U n it e d St a t e s G o v e r n m e n t

M e m o r a n d u m

FORMG-11Sf(1-«2)

R a ilro a d R e tire m e n t B oard

June 10,2010

L-2010-03

TO:

FROM:

SUBJECT:

Kenneth P. Boehne 

Chief Financial Officer

Steven A. Bartholowy ./ 

General C ounseJ>^^f> \

Allocation of Employer Contributions to the RUI Administration Fund 

Administrative Expenses under the Railroad Unemployment Insurance Act

This is in reply to your request that I review your proposed method to allocate to 

administrative expenses, as authorized by section 11(a) of Railroad Unemployment 

Insurance Act (RUIA), a portion of contributions paid electronically by railroad 

employers under section 8 of that Act. As discussed below, I have no legal objection to 

your proposal.

Section 8(a) of the RUIA imposes upon covered employers a duty to pay contributions 

based upon compensation paid to the employees of that employer in that month, and 

sets forth the formula for calculating each employer’s contribution rate. Section 8(i) 

requires that these contributions be collected by the Railroad Retirement Board and 

"deposited by it with the Secretary of the Treasury of the United States, such part 

thereof as equals 0.65 per centum of the total compensation on which such 

contributions are based to be deposited to the credit of the fund and the balance to be 

deposited to the credit of the account.” Section 8(j) of the RUIA provides that 

contributions shall be collected and paid quarterly, or at such time as regulations of the 

Board may require. Accordingly, sections 345.115 and 345.116 of the Board’s 

regulations require contributions be paid on or before the last day of the calendar month 

following close of the calendar quarter.

Section 11(a) of the RUIA provides as follows:

RAILROAD UNEMPLOYMENT INSURANCE ADMINISTRATION FUND

Sec. 11. (a) The Secretary of the Treasury shall maintain in the unemployment 

trust fund established pursuant to section 904 of the Social Security Act 

an account to be known as the railroad unemployment insurance 

administration fund. This unemployment insurance administration fund
shall consist of (i) such part of all contributions collected pursuant to 

section 8 of this Act as equals 0.65 per centum of the total compensation 

on which such contributions are based; (ii) all amounts advanced to 

the fund by the Secretary of the Treasury pursuant to this section;

(iii) all amounts appropriated by subsection (b) of this section; 

and (iv) such additional amounts as Congress may appropriate for 

expenses necessary or incidental to administering this chapter.

Such additional amounts are authorized to be appropriated.

Regulations of the Board require that the employer also file a contribution report (Board 

Form DC-1 Employer’s Quarterly Report of Contributions) at the time contribution 

payment is due. See 20 CFR 345.111, 345.116. The form DC-1 shows the 

“compensation on which such contributions are based” as required by RUIA sections 

8(i) and 11(a). When an employer pays contributions by check accompanied by Form 

DC-1, the Bureau of Fiscal Operations consequently has at hand the information 

needed to calculate and deposit the correct proportion of the contributions to the RUIA 

administration fund pursuant to the foregoing provisions of law.

However, employers may also pay contributions via electronic fund transfers into the 

Treasury, while filing the Form DC-1 with the Board. Accordingly, at the time of deposit, 

the total compensation upon which the 0.65 percent administrative fund allocation must 

be based is not available. The portion of each electronic contribution payment allocated 

to the administration fund at time of deposit is therefore estimated based on a formula 

for an average employer contribution. The average is determined each year by the 

Board’s Actuary Office.

Previously, the estimated allocation at time of deposit of electronic fund transfers has 

not been recalculated after receipt of the Form DC-1 recording the actual compensation 

upon which the contribution was paid. You now propose to reallocate the estimated 

deposits to the RUIA administrative fund on a quarterly basis, using compensation 

reported on the DC-1 corresponding to the contribution payments during that quarter. 

The reallocations will be made in March, June, September and December of each year.

In my opinion, your proposed method comports with the allocation requirements of 

sections 8 and 11 of the RUIA. Accordingly, I have no legal objection to the proposed 

method of reallocating contributions to the RUIA administrative fund.

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