Title 20—Employees' Benefits--Volume 1
PART 234—LUMP-SUM PAYMENTS
§ 234.1   Introduction.
This part contains information about the various lump-sum payments payable under sections 6(a)(1) through 6(d)(2) of the 1974 Act.
§ 234.2   Definitions.
As used in this part:
Applicant means the person who signs an application for an annuity or lump-sum for himself, herself or for some other person.
Apply means to sign a form or statement that the Board accepts as an application.
Burial expenses means expenses in connection with the actual burial or other disposition of the remains of the deceased employee.
Eligible means a person meets all the requirements for payment of an annuity or a lump-sum, but has not yet applied.
Employee means any person who is working or has worked for a railroad employer.
Entitled means a person who meets all the requirements for an annuity or a lump-sum, and has applied.
Equitably entitled person means the person whose funds were used to pay the burial expenses of a deceased employee.
Lump-sum means any non-recurring payment due because of an employee's or beneficiary's death.
Person means an individual, partnership, trust estate, association, corporation, government unit, or estate of a deceased individual.
Reimbursable burial expenses means that part of the burial expenses not previously reimbursed by another Federal agency.
§ 234.10   General.
A lump-sum death payment (LSDP) is payable when an employee with ten or more years of railroad service and a current connection with the railroad industry dies and is not survived by an individual who is eligible for a monthly annuity in the month the employee died. The amount of the LSDP and the priority for payment depend upon when the employee acquired his or her 120th month of railroad service. If the employee acquired the 120th month of railroad service after 1974, a 1974 Act lump-sum death payment is payable to the employee's widow(er). If the employee acquired the 120th month of railroad service before 1975, a 1937 Act lump-sum death payment is payable to the employee's widow(er), the funeral home or the payer of the employee's burial expenses. An application for an LSDP must be filed within two years after the employee's death.
§ 234.11   1974 Act lump-sum death payment.
(a) The total amount of the 1974 Act LSDP is payable to the employee's widow(er), if she or he was “living in the same household” as the employee at the time of the employee's death. (Refer to § 234.21 for an explanation of “living in the same household.”)
(b) The amount of the 1974 Act LSDP is equal to three times the amount of the PIA, as determined by section 215 of the Social Security Act, or $255.00, whichever is less.
§ 234.12   1937 Act lump-sum death payment.
(a) The 1937 Act LSDP is payable in the following order and amounts:
(1) The employee's “living with” widow(er) is paid the total amount of the LSDP. (Refer to § 234.21 for an explanation of “living with.”)
(2) A funeral home, which has unpaid expenses, is paid the amount of the unpaid expenses or the total amount of the LSDP, whichever is less.
(3) An equitably entitled person is paid the total amount of the LSDP or a proportionate share of the LSDP, depending upon the amount of burial expenses he or she paid.
(b) The 1937 Act LSDP is equal to ten times the basic amount. (Refer to § 234.20 for an explanation of the computation of the employee's basic amount.)
§ 234.13   Payment to a funeral home.
The 1937 Act LSDP is paid to a funeral home under the following conditions:
(a) A person who has assumed responsibility for all or part of the burial expenses files an application authorizing payment to the funeral home. Usually, the Board considers the person who makes the arrangements with the funeral home or makes a voluntary payment to the funeral home to be the person who has assumed responsibility for the burial expenses.
(b) An official of the funeral home with unpaid expenses files an application on behalf of the funeral home after 90 days have elapsed from the date of the employee's death, if during that 90-day period no one has assumed responsibility for the payment of the burial expenses.
§ 234.14   Payment to an equitably entitled person.
(a) An equitably entitled person's funds used to pay burial expenses may consist of:
(1) The individual's own money;
(2) Money in a joint account with the employee or another individual;
(3) Money paid to an individual who was named beneficiary to receive the money;
(4) A promissory note; or
(5) Money which several people placed into a pooled fund.
(b) Payment is made to equitably entitled persons in the following order:
(1) The person who paid the funeral home expenses;
(2) The person who paid the grave opening and closing expenses;
(3) The person who provided the burial plot; and
(4) The person who paid any type of expenses not listed in paragraphs (b)(1) through (3) of this section.
§ 234.15   When an employee's estate is entitled.
(a) The employee's estate is considered an equitably entitled person if the funds used to pay burial expenses consisted of:
(1) Money in the employee's single-ownership bank account;
(2) Money paid directly to the funeral home by the employee before death;
(3) Money paid by the employee under a contract, plan, system or general practice where no beneficiary was named to receive the money;
(4) Money found among the employee's effects;
(5) Unpaid salary due the employee by the employee's employer;
(6) Money obtained by selling the employee's real or personal property; or
(7) Money from a trust fund.
(b) If the employee's estate is the equitably entitled person, the Board will pay the LSDP to the legal representative of the employee's estate. When no legal representative of the employee's estate has been or is expected to be appointed, the Board will pay the LSDP according to state statutory procedures applicable when no formal probate or administration occurs.
§ 234.16   When a widow(er) is eligible as an equitably entitled person.
When a widow(er) files for an LSDP and the “living with” requirement (described in § 234.21) is not met, the widow(er) could be paid as an equitably entitled person.
§ 234.17   When an equitably entitled person's estate is payable.
When an equitably entitled person dies before negotiating the LSDP check, that person's share is payable to his or her estate.
§ 234.18   Payment of a deferred lump-sum to a widow(er).
In certain cases, a deferred LSDP may be payable to the employee's widow(er), even if someone may be entitled to a monthly annuity in the month of the employee's death. A deferred LSDP is the difference between the amount of the LSDP and the total of the monthly survivor annuities paid during the 12-month period which begins in the month of the employee's death.
§ 234.19   Effect of payment on future entitlement.
Payment of an LSDP does not affect the entitlement of survivors to monthly annuities at a later date.
§ 234.20   Computation of the employee's 1937 Act LSDP basic amount.
(a) Definition of terms used in this section:
Average monthly remuneration (AMR) means the amount obtained by adding together the creditable compensation and wages earned by the employee after 1936 and before the LSDP closing date and dividing that sum by three times the number of calendar quarters in that period. (Refer to part 211 of this chapter for a definition of creditable compensation and section 209 of the Social Security Act for a definition of creditable wages.)
Closing date means whichever of the following produce the highest AMR:
(1) The first day of the calendar year in which the employee both attained age 65 and was completely insured;
(2) The first day of the calendar year in which the employee died; or
(3) The first day of the calendar year following the year in which the employee died;
(4) However, if paragraphs (a)(1) through (3) of this definition do not occur before January 1, 1975, the closing date is January 1, 1975.
(b) LSDP basic amount formula. The basic amount is computed using the following formula:
(1) Determine 52.4% of the AMR up to and including $75.00;
(2) Determine 12.8% of the AMR exceeding $75.00;
(3) Determine 1% of the sum of paragraphs (b)(1) and (2) of this section;
(4) Multiply the result of paragraph (b)(3) of this section by the number of years after 1936 through 1974 in which the employee earned $200 or more;
(5) Add the results of paragraphs (b)(1), (2) and (3) of this section. If the resulting basic amount is less than $18.14, increase it to $18.14.
§ 234.21   Definitions of “living with” and “living in the same household.”
(a) Living with. A widow(er) is considered “living with” the employee at the time of the employee's death, if one of the following conditions applies:
(1) The employee and spouse were members of the same household;
(2) The spouse was receiving regular contributions for support from the employee; or
(3) The employee was under court order to contribute to the spouse's support.
(b)(1) Living in the same household. An employee and spouse were “living in the same household” if they lived together as a married couple in the same residence. However, an employee and spouse, who were temporarily living apart, will be considered “living in the same household” if there was intent to share the same residence had the employee not died. The Board will usually assume that a married couple was living apart temporarily, if the separation was caused by circumstances beyond their control, for example, ill health, financial difficulties, service with the Armed Forces, or confinement in a curative, custodial, or penal institution.
(2) If the employee and spouse were separated solely for medical reasons, the Board will consider them “living in the same household,” even if the separation was likely to be permanent.
§ 234.30   General.
When an applicant or an annuitant dies before being paid any annuities that may be due, the total of those annuities become payable to certain survivors in a lump-sum. Refer to § 234.31 through § 234.34 for information about when and to whom each type of unpaid annuity is payable. An application for an unpaid annuity must be filed within two years after the death of the person originally entitled to the annuity.
§ 234.31   Regular employee retirement and supplemental annuities.
A regular employee retirement annuity or a supplemental annuity which is unpaid at the death of the employee is payable in the following order and amounts:
(a) A surviving spouse, who was “living with” (see § 234.21) the employee at the time of the employee's death, receives the full amount of the unpaid annuity.
(b) Each person who paid the employee's burial expenses receives a share of the unpaid annuities in the same proportion that he or she paid the burial expenses, but only to the extent that he or she is not reimbursed by the LSDP. If a payer of the employee's burial expenses dies before negotiating his or her check, that payment becomes payable to his or her estate.
(c) Surviving children of the employee receive equal shares.
(d) Surviving grandchildren of the employee receive equal shares.
(e) Surviving parents of the employee each receive equal shares.
(f) Surviving brothers and sisters of the employee receive equal shares. Half blood brothers and sisters share equally with full blood brothers and sisters.
§ 234.32   Spouse or divorced spouse annuities.
A spouse annuity or divorced spouse annuity which is unpaid at the death of the spouse or divorced spouse is paid in the following order and amounts:
(a) The employee receives the full amount.
(b) If the employee died before negotiating the check in payment of the unpaid annuities, the unpaid spouse annuity or divorced spouse annuity is paid in the same order and amounts as described in § 234.31 (b) through (f).
§ 234.33   Survivor annuities.
Any survivor annuity which is unpaid at the death of the survivor is paid in the same order and amounts as described in § 234.31(a) and § 234.31(c) through § 234.31(f).
§ 234.34   When an entitled relative of the employee dies before receiving payment of a due but unpaid annuity.
If a person, who is entitled to unpaid annuities based upon his or her relationship to the employee, dies before negotiating the check in payment of the unpaid annuities, the amount to which he or she was entitled becomes payable to other relatives of the employee in the same degree of relationship. If no relatives in that degree of relationship survive, the amount becomes payable to relatives in the next degree of relationship.
§ 234.40   General.
The residual lump-sum (RLS) is the means by which railroad employees and their survivors are guaranteed to receive at least as much in benefits as the employee paid in railroad retirement taxes during the years 1937 through 1974. An RLS payment can be made only if it appears that no other benefits based at least in part on railroad service will be payable under either the Railroad Retirement Act or Social Security Act in the future. The residual is reduced for any retirement benefits that were paid on the basis of the employee's railroad service, and for any survivor benefits based on the employee's earnings already paid by either the Board or the Social Security Administration. A widow(er) or dependent parent can, before attaining age 60, elect to waive future rights to monthly benefits based on the employee's railroad service in order to receive the RLS.
§ 234.41   Persons to whom an RLS is payable.
After the death of an employee, the RLS is payable, in the following order, to: beneficiaries designated by the employee; surviving relatives of the employee in order provided by law (see § 234.44); or the employee's estate.
§ 234.42   How the employee may designate beneficiaries.
The employee may designate one or more persons as beneficiaries of the RLS on a form available at any Board office. The employee may specify the share that each beneficiary is to receive. Also, the employee may designate alternate beneficiaries in the event that all primary beneficiaries die before the RLS becomes payable.
§ 234.43   Payment to designated beneficiaries.
(a) How designated beneficiaries are paid. Primary beneficiaries are paid the RLS to the exclusion of alternate beneficiaries. If a designated beneficiary dies before the date on which the RLS becomes payable, his or her share of the RLS becomes payable to any other designated beneficiaries. If an entitled designated beneficiary dies before negotiating the RLS check, that share is payable to his or her estate.
(b) Amount designated beneficiaries are paid. If the employee specified the share that each beneficiary is to receive, payment is made in the proportion specified. Otherwise, if there is more than one designated beneficiary, each is paid an equal share of the RLS.
§ 234.44   Payment to surviving relatives.
(a) How surviving relatives are paid. If the employee either did not designate a beneficiary or was not survived by a designated beneficiary, the RLS is payable to surviving relatives of the employee in the following order of relationship to the employee:
(1) Widow(er) who was “living with” the employee at the time of the employee's death (see § 234.21 for a definition of “living with”);
(2) Child;
(3) Grandchild;
(4) Parent;
(5) Brother or sister, including half blood brother or sister.
(b) Amount surviving relatives are paid. If more than one relative in an equal degree of relationship survives the employee, each one is paid an equal share of the RLS. If an entitled relative of the employee dies before negotiating the RLS check, that share becomes payable to other surviving relatives of the employee in the same degree of relationship. If no relatives in that degree of relationship survive, relatives in the next degree of relationship are payable.
§ 234.45   Payment to the employee's estate.
(a) When the employee's estate is paid. If no designated beneficiaries or relatives survive the employee when the RLS becomes payable, the employee's estate may be paid the RLS. Employees may also designate their estates to receive all or a share of the RLS as beneficiaries.
(b) How the employee's estate is paid. If a legal representative of the employee's estate has been appointed and has not been discharged, the Board will pay the RLS to the legal representative. When no legal representative of the employee's estate has been or is expected to be appointed, or the estate of the deceased employee has been closed and reopening is not expected, the Board will pay the RLS according to state statutory procedures applicable when no formal probate or administration occurs.
§ 234.46   Amount of the RLS payable.
The gross RLS amount is equal to certain percentages of the employee's creditable compensation, including military service, as described in § 234.48. (Creditable compensation and military service are discussed in parts 211 and 212 of this chapter, respectively.) The amount of the RLS payable is equal to the gross RLS minus the sum of all retirement benefits that have been paid on the basis of the employee's railroad service and all survivor benefits based on the employee's earnings previously paid by either the Board or the Social Security Administration.
§ 234.47   Election of the RLS by a widow(er) or parent.
(a) An RLS cannot be paid if it appears that there are immediate or future monthly survivor benefits payable to anyone other than a widow(er) or parent. A widow(er) or parent can elect to have the RLS paid in lieu of future monthly benefits based on the employee's railroad earnings under either the Railroad Retirement Act or Social Security Act.
(b) When an election must be filed. An election to have the RLS paid must be filed before the widow(er) or parent attains age 60 if he or she would be entitled to benefits under the Railroad Retirement Act, or before the age of eligibility if he or she would be entitled to future benefits under the Social Security Act instead of the Railroad Retirement Act.
(c) Filing an election. An election to have the RLS paid must be made on the certification provided by the Board for that purpose, and must contain an irrevocable election to have the RLS paid in lieu of all benefits based on the employee's railroad service to which the widow(er) or parent might otherwise become entitled. Once the RLS check is negotiated, the election cannot be revoked.
§ 234.48   Computation of the gross RLS amount.
The amount of the gross RLS is equal to the percentages of the employee's creditable compensation shown in Table I. However, compensation may only be credited up to the maximum amounts shown in Table II.
(a) Percentages of the employee's creditable compensation and the periods to which those percentages apply:
Table I
(b) Maximum compensation which may be credited per month:
Table II
§ 234.50   General.
Under the 1974 Act, railroad employees with 10 or more years of railroad service, who are not entitled to a vested dual benefit payment, may be eligible for a lump-sum refund payment if they had concurrent railroad and social security earnings within the period 1951 through 1974. The combined earnings from the railroad retirement and social security systems in any of those years must exceed the maximums given in § 234.53. The lump-sum refund is payable to either the employee or the employee's survivors.
§ 234.51   Persons to whom a lump-sum refund payment is payable.
Employees receive their lump-sum refund payment from the Board, without applying for it, at the time their regular annuity is awarded. If an employee dies without receiving payment of a regular annuity, the lump-sum refund payment is payable to the employee's survivors in the same order of priority as shown for the RLS in § 234.44.
§ 234.52   Effect of payment on other benefits.
The lump-sum refund payment is deductible from the RLS; however, it has no effect on the payment of other benefits.
§ 234.53   Computation of the lump-sum refund payment.
(a) The lump-sum refund payment is calculated as follows:
(1) Combine the railroad employee's creditable earnings, including military service, under the Social Security Act and Railroad Retirement Act for each of the years 1951 through 1974;
(2) Determine the amount of the employee's creditable earnings in excess of the amounts for each year shown in the chart in paragraph (b) of this section;
(3) Multiply the results of paragraph (a)(2) of this section by the percentage shown in the chart in paragraph (b) of this section; and
(4) Add the results of paragraph (a)(3) of this section. The total is the amount of the lump-sum refund payment.
(b) Chart for calculation of lump-sum refund payment.
§ 234.55   General.
Under the Railroad Retirement Act certain railroad employees who have received separation or severance payments may be entitled to a lump-sum payment if tier II railroad retirement taxes were deducted from these payments. This part sets forth the conditions for entitlement to the lump-sum payment and explains how the payment is computed.
§ 234.56   Persons to whom a separation allowance lump-sum payment is payable.
(a) An employee who has completed 10 years of service at the time of his or her retirement or death and who has received on or after January 1, 1985, a separation allowance or severance payment (see § 210.11 of this chapter) which would have been used to increase his or her tier II benefit, except for the fact that he or she was neither in an employment relation to one or more employers as defined in part 204 of this chapter nor an employee representative (see part 205 of this chapter), shall be entitled to a lump sum in the amount provided for in § 234.58.
(b) If an employee, otherwise eligible for the lump sum provided for in this section, dies before he or she becomes entitled to a regular annuity or before he or she receives payment of the lump sum, the lump sum is payable to the employee's widow or widower who will not have died before receiving payment. If the employee is not survived by a widow or widower who will not have died before receiving payment, the lump sum is payable to the employee's survivors in the same order of priority as shown for the residual lump-sum (RLS) in § 234.44.
§ 234.57   Effect of payment on other benefits.
The tier II separation allowance lump-sum payment has no effect on the payment of other benefits.
§ 234.58   Computation of the separation allowance lump-sum payment.
The separation allowance lump-sum payment is calculated as follows:
(a) Determine the amount of the compensation due to the receipt of separation or severance pay that could not be considered in the computation of tier II;
(b) Multiply this amount by the rate or rates of tax imposed by section 3201(b) of the Internal Revenue Code of 1954 or 1986 on the compensation (tier II tax); and
(c) The product is the amount of the separation allowance lump-sum payment.
§ 234.60   Escheat.
Any payment under this part which would be payable to any state, political subdivision of a state, the U.S. government or a foreign government because of the lack of a legal heir, shall remain in the Railroad Retirement Account.
§ 234.61   Assignment of interest by an eligible person.
(a) Any person who is eligible to receive a share of a lump-sum payment may assign his or her share to another eligible applicant, provided the share is not more than $500.
(b) If an LSDP or accrued annuity is payable, the request that a share be assigned must be received at a Board office no later than two years after the death of the employee or the originally entitled person.
§ 234.62   Effect of conviction of a felony on entitlement.
A person who has been convicted of a felony or an act in the nature of a felony of intentionally causing the employee's death shall not be entitled to any benefits under the Railroad Retirement Act. If a charge of felony is pending against an applicant for a lump-sum payment, the Board will make no payment until the applicant submits proof that the charge has been withdrawn, that no further action will be taken on the charge, or that he or she has been cleared of the charge.