[Federal Register Volume 69, Number 25 (Friday, February 6, 2004)]
[Rules and Regulations]
[Pages 5691-5693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2410]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960-AF82


Interrelationship of Old-Age, Survivors and Disability Insurance 
Program With the Railroad Retirement Program

AGENCY: Social Security Administration (SSA).

ACTION: Final rule.

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SUMMARY: We are issuing these final rules to conform our regulations to 
a self-implementing provision in current law that affects benefit 
coordination between the Railroad Retirement Act and title II of the 
Social Security Act. The amendments modified a Railroad Retirement Act 
requirement involving the period of service in the railroad industry 
needed to satisfy certain annuity eligibility requirements. We refer to 
that requirement herein as the ``vesting requirement.'' For affected 
persons, this provision established a Railroad Retirement Act vesting 
requirement of 5 or more years of service, all of which accrue after 
December 31, 1995, as an alternative to the existing vesting 
requirement of 10 years of service. As a result of this provision, 
certain railroad workers who meet the alternative 5-year vesting 
requirement, and other affected persons, will now receive benefits 
under the Railroad Retirement Act rather than under title II of the 
Social Security Act. The amendments made by this provision were 
effective on or after January 1, 2002, for all individuals in the 
affected categories. Railroad retirement benefits payable on the basis 
of this provision are not retroactive and are not payable for months 
prior to January 2002, but are payable beginning January 1, 2002, to 
those with 5 years of service after 1995. Railroad employees previously 
denied benefits for insufficient service would have to file a new 
application for railroad benefits in order to be considered under the 
new vesting rules.

DATES: These regulations are effective February 6, 2004.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register on the 
Internet site for the Government Printing Office, http://www.gpoaccess.gov/fr/index.html. It is also available on the Internet 
site for SSA (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT: Marylin Buster, Social Insurance 
Specialist, Office of Income Security Programs, Social Security 
Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, 
(410) 965-2490 or TTY (410) 966-5609. For information on eligibility, 
claiming benefits, or coverage of earnings, call our national toll-free 
number, 1-800-772-1213 or TTY 1-800-325-0778.

SUPPLEMENTARY INFORMATION:

Background

    The Railroad Retirement Act provides a system of benefits for 
railroad employees, their dependents and survivors. It is integrated 
with the Social Security Act to provide a coordinated system of 
retirement, survivor, dependent, and disability benefits payable on the 
basis of an individual's work in the railroad industry and in 
employment and self-employment covered by the Social Security Act.
    The Railroad Retirement Act distinguishes between ``career'' 
railroad workers and individuals who may be considered ``casual'' 
railroad workers by vesting people who have specified amounts of 
railroad work. For a vested worker, railroad compensation generally 
remains under the Railroad Retirement Board (RRB) and is used to 
compute railroad retirement and survivor annuities for the worker. For 
a non-vested worker, railroad compensation is transferred from RRB to 
SSA and is combined with any social security covered wages and self-
employment to determine the worker's eligibility for and the amount of 
title II benefits. Section 103 of Pub. L. 107-90, the Railroad 
Retirement and Survivors' Improvement Act of 2001, modified the rules 
involving the period of railroad industry service needed in order to 
satisfy certain annuity eligibility requirements under section 2 of the 
Railroad Retirement Act. It affects individuals who have attained 
retirement age as defined in the Social Security Act. It also affects 
individuals who have attained age sixty-two and have completed less 
than 30 years of railroad service, and individuals whose permanent 
physical or mental condition is such that they are unable to engage in 
any regular employment. The new vesting requirement similarly affects 
the eligibility and entitlement of spouses of individuals who performed 
railroad service. Finally, the amendments affect the eligibility and 
entitlement of survivors; i.e., widows, children, and parents of 
deceased individuals who performed railroad service.
    Under the new amendments, the vesting requirement for affected 
individuals is either 10 years of railroad service or, for individuals 
with less than

[[Page 5692]]

10 years of service, at least 5 years of service, all of which accrue 
after December 31, 1995. Railroad retirement benefits payable on the 
basis of this provision are not retroactive and are not payable for 
months prior to January 2002, but are payable beginning January l, 
2002, to those with 5 years of service after 1995. Employees previously 
denied benefits for insufficient service would have to file a new 
application for benefits in order to be considered under the new 
vesting rules. SSA must use the revised vesting requirement in 
determining eligibility for, or the amount of benefits under, title II 
of the Social Security Act in cases involving potential or actual 
entitlement to a railroad annuity. It also affects certification by SSA 
for payment purposes, under appropriate circumstances to RRB as 
required by the Social Security Act.

Explanation of Changes

    We are deleting Sec.  404.1403 and revising Sec. Sec.  404.1401, 
404.1402, 404.1405, and 404.1413 to make it clear that the railroad 
vesting requirement is either 10 years of service under the Railroad 
Retirement Act or 5 or more years of service, all of which accrue after 
December 31, 1995. Railroad retirement benefits payable on the basis of 
this provision are not retroactive and are not payable for months prior 
to January 2002, but are payable beginning January 1, 2002, to those 
with 5 years of service after 1995. Employees previously denied 
benefits for insufficient service would have to file a new application 
for benefits in order to be considered under the new vesting rules.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 
902(a)(5), SSA follows the Administrative Procedure Act (APA) 
rulemaking procedures specified in 5 U.S.C. 553 in the development of 
its regulations. The APA provides exceptions to its prior notice and 
public comment procedures when an agency finds there is good cause for 
dispensing with such procedures on the basis that they are 
impracticable, unnecessary, or contrary to the public interest.
    In the case of these final rules, we have determined that, under 5 
U.S.C. 553 (b)(B), good cause exists for dispensing with the notice and 
public comment procedures on these rules because such procedures are 
unnecessary. Good cause exists because these regulations merely conform 
our rules on title II benefits for railroad workers to the self-
implementing vesting provisions in section 103 of Public Law 107-90 
that we have been following operationally since January 2002. 
Therefore, opportunity for prior comment is unnecessary, and we are 
issuing these regulations as final rules.
    In addition, we find good cause for dispensing with the 30-day 
delay in the effective date of a substantive rule, provided for by 5 
U.S.C. 553(d). As explained above, these revisions conform our rules on 
title II benefits for railroad workers to current law. However, without 
these changes, our rules will conflict with current law and may mislead 
the public. Therefore, we find that it is in the public interest to 
make these rules effective upon publication.

Executive Order 12866, as Amended by Executive Order 13258

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules do not meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were not subject to OMB review. We 
have also determined that these rules meet the plain language 
requirement of Executive Order 12866, as amended by Executive Order 
13258.

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities. Therefore, a 
regulatory flexibility analysis as provided in the Regulatory 
Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    These final regulations will impose no additional reporting or 
record keeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.004, Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure; Blind; Disability benefits; 
Old-Age, Survivors and Disability Insurance; Reporting and record 
keeping requirements; Social Security.

    Dated: January 29, 2004.
Jo Anne B. Barnhart,
Commissioner of Social Security.

0
For the reasons stated in the preamble, subpart O of part 404 is 
amended as follows:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

Subpart O--[Amended]

0
1. The authority citation for subpart O of part 404 continues to read 
as follows:

    Authority: Secs. 202(l), 205(a), (c)(5)(D), (i), and (o), 
210(a)(9) and (1)(4), 211(c)(3), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 402(l), 405(a), (c)(5)(D), (i), and (o), 
410(a)(9) and (l)(4), 411(c)(3), and 902(a)(5)).


0
2. Sec.  404.1401 is revised to read as follows:


Sec.  404.1401  What is the interrelationship between the Railroad 
Retirement Act and the Old-Age, Survivors and Disability Insurance 
Program of the Social Security Act?

    (a) Background. The Railroad Retirement Act provides a system of 
benefits for railroad employees, their dependents and survivors, and is 
integrated with the Social Security Act to provide a coordinated system 
of retirement, survivor, dependent and disability benefits payable on 
the basis of an individual's work in the railroad industry and in 
employment and self-employment covered by the Social Security Act. With 
respect to the coordination between the two programs, the Railroad 
Retirement Act distinguishes between ``career'' or ``vested'' railroad 
workers and those individuals who may be considered ``casual'' or 
``non-vested'' railroad workers based on the total amount of railroad 
service credited to the worker, as explained in paragraph (b) of this 
section. The Railroad Retirement Board transfers to the Social Security 
Administration (SSA) the compensation records of workers who at the 
time of retirement, onset of disability or death, are non-vested and 
meet certain other requirements. Any compensation paid to non-vested 
workers for service after 1936 becomes wages under the Social Security 
Act (to the extent they do not exceed the annual wage limitations 
described in Sec.  404.1047). Any benefits payable to non-vested 
workers, their dependents, and their survivors, are computed on the 
basis of the combined compensation and social security covered earnings 
creditable to the workers' records. Once a railroad worker meets the 
vesting requirements, the record of the worker's railroad service and 
compensation generally may not be used for benefit purposes under the 
Social Security Act, but under certain circumstances may be transferred 
after the worker's death to SSA for use in determining social security 
benefit entitlement for the

[[Page 5693]]

railroad worker's survivors (see Sec.  404.1407). Under certain 
circumstances (see Sec.  404.1413), certification of benefits payable 
under the provisions of the Social Security Act will be made to the 
Railroad Retirement Board. The Railroad Retirement Board will certify 
such benefits to the Secretary of the Treasury.
    (b) Who is a vested railroad worker? You are a vested railroad 
worker if you have:
    (1) Ten years or more of service in the railroad industry, or
    (2) Effective January 1, 2002, you have at least 5 years of service 
in the railroad industry, all of which accrue after December 31, 1995.
    (c) Definition of years of service. As used in paragraph (b) of 
this section, the term years of service has the same meaning as 
assigned to it by section 1(f) of the Railroad Retirement Act of 1974, 
as amended, (45 U.S.C. 231(f)).

0
3. Sec.  404.1402 is revised to read as follows:


Sec.  404.1402  When are railroad industry services by a non-vested 
worker covered under Social Security?

    If you are a non-vested worker, we (the Social Security 
Administration) will consider your services in the railroad industry to 
be ``employment'' as defined in section 210 of the Social Security Act 
for the following purposes:
    (a) To determine entitlement to, or the amount of, any monthly 
benefits or lump-sum death payment on the basis of your wages and self-
employment income;
    (b) To determine entitlement to, or the amount of, any survivor 
monthly benefit or any lump-sum death payment on the basis of your 
wages and self-employment income provided you did not have a ``current 
connection'' with the railroad industry, as defined in section 1(o) of 
the Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(o)), at 
the time of your death; (in such cases, survivor benefits are not 
payable under the Railroad Retirement Act);
    (c) To determine entitlement to a period of disability (see subpart 
B of this part) on the basis of your wages and self-employment income; 
or
    (d) To apply the provisions of section 203 of the Social Security 
Act concerning deductions from benefits under the annual earnings test 
(see subpart E of this part).

0
4. Sec.  404.1403 is removed.

0
5. Sec.  404.1405 is amended by revising the section heading and 
paragraph (b) to read as follows:


Sec.  404.1405  If you have been considered a non-vested worker, what 
are the situations when your railroad industry work will not be covered 
under Social Security?

* * * * *
    (b) You continue to work in the railroad industry after 
establishing entitlement to old-age insurance benefits under section 
202(a) of the Social Security Act. If your service in the railroad 
industry is used to establish your entitlement to, or to determine the 
amount of, your old-age insurance benefits under section 202(a) of the 
Social Security Act, but you become vested after the effective date of 
your benefits, your railroad service will no longer be deemed to be in 
``employment'' as defined in section 210 of the Act. Your benefits and 
any benefits payable to your spouse or child under section 202(b), (c), 
or (d) of the Act will be terminated with the month preceding the month 
in which you become a vested worker. However, if you remain insured 
(see subpart B of this part) without the use of your railroad 
compensation, your benefits will instead be recalculated without using 
your railroad compensation. The recalculated benefits will be payable 
beginning with the month in which you become a vested worker. Any 
monthly benefits paid prior to the month you become a vested worker are 
deemed to be correct payments.

0
6. Sec.  404.1413 is revised to read as follows:


Sec.  404.1413  When will we certify payment to the Railroad Retirement 
Board (RRB)?

    (a) When we will certify payment to RRB. If we find that you are 
entitled to any payment under title II of the Social Security Act, we 
will certify payment to the Railroad Retirement Board if you meet any 
of the following requirements:
    (1) You are a vested worker; or
    (2) You are the wife or husband of a vested worker; or
    (3) You are the survivor of a vested worker and you are entitled, 
or could upon application be entitled to, an annuity under section 2 of 
the Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(a)); or
    (4) You are entitled to benefits under section 202 of the Social 
Security Act on the basis of the wages and self-employment income of a 
vested worker (unless you are the survivor of a vested worker who did 
not have a current connection, as defined in section 1(o) of the 
Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(o)) with 
the railroad industry at the time of his or her death).
    (b) What information does certification include? The certification 
we make to the Railroad Retirement Board for individuals entitled to 
any payment(s) under title II will include your name, address, payment 
amount(s), and the date the payment(s) should begin.
    (c) Applicability limitations. The applicability limitations in 
paragraphs (a)(1) through (4) of this section affect claimants who 
first become entitled to benefits under title II of the Social Security 
Act after 1974. (See also Sec.  404.1810.)

[FR Doc. 04-2410 Filed 2-5-04; 8:45 am]
BILLING CODE 4191-02-P