COEN77 wrote:Volunteering to contribute to a 401K wouldn't/shouldn't have any effect on the RRB employer contributions. In 1994 the BLE on the C&O side of CSX got us a 401K without any match that came later on under contract negotiations at .25 up to 6%. The match was only applied to CSX stock. The railroads contribution to RRB is manditory. They don't have a choice of not contributions or restructuring the payments. Check with the union for information.

I remember when they did that. We all thought it was going to be a good deal till we got told there would be no match.
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Re: RRR and 401K

Postby COEN77 » Sun Sep 15, 2013 7:03 am

Freddy wrote:I remember when they did that. We all thought it was going to be a good deal till we got told there would be no match.

We all thought the same the BLE getting screwed again with no 401K match. Now being retired glad I joined it's a nice nest egg. It was at least something to put money aside even though it was a wild ride with two stock market crashes in 2000 & 2008. To this day my retired conductor (UTU) friends still bring up the money & stock they recieved for selling out the brakemen in '86 & '94. It still makes me hot under the collar. LOL! At least I can look into the mirror knowing whatever I have I earned.
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Re: RRR and 401K

Postby trvr815 » Wed Sep 18, 2013 5:51 pm

COEN77 wrote:Volunteering to contribute to a 401K wouldn't/shouldn't have any effect on the RRB employer contributions. In 1994 the BLE on the C&O side of CSX got us a 401K without any match that came later on under contract negotiations at .25 up to 6%. The match was only applied to CSX stock. The railroads contribution to RRB is manditory. They don't have a choice of not contributions or restructuring the payments. Check with the union for information.


I am not suggesting that our employers will contribute less to RRR if they match toward our 401K. What I am saying, is that if your get a company match that match will be reduced in tier II dollar for dollar.

I'll give another example, managers and pensions. Pensions also reduce the tier II (at UP it's $43 x years of service). If one gets 1500/mo. pension and the tier II is 1500 that would wipe out any tier II you would receive. Thus, managers would be able to get all of their 401K's.

If you look in the RRR green/white book it spells it our in their.
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Re: RRR and 401K

Postby trvr815 » Thu Sep 19, 2013 6:55 pm

Found it. Here we go:

Private Rail Pensions, 401(k) Plan Payments May Reduce Supplemental Annuities
Railroad retirement beneficiaries are reminded that receipt of a private railroad pension or a
distribution from an employe r-sponsored 401(k) plan may reduce the amount of a supplemental
annuity payable by the Railroad Retirement Board. The following questions and answers provide
information on this subject.

2. What effect does the receipt of a private railroad pension have on the payment of a
supplemental annuity?
If a retired employee also receives a private pension funded entirely or in part by a railroad
employer, the supplemental annuity is permanently reduced by the amount of the monthly pension
benefit that is based on the railroad employer’s contributions. However, if the employer reduces the
pension for the employee’s entitlement to a supplemental annuity, the amount by which the pension is
reduced is restored to the supplemental annuity (but does not raise it over the $43 maximum). There is
no reduction for a pension paid by a railroad labor organization.
3. What if an employee elects to receive the pension in a lump-sum instead of as a monthly
benefit?
If a retired employee elects to receive his or her pension in a lump-sum payment instead of as a
monthly benefit, the supplemental annuity is reduced the same as it would be if the employee was
receiving the monthly benefit. If the lump sum is paid in installments, the installment payments are not
considered monthly benefit payments.

4. What effect does the receipt of a 401(k) plan distribution have on the payment of a
supplemental annuity?
The supplemental annuity is reduced dollar-for-dollar by the amount of an employee’s 401(k)
distribution that is attributable to the railroad employer’s contributions, which is the total of the
employer’s actual contributions plus or minus the earnings or losses on those contributions.
If the only payment option under a 401(k) plan is a lump-sum distribution, whether in the form of
cash, stock, a rollover to an Individual Retirement Account (IRA) or any combination of the three, the
supplemental annuity is withheld until the amount of the distribution attributable to the employer’s
contributions is recovered. For example, if an individual receives a $100,000 distribution and $15,050
of that amount is attributable to the employer’s contributions, the supplemental annuity would be
withheld for 350 months ($15,050 divided by the monthly supplemental annuity rate of $43).
If a monthly benefit is payable or anoption under a 401(k) plan, the supplemental annuity is
permanently reduced by the amount of the monthly benefit attributable to the employer’s
contributions. This is true no matter how the employee actually elects to receive the distribution of the
plan.
7. What about 401(k) plans that do not require employer contributions?
A distribution from a 401(k) plan under which the railroad employer is not obligated to make
contributions will not cause a reduction in the supplemental annuity. A distribution from a 401(k) plan
sponsored by a railroad labor organization also will not cause a reduction in the supplemental annuity.
Persons can contact an RRB field office for more information via the agency’s website,
www.rrb.gov, or by calling toll-free at 1-877-772-5772. Most RRB offices are open to the public from
9:00 a.m. to 3:30 p.m., Monday through Friday, except on Federal holidays
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Re: RRR and 401K

Postby nsdq160th » Mon Oct 22, 2018 11:44 pm

I worked at the LIRR for just under 1 year. I had contributed to Tier 1, Tier 2 and a possible Tier 3? when and how do I get that money I put into these RRB's?? when do I get it back and how do I get that $$ back?
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Re: RRR and 401K

Postby Cowford » Wed Oct 24, 2018 5:27 pm

trvr, your reference is to SUPPLEMENTAL annuity payments... according to RRB, If you weren't working for the railroads prior to 1981, you are not eligible. I don't understand its origins, but it looks to max out at about $500/yr anyway.

nsdq, you need 60-120 months of railroad service (depending on when you worked) to vest in RRB. Tier 1 will roll into your FICA credits. Tier 2 you can kiss goodbye. There is no Tier 3.
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Re: RRR and 401K

Postby nsdq160th » Wed Oct 24, 2018 5:35 pm

Holy flock!! So all that $$ I put in goes into the trash!! Yeah I worked there less than 1 year so I can kiss my own @$$ goodbye?!! Flllllloock!!!!
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Re: RRR and 401K

Postby Wayside » Thu Oct 25, 2018 8:24 am

That's how it works. It's not so much a retirement savings account as it is an insurance policy annuity. Many people get much more out of these systems than they ever put in, by the way. I have about 24 months of FICA that I paid in that I won't get any of through RR Retirement (I am retired from railroads :-) ).
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Re: RRR and 401K

Postby Cowford » Thu Oct 25, 2018 12:39 pm

"I have about 24 months of FICA that I paid in that I won't get any of through RR Retirement (I am retired from railroads)"

I may be wrong, but just as Tier 1 gets you FICA credits, aren't FICA payments credited to your Tier 1 calculation?
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Re: RRR and 401K

Postby Wayside » Thu Oct 25, 2018 1:19 pm

Cowford wrote:I may be wrong, but just as Tier 1 gets you FICA credits, aren't FICA payments credited to your Tier 1 calculation?


They weren't credited to mine.
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Re: RRR and 401K

Postby nsdq160th » Sat Oct 27, 2018 12:03 am

this railroad RRB Tier payment crap is just retarded and and total scam!!! :wink: :wink: :wink: :wink: :wink:
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Re: RRR and 401K

Postby freightguy » Tue Oct 30, 2018 6:25 am

Nsdq106th,

A lot of people would disagree with you. Especially LIRR retirees vs collecting social security. Staying a year at the LIRR is rare unless you’re forced out. They also have a 457 plan also.
Signed off
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Re: RRR and 401K

Postby Wayside » Tue Oct 30, 2018 7:28 am

Railroad retirement's positive qualities are a fairly well-kept secret in this country. I'm okay with keeping it that way, so yeah, it's a total scam. :wink:
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