[Federal Register Volume 60, Number 27 (Thursday, February 9, 1995)]
[Proposed Rules]
[Pages 7729-7737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3278]



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RAILROAD RETIREMENT BOARD
20 CFR Parts 226 and 232

RIN 3220-AA58


Computing Employee, Spouse, and Divorced Spouse Annuities

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

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SUMMARY: The Railroad Retirement Board (Board) proposes to revise its 
regulations dealing with the computation of retirement annuities under 
the Railroad Retirement Act of 1974 (Act). The Board's current 
regulations regarding the computation of these annuities were 
promulgated under the Railroad Retirement Act of 1937 and no longer 
reflect the computational provisions contained in the Act.

DATES: Comments must be received by the Secretary to the Board on or 
before March 13, 1995.

ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 North 
Rush Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Assistant General 
Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, 
Illinois 60611, telephone (312) 751-4513, TTD (312) 751-4701.

SUPPLEMENTARY INFORMATION: The proposed revision to Part 226 (formerly 
``Computation of Annuity'') provides the rules for computing the amount 
of the employee, spouse and divorced spouse annuity, under the Railroad 
Retirement Act of 1974. In general, the annuity consists of two 
components or tiers. The first tier (tier I) is a social security level 
benefit that is computed under social security rules based on the 
employee's earnings under both the railroad retirement and the social 
security systems and is reduced by the amount of any social security 
benefit payable. The second tier (tier II) is based solely on the 
employee's railroad earnings.
    In limited circumstances the employee annuity may be increased by a 
``vested dual benefit''. An employee who has completed 25 years of 
railroad service may also be eligible for a supplemental annuity.
    The proposed rule is divided into seven (7) subparts:
    Subpart A sets forth definitions and lists other regulations 
related to this part.
    Subpart B describes the computation of the employee annuity which 
includes the social security level component (tier I) (proposed 
Sec. 226.10), the component based solely on railroad service (tier II) 
(proposed Sec. 226.11); the vested dual benefit (proposed Sec. 226.12), 
and a supplemental annuity (proposed Sec. 226.16). Proposed Sec. 226.13 
describes how cost-of-living increases apply to the annuity.
    Subpart C (proposed Secs. 226.30-226.35) parallels subpart B and 
describes the computation of the spouse and divorced spouse annuities. 
However, the divorced spouse is not entitled to a tier II benefit and 
no supplemental annuity or vested dual benefits are payable to spouses. 
Proposed Sec. 226.31 explains how the spouse and divorced spouse 
annuity are reduced due to receipt of a public pension which was not 
based upon employment covered by the Social Security Act on the last 
day of employment.
    Subpart D (proposed Secs. 226.50-226.52) describes the Railroad 
Retirement Family Maximum which is a statutory ``cap'' placed upon the 
total benefits payable under the RRA. Proposed Sec. 226.51 describes 
how the maximum is determined (the higher of $1,200 or an amount based 
upon the employee's final average monthly compensation (FAMC)). 
Proposed Sec. 226.52 describes how the ``reduction amount'' is computed 
when the maximum is exceeded and proposed Sec. 226.50 describes how the 
spouse, then the employee annuity is reduced until the total employee 
and spouse annuity equal the maximum. The railroad retirement maximum 
is computed at the employee's annuity beginning date but will be 
recomputed if the spouse later divorces the employee or the employee 
later becomes entitled to a vested dual benefit or supplemental 
annuity. A divorced spouse annuity is not counted in determining 
whether the RRA maximum is exceeded.
    Subpart E (proposed Secs. 226.60-226.63) explains how years of 
service and average monthly compensation (AMC) are determined. The tier 
II of the employee annuity is seven tenths of 1% (.007) times the 
product of an employee's years of service times his or her AMC. The 
spouse's tier II is 45% of the employee's tier II. See proposed 
Sec. 226.11 and 226.32.
    Subpart F (proposed Secs. 226.70-226.74) describes the reduction 
required due to receipt of workers' compensation benefits. The tier I 
of an employee, spouse, or divorced spouse annuity is reduced if the 
employee is under age 65 and is entitled to a disability annuity and 
another periodic benefit based upon disability pursuant to some other 
Federal or state law or plan (proposed Sec. 226.70). The reduction 
amount is first applied to the tier I of any spouse or divorced spouse 
annuity payable, then to the employee tier I (Sec. 226.71). Certain 
disability payments do not cause a reduction. These are listed in 
proposed Sec. 226.72.
    The formula for the reduction amount is found at proposed 
Sec. 226.71. The reduction provided for in this part applies if the 
total tier I components payable to the employee and spouse (or divorced 
spouse) plus workers' compensation or public disability benefit exceed 
80% of the employee's prior average current earnings. Proposed 
Sec. 226.73 explains what events cause a change in the reduction 
amount. Proposed Sec. 226.74 provides that ``average current earnings'' 
must be recomputed periodically to take into account inflation. The 
redetermined average current earnings are used only if it results in a 
lower reduction amount.
    Subpart G of the proposed rule (Secs. 226.90-226.92) explains how 
and when an annuity is recomputed to take into account railroad service 
and social security earnings after an annuitant retires.
    Part 232--Spouses' Annuities is now obsolete; it is proposed to be 
removed.
    The Board has determined that this is not a significant regulatory 
action under Executive Order 12866; therefore, no regulatory impact 
analysis is required. There are no information collections associated 
with this rule.

List of Subjects in 20 CFR Part 226 and Part 232

    Pensions, Railroad employees, Railroad retirement.

    1. For the reasons set out in the preamble, Part 226 of Title 20 of 
the Code of Federal Regulations (formerly ``Computation of Annuity'') 
is proposed to be revised as follows: [[Page 7730]] 

PART 226--COMPUTING EMPLOYEE, SPOUSE, AND DIVORCED SPOUSE ANNUITIES

Subpart A--General

Sec.
226.1  Introduction.
226.2  Definitions.
226.3  Other regulations related to this part.

Subpart B--Computing an Employee Annuity

226.10  Employee tier I.
226.11  Employee tier II.
226.12  Employee vested dual benefit.
226.13  Cost-of-living increase in employee vested dual benefit.
226.14  Employee regular annuity rate.
226.15  Deductions from employee regular annuity rate.
226.16  Supplemental annuity.

Subpart C--Computing a Spouse or Divorced Spouse Annuity

226.30  Spouse or divorced spouse tier I.
226.31  Reduction for public pension.
226.32  Spouse tier II.
226.33  Spouse regular annuity rate.
226.34  Divorced spouse regular annuity rate.
226.35  Deductions from regular annuity rate.

Subpart D--Railroad Retirement Family Maximum

226.50  General.
226.51  Maximum monthly amount.
226.52  Total annuity subject to maximum.
Subpart E--Years of Service and Average Monthly Compensation
226.60  General.
226.61  Use of military service.
226.62  Computing the average monthly compensation.
226.63  Determining monthly compensation.
Subpart F--Reduction for Workers' Compensation and Disability Benefits 
Under a Federal, State, or Local Law or Plan
226.70  General.
226.71  Initial reduction.
226.72  Benefits that do not cause a reduction.
226.73  Changes in reduction amount.
226.74  Redetermination of reduction.
Subpart G--Recomputation To Include Additional Railroad Service and 
Compensation
226.90  When recomputation applies.
226.91  How an employee annuity rate is recomputed.
226.92  Effect of recomputation on spouse and divorced spouse 
annuity.

    Authority: 45 U.S.C. 231(f)(b)(5).

PART 226--COMPUTING EMPLOYEE, SPOUSE, AND DIVORCED SPOUSE ANNUITIES

Subpart A--General


Sec. 226.1  Introduction.

    This part explains how employee, spouse, and divorced spouse 
annuities are computed. It describes how to determine the years of 
railroad service and average monthly compensation used in computing the 
employee annuity rate. The railroad retirement family maximum, cost-of-
living increases, and the recomputation of an annuity to include 
additional railroad earnings are also explained in this part.


Sec. 226.2  Definitions.

    Except as otherwise expressly noted, as used in this part--
    Annuity means a payment due an entitled individual for a calendar 
month and payable to him or her on the first day of the following 
month.
    Eligible means that an individual meets all the requirements for 
payment of an annuity but has not yet applied for one.
    Employee means an individual who is or has been in the service of 
an employer as defined in part 202 of this chapter.
    Entitled means that an individual has applied for and has 
established his or her rights to benefits.
    Railroad Retirement Act means the Railroad Retirement Act of 1974, 
as amended.
    Retirement age means, with respect to an employee, spouse or 
divorced spouse who attains age 62 before January 1, 2000, age 65. For 
an employee, spouse or divorced spouse who attains age 62, after 
December 31, 1999, retirement age means the age provided for in section 
216(l) of the Social Security Act.
    Social Security Act means the Social Security Act as amended.


Sec. 226.3  Other regulations related to this part.

    This part is closely related to part 216 of this chapter, which 
describes when an employee, spouse, or divorced spouse is eligible for 
an annuity, part 225 of this chapter, which explains the primary 
insurance amounts used in computing the employee, spouse and divorced 
spouse annuity rates, and part 229 of this chapter, which describes 
when and how employee and spouse annuities can be increased under the 
social security overall minimum. The creditable service and 
compensation used in determining the years of service and average 
monthly compensation are explained in parts 210 and 211 of this 
chapter. The beginning and ending dates of annuities are explained in 
part 218 of this chapter.

Subpart B--Computing an Employee Annuity


Sec. 226.10  Employee tier I.

    Tier I of an employee annuity is an amount similar to the social 
security benefit the employee would receive based on combined railroad 
and social security earnings. The tier I benefit is computed as 
follows:
    (a) A tier I PIA is computed based on combined railroad and social 
security earnings, as shown in Sec. 225.11 of this chapter. This PIA is 
adjusted for any delayed retirement credits or cost-of-living 
increases, as shown in subparts D and E of part 225 of this chapter, 
and is reduced for receipt of a pension based upon non-covered service 
in accordance with section 215(a)(7) of the Social Security Act. The 
tier I of a disability annuity may also be adjusted for other benefits 
based on disability, as shown in Secs. 226.70-226.74 of this part. 
Except in the case of an employee who retires at age 60 with 30 years 
of service, if the result is not a multiple of $1, it is rounded to the 
next lower multiple of $1. In the case of an employee who retires with 
an age reduced annuity based upon 30 years of service (see Sec. 216.31 
of this chapter) the tier I is not rounded until all reductions have 
been made.
    (b) If the employee is entitled to a reduced age annuity (see 
Sec. 216.31 of this chapter), the rate from paragraph (a) of this 
section is multiplied by a fraction for each month the employee is 
under retirement age on the annuity beginning date. The result is 
subtracted from the rate in paragraph (a) of this section. At present 
the fraction is \5/9\ of 1% (or \1/180\). If the employee retires 
before age 62 with at least 30 years of service, the employee is deemed 
age 62 for age reduction purposes and a 20% reduction is applied. This 
reduction remains in effect until the first full month throughout which 
the employee is 62, at which time the tier I is recomputed to reflect 
interim increases in the national wage levels and the age reduction 
factor is recomputed, if necessary, in accordance with this paragraph.
    (c) The amount from paragraph (a) or (b) of this section is reduced 
by the amount of any monthly benefit payable to the employee under 
title II of the Social Security Act, including any social security 
benefit payable under a totalization agreement between the Social 
Security Administration and another country. The social security 
benefit used to reduce the tier I may be an age or disability benefit 
on the employee's own earnings record, a benefit based on the earnings 
record of another person, or the total of two types of benefits. The 
amount of the social security benefit used to reduce tier I is before 
any deduction for excess earnings. It is after any reduction for 
[[Page 7731]] other benefits based on disability. The result cannot be 
less than zero.
    (d) The tier I is subject to automatic annual increases as provided 
for in subpart E of part 225 of this chapter.
    Example: An employee born on November 3, 1919, becomes entitled to 
an age annuity effective October 1, 1982. Retirement age for 
individuals born in 1919 is age 65. He has less than 30 years of 
service. His tier I PIA is $712.60, which is rounded down to $712. 
Since the employee is 25 months under age 65 when his annuity begins, 
$712 is multiplied by \25/180\ (\1/180\ for each month under age 65), 
to produce an age reduction of $98.89, and a tier I rate after age 
reduction of $613.11. The employee is also entitled to a social 
security benefit of $190 a month. The employee's final tier I rate is 
$423.11.


Sec. 226.11  Employee tier II.

    The tier II of an employee annuity is based only on railroad 
service. For annuities awarded after September 1981, the tier II 
benefit is computed as follows:
    (a) The product obtained by multiplying the employee's creditable 
years of service by the average monthly compensation, determined as 
shown in subpart E of this part, is multiplied by seven-tenths of 1 
percent (.007).
    (b) If the employee is entitled to a vested dual benefit (see 
Sec. 226.12 of this part), the result from paragraph (a) of this 
section is reduced by 25 percent of the vested dual benefit amount. 
This reduction is made before reduction of the tier II benefit for age. 
The result cannot be less than zero.
    (c) If the railroad retirement family maximum applies, as shown in 
Secs. 226.50-226.52 of this part, the amount from paragraph (a) or (b) 
of this section is reduced by the smaller of--
    (1) The difference between the total railroad retirement maximum 
reduction amount and the reductions in the spouse and supplemental 
annuities; or
    (2) The total tier II amount from paragraph (a) or (b) of this 
section.
    (d) If the employee is entitled to a reduced age annuity (see 
Sec. 216.31 of this chapter), the rate from paragraphs (a) through (c) 
of this section is reduced in the same manner as the tier I as provided 
for in Sec. 226.10 of this part. In the case of an employee with 30 
years of service who is entitled to a reduced age annuity (see 
Sec. 216.31 of this chapter), the age reduction only applies to the 
tier I component; no age reduction applies to the tier II component.
    (e) The total tier II amount (paragraphs (a) through (d)), is 
increased by 32.5 percent of the percentage increase in the cost of 
living increase to the tier I annuity component. Each cost-of-living 
increase is paid only to an employee whose annuity begins on or before 
the effective date of the increase. The increases are effective on the 
same date as any cost-of-living increase to the tier I annuity 
component.


Sec. 226.12  Employee vested dual benefit.

    (a) General. An employee vested dual benefit is payable, in 
addition to tiers I and II, to an employee who meets one of the 
following requirements:
    (1) Employee worked in the railroad industry in 1974. An employee 
who worked for a railroad in 1974 and retired after 1974 is considered 
vested if on December 31, 1974, he or she had both 10 years of railroad 
service and sufficient quarters of coverage under the Social Security 
Act to qualify for a social security benefit. An employee qualified on 
this basis is eligible for vested dual benefit amounts computed on his 
or her railroad and social security credits through December 31, 1974.
    (2) Employee who did not work for a railroad in 1974. An employee 
who did not work in the railroad industry in 1974, but who had 25 or 
more years of railroad service before 1975 or a current connection with 
the railroad industry on December 31, 1974, as defined in part 216 of 
this chapter, or a current connection when he or she retired, is also 
considered vested under the same conditions as an employee who had 
worked in the railroad industry in 1974.
    (3) An employee who completed 10 years or more years of railroad 
service (but less than 25) before 1975 but left the industry before 
1975 and did not have a current connection on December 31, 1974 or when 
he or she retired. Such an employee is considered vested only if he or 
she had sufficient social security quarters of coverage to qualify for 
a social security retirement benefit as of the end of the year prior to 
1975 in which he or she left the railroad industry. The vested dual 
benefit amount is based only on credits acquired through the last year 
of pre-1975 railroad service instead of through December 31, 1974.
    (b) Computation. The employee vested dual benefit is computed as 
follows:
    (1) The combined earnings dual benefit PIA is subtracted from the 
total of the railroad earnings dual benefit PIA and the social security 
earnings dual benefit PIA (see part 225 of this chapter for an 
explanation of these PIA's).
    (2) The result from paragraph (b)(1) of this section is adjusted 
for any applicable cost-of-living increase, as shown in Sec. 226.13 of 
this part.
    (3) If the employee is entitled to a reduced age annuity (see 
Sec. 216.1 of this chapter), the rate from paragraph (b)(2) of this 
section is reduced in the same manner as the tier I as provided for in 
Sec. 226.10 of this part. In the case of an employee with 30 years of 
service who is entitled to an annuity reduced for age, the age 
reduction applies only to the tier I component; no age reduction 
applies to the vested dual benefit.
    (4) The vested dual benefit payable in a given year may also be 
reduced for insufficient funding as shown in part 233 of this chapter.
    Example: An employee born on November 3, 1919 becomes entitled to 
an annuity including a vested dual benefit on October 1, 1982. His 
combined earnings dual benefit PIA is $254.90, his railroad earnings 
dual benefit PIA is $93.80, and his social security earnings dual 
benefit PIA is $244.70. The vested dual benefit before cost-of-living 
increase is $83.60 ($93.80+244.70-254.90=83.60). A cost-of-living 
increase of $67.72 (81 percent of $83.60. See Sec. 226.13 of this part) 
results in a vested dual benefit of $151.32. Retirement age for a 
person born in 1919 is age 65. Since the employee is 25 months under 
age 65 when the annuity begins, $151.32 is multiplied by \25/180\, to 
produce an age reduction of $21.02 and a vested dual benefit rate after 
age reduction of $130.30.


Sec. 226.13  Cost-of-living increase in employee vested dual benefit.

    If the employee's annuity begins June 1, 1975 or later, a cost-of-
living increase is added to the total vested dual benefit amount. This 
increase is based on the cost-of-living increases in social security 
benefits during the period from January 1, 1975, to the earlier of the 
date the employee's annuity begins or January 1, 1982. The increases 
are effective on June 1 of each year through 1981. The percentage 
increase for annuities that begin June 1, 1981, or later is 81 percent.


Sec. 226.14  Employee regular annuity rate.

    The regular annuity rate payable to the employee is the total of 
the employee tier I, tier II, and vested dual benefit amounts, from 
Secs. 226.10-226.12.


Sec. 226.15  Deductions from employee regular annuity rate.

    The employee annuity as computed under this subpart may be reduced 
by premiums required for supplemental medicare coverage, income tax 
withholding, recovery of debts due the Federal government, garnishment 
pursuant to part 350 of the chapter and [[Page 7732]] property awards 
as provided for in part 295 of this chapter.


Sec. 226.16  Supplemental annuity.

    A supplemental annuity is payable in addition to tiers I and II and 
the vested dual benefit to an employee who meets the requirements of 
Sec. 216.41 of this chapter. The supplemental annuity is equal to $23 
plus $4 for each full year of service, over 25 years of service, up to 
a maximum of $43. The supplemental annuity may be reduced by the 
railroad retirement family maximum as shown in Secs. 226.50-226.52 of 
this part, or for the receipt of a private pension benefit as explained 
in part 227 of this chapter.

Subpart C--Computing a Spouse or Divorced Spouse Annuity


Sec. 226.30  Spouse or divorced spouse tier I.

    (a) General. The tier I of a spouse or divorced spouse annuity is 
an amount similar to the social security benefit the spouse or divorced 
spouse would receive based on the employee's combined railroad and 
social security earnings. In the case of an employee who retires before 
age 62 with 30 years of service, the spouse tier I is simply 50% of the 
employee tier I until the first month throughout which both the 
employee and spouse are age 62 at which time the tier I is an amount 
similar to the social security benefit on the employee's combined 
railroad and social security earnings.
    (b) Reduction for other disability benefits. The spouse or divorced 
spouse tier I may be adjusted for other disability benefits received by 
a disabled employee, as shown in Secs. 226.70-226.74 of this part.
    (c) Reduction for government pension. The amount in paragraphs (a) 
or (b) of this section is reduced (but not below zero) by the amount of 
any government pension payable on the spouse's or divorced spouse's 
earnings record, as described in Sec. 226.31 of this part.
    (d) Rounding. The last tier I rate from paragraph (a), (b) or (c) 
of this section 5 if not a multiple of $1, is rounded to the next lower 
multiple of $1. However, in cases in which the spouse is in receipt of 
an age reduced 60/30 annuity or in which the employee with 30 years of 
service began a disability annuity July 1, 1984, or later, the spouse 
tier I is not rounded until all reductions have been made. See 
Sec. 226.10(a).
    (e) Age reduction. If the spouse or divorced spouse is entitled to 
a reduced age annuity (see Secs. 216.51 and 216.52 of this chapter), 
the rounded tier I rate from paragraph (d) of this section is 
multiplied by a fraction for each month the spouse or divorced spouse 
is under retirement age on the date the annuity begins. The result is 
subtracted from the rate from paragraph (d) of this section. At present 
the fraction is \25/36\ of 1% (or \1/144\). In the case of an employee 
with 30 years of service who is awarded a disability annuity on July 1, 
1984, or later, where the spouse does not have a child of the employee 
under age 18 in care, the spouse tier I is reduced for each month the 
spouse is under retirement age on the date the spouse annuity begins. 
If the spouse is age 60 or 61, he or she is deemed to be age 62 for 
purposes of the age reduction. The age reduction is applied before 
reduction for a government pension.
    (f) Reduction for social security benefit. The previous tier I 
rate, from paragraph (d) or (e) of this section, is reduced by the 
amount of any monthly benefit payable to the spouse or divorced spouse 
under title II of the Social Security Act. The social security benefit 
used to reduce tier I may be an age or disability benefit on the 
spouse's or divorced spouse's own earnings record, a benefit based on 
the earnings record of another person, or the total of two types of 
benefits. The result cannot be less than zero.
    (g) Reduction for employee annuity. If the spouse or divorced 
spouse is entitled to an employee annuity on his or her own wage 
record, the spouse or divorced spouse tier I is reduced for the 
spouse's own employee annuity as follows:
    (1) Spouse. If either the employee or the spouse had some railroad 
service before 1975, the previous tier I rate from paragraphs (d) 
through (f) of this section, whichever applies, is reduced (but not 
below zero) by the spouse's own employee tier I rate, as computed under 
Sec. 226.10 of this part. If both the employee and spouse began 
railroad service after 1974, the spouse's total annuity rate, as shown 
in Sec. 226.33, is reduced (but not below zero) by the spouse's own 
employee total annuity rate, as shown in Sec. 226.14. These reductions 
are effective from the later of the date the employee or spouse annuity 
begins.
    (2) Divorced spouse. The previous tier I rate from paragraphs (d) 
through (f) of this section, whichever applies, is reduced (but not 
below zero) by the divorced spouse's own employee total annuity rate as 
shown in Sec. 226.14.
    Example: The computation of the spouse tier I may be illustrated as 
follows: A railroad employee's wife who was born on September 16, 1920 
becomes entitled to a spouse annuity on October 1, 1982. She is also 
entitled to a social security benefit of $190 a month effective October 
1, 1982. Her husband's employee tier I PIA is $712.60. The spouse tier 
I is $356.30 (50 percent of $712.60). This is rounded down to $356. 
Since she is 35 months under age 65, the present retirement age when 
the annuity begins, $356 is multiplied by \35/144\, to produce an age 
reduction of $86.53 and a tier I rate after age reduction of $269.47. 
Her final tier I rate effective October 1, 1982, after reduction for 
social security benefits, is $79.47 ($269.47-$190.00).


Sec. 226.31  Reduction for public pension.

    (a) The tier I annuity component of a spouse/divorced spouse 
annuity, as described in the preceding sections of this part, is 
reduced if the spouse/divorced spouse is in receipt of a public 
pension.
    (b) When reduction is required. Unless the spouse or divorced 
spouse annuity meets one of the exceptions in paragraph (d) of this 
section, the tier I annuity component is reduced each month the 
annuitant is receiving a monthly pension from a Federal, state, or 
local government agency (government pension), but excluding a pension 
paid by a government of a foreign country, for which he or she was 
employed in work not covered by social security on the last day of such 
employment. For purposes of this section, Federal government employees 
are not considered to be covered by social security if they are covered 
for Medicare but are not otherwise covered by social security.
    (c) Payment in a lump sum. If the government pension is not paid 
monthly or is paid in a lump-sum payment, the Board will determine how 
much the pension would be if it were paid monthly and then reduce the 
monthly railroad retirement annuity accordingly. The number of years 
covered by a lump-sum payment and thus the period when the annuity will 
be reduced, will generally be clear from the pension plan. If one of 
the alternatives to a lump-sum payment is a life annuity, and the 
amount of the monthly benefit for the life annuity can be determined, 
the reduction will be based on that monthly benefit amount. Where the 
period or the equivalent monthly pension benefit is not clear, it may 
be necessary for the Board to determine the reduction period on an 
individual basis.
    (d) Exceptions. The reduction does not apply:
    (1) If the annuitant is receiving a government pension based on 
employment for an interstate instrumentality; or
    (2) If the annuitant receives or is eligible to receive a 
government pension [[Page 7733]] for one or more months in the period 
December 1977 through November 1982 and he or she meets the 
requirements for social security benefits that were applied in January 
1977 (even though he or she did not actually claim such benefits nor 
become entitled to such benefits until a later month). The January 1977 
requirements are, for a man, a one-half support test (see paragraph (e) 
of this section), and, for a woman claiming benefits as a divorced 
spouse, marriage for at least 20 years to the insured worker. A person 
is considered eligible for a government pension for any month in which 
he or she meets all the requirements for payment except that he or she 
is working or has not applied; or
    (3) If the annuitant was receiving or eligible (as defined in 
paragraph (d)(2) of this section) to receive a government pension for 
one or more months before July 1983, and he or she meets the one-half 
support test (see paragraph (e) of this section). If the annuitant 
meets the exception in this paragraph but he or she does not meet the 
exception in paragraph (d)(2) of this section, December 1982 is the 
earliest month for which the reduction will not affect his benefits; or
    (4) If the annuitant has been eligible for a government pension in 
a given month except for a requirement which delayed eligibility for 
such pension until the month following the month in which all other 
requirements were met, the Board will consider the annuitant to be 
eligible in that given month for the purpose of meeting one of the 
exceptions in paragraphs (d)(2) and (d)(3) of this section. If the 
annuitant meets an exception solely because of this paragraph, his or 
her benefits will be unreduced for months after November 1984 only.
    (e) The one-half support test. For a man to meet the January 1977 
requirement as provided in the exception in paragraph (d)(2) of this 
section and for a man or a woman to meet the exception in paragraph 
(d)(3) of this section, he or she must meet a one-half support test. 
One-half support is defined in part 222 of this chapter. One-half 
support must be met at one of the following times:
    (1) If the employee upon whose compensation the spouse or divorced 
spouse annuity is based had a period of disability, as defined in part 
220 of this chapter, which did not end before he or she became entitled 
to an age and service or disability annuity, the spouse/divorced spouse 
annuitant must have been receiving at least one-half support from the 
employee either--
    (i) At the beginning of the employee's period of disability; or
    (ii) At the time the employee became entitled to an age and service 
or disability annuity.
    (2) If the employee upon whose compensation the spouse or divorced 
spouse annuity is based did not have a period of disability, as defined 
in part 220 of this chapter, at the time of his or her entitlement, the 
spouse or divorced spouse annuitant must have been receiving at least 
one-half support from the employee at the time the employee became 
entitled to an age and service or disability annuity.
    (f) Amount of reduction. (1) If the spouse/divorced spouse 
annuitant becomes eligible for a government pension after June 1983, 
the Board will reduce (to zero, if necessary) the tier I annuity 
component by two-thirds of the amount of the monthly pension. If the 
amount of the reduction is not a multiple of 10 cents, it will be 
rounded to the next higher multiple of 10 cents.
    (2) If the spouse/divorced spouse annuitant became eligible for a 
government pension before July 1983 and he or she did not meet one of 
the exceptions in paragraph (d) of this section, the Board will reduce 
(to zero, if necessary) the tier I component by the full amount of the 
pension for months before December 1984 and by two-thirds the amount of 
his or her monthly pension for months after November 1984. If the 
amount of the reduction is not a multiple of 10 cents, it will be 
rounded to the next higher multiple of 10 cents.
    (g) Reduction not applicable. This reduction is not applied to 
claimants who both filed and were entitled to a spouse benefit prior to 
December 1977.


Sec. 226.32  Spouse tier II.

    The spouse tier II benefit is computed as follows:
    (a) The employee's tier II amount as computed under Sec. 226.11 of 
this part, after any reduction for entitlement to a vested dual benefit 
but before reduction for the railroad retirement family maximum, is 
multiplied by 45 percent. The spouse tier II is recomputed if the 
employee's tier II rate is reduced for entitlement to a vested dual 
benefit after the beginning date of the spouse annuity.
    (b) If tier I of a spouse annuity is reduced for the spouse's 
employee annuity, as provided for in Sec. 226.30(g) of this part, the 
reduction is restored in tier II. The restored amount is payable on the 
effective date of the spouse or the employee tier I benefit, whichever 
is later. The previous tier II rate is increased by the restored 
amount, which is determined as follows:
    (1) Initial restored amount. The restored amount is the amount by 
which the spouse tier I was reduced by reason of receipt of an employee 
annuity on the date the restored amount is first payable. The restored 
amount is only payable if either the employee or spouse had railroad 
service prior to 1975.
    (2) Recomputation of restored amount. The restored amount is 
recomputed if the spouse becomes entitled to a government pension, a 
social security benefit, or a different type of social security benefit 
after the date the initial restored amount is effective. The recomputed 
amount is the amount by which the spouse tier I is reduced by reason of 
receipt of an employee annuity on the effective date of the entitlement 
to a government pension or social security benefit.
    (3) Cost-of-living increase in restored amount. If an initial or 
recomputed restored amount is effective before the effective date of 
the cost-of-living increase shown in paragraph (e) of this section, the 
restored amount is multiplied by the percentage increase that applies. 
The result is added to the restored amount on the effective date of the 
increase for each year that the increase is payable.
    (c) If the employee's tier II has been reduced pursuant to section 
3(g)(2) of the Railroad Retirement Act (takeback provision) the spouse 
tier II is reduced by one half of the ``takeback'' in the employee tier 
II.
    (d) If the railroad retirement family maximum applies, as shown in 
Secs. 226.50-226.52 of this part, the spouse tier II rate, as 
determined in paragraphs (a) through (c) of this section, is reduced by 
the smaller of--
    (1) The total railroad retirement maximum reduction amount; or
    (2) The previous spouse tier II rate.
    (e) The tier II rate, from paragraphs (a) through (d) of this 
section, is increased by the same percentage as the employee tier II 
increase described in Sec. 226.11(e) of this part.
    (f) If the spouse is entitled to a reduced age annuity (see 
Sec. 216.51 of this chapter), the tier II rate, as determined in 
paragraphs (a) through (e) of this section is reduced in the same 
manner as the tier I as provided for in Sec. 226.30(e) of this part.
    Example: An employee's tier II rate is $329.63 effective October 
17, 1981. The spouse rate is $148.33 (45 percent  x  $329.63) effective 
October 17, 1981. This is increased to $151.89 effective June 1, 1982 
by a cost-of-living increase of 2.4 percent. The spouse is 35 months 
under age 65, the present retirement age, [[Page 7734]] when the 
annuity begins. The $151.89 rate is multiplied by \35/144\ to produce 
an age reduction of $36.92. This is subtracted from $151.89 to produce 
a final rate of $114.97.


Sec. 226.33  Spouse regular annuity rate.

    The final tier I and tier II rates, from Secs. 226.30 and 226.32, 
are added together to obtain the total spouse regular annuity rate.


Sec. 226.34  Divorced spouse regular annuity rate.

    The regular annuity rate of a divorced spouse is equal to his or 
her tier I amount. The divorced spouse is not entitled to a tier II 
benefit.


Sec. 226.35  Deductions from regular annuity rate.

    The regular annuity rate of the spouse and divorced spouse annuity 
may be reduced by premiums required for supplemental medicare coverage, 
income tax withholding (spouse annuity only), recovery of debts due the 
Federal government, and garnishment pursuant to part 350 of this 
chapter.

Subpart D--Railroad Retirement Family Maximum


Sec. 226.50  General.

    There is a monthly ceiling on total family benefits which limits 
the amount of certain portions of the employee and spouse annuity. This 
railroad retirement family maximum amount varies according to the 
employee's earnings in the ten-year period that ends with the year in 
which his or her annuity begins. If the employee and spouse annuity 
amounts described in Sec. 226.52 of this part are higher than the 
maximum from Sec. 226.51 of this part, first the spouse tier II, then 
the supplemental annuity and, finally, the employee tier II are reduced 
until the total annuity amount is equal to the maximum or until the 
spouse tier II and the employee supplemental annuity and tier II have 
been reduced to zero, whichever comes first. The reduction for the 
railroad retirement family maximum is first computed from the date the 
employee's annuity begins. It is recomputed if the employee's tier II 
rate is reduced for entitlement to a vested dual benefit. It is also 
recomputed if a workers' compensation or other disability benefit 
begins or ends, or the employee's tier I benefit or supplemental 
annuity begins after the beginning date of the regular employee 
annuity. Finally, it is recomputed if a spouse who was entitled to an 
annuity divorces the employee or the spouse annuity entitlement ends.


Sec. 226.51  Maximum monthly amount.

    The railroad retirement family maximum is equal to an employee's 
``final average monthly compensation'' (FAMC) up to \1/2\ of \1/12\ of 
the annual maximum tier I earnings as shown in part 224 of this chapter 
in the year the annuity begins plus 80 percent of so much of his or her 
FAMC as exceeds \1/2\ of \1/12\ of the tier I maximum in the year the 
annuity begins. For this purpose, the FAMC is determined by dividing 
the individual's total earnings up to the tier II earnings limit as 
shown in part 211 of this chapter for the two highest-earnings years 
out of the last 10 calendar years, including the year of retirement, by 
24. The railroad retirement maximum cannot be more than the FAMC and 
cannot be less than $1,200.
    Example: An employee's annuity begins on December 2, 1982. He has 
yearly earnings that exceed the tier II annual maximum of $24,300 in 
1982 and $22,200 in 1981. The FAMC is the sum of the tier II maximum 
for 1981 and 1982 divided by 24 [($24,300 + $22,200 <divide> 24)] or 
$1,937.50. The maximum which may be credited to a month for tier I in 
1982 is $2,700. The family maximum is $1,350 (\1/2\ of \1/12\ of the 
annual tier I maximum) plus $470 (80% of the difference between 
$1,937.50 and $1,350) or $1,820.


Sec. 226.52  Total annuity subject to maximum.

    The total annuity amount which is compared to the maximum monthly 
amount to determine if a reduction for the railroad retirement family 
maximum applies is determined by adding together the amounts in 
paragraphs (a) and (b) of this section. A hypothetical spouse annuity 
amount is included from the beginning date of the employee annuity if 
the spouse is not entitled to an annuity at the time the maximum 
calculation is made.
    (a) Employee annuity amounts. The following amounts are added 
together--
    (1) The employee tier I amount, effective on the date the 
employee's tier I benefit begins or, if later, on the date a reduction 
for other disability benefits begins or ends, as shown in Sec. 226.71 
of this part. This amount is before any reduction for age or social 
security benefits but after including any delayed retirement credits, 
after any reduction for other disability benefits, and after rounding; 
and
    (2) The employee tier II rate before reduction for the railroad 
retirement family maximum, effective on the employee's annuity 
beginning date and, if later, on the date the tier II is first reduced 
for a vested dual benefit, as shown in Sec. 226.11 of this part; and
    (3) The initial supplemental annuity rate effective on the date the 
supplemental annuity begins, before any reduction for a private 
pension, as shown in part 227 of this chapter.
    (b) Spouse annuity amounts. The following amounts are added 
together--
    (1) The spouse tier I amount, which is or would be effective on the 
date the employee's annuity or tier I benefit begins, as shown in 
Sec. 226.30. This amount is before any reduction for other disability 
benefits, age, or social security benefits, but after any reduction for 
a government pension or employee annuity; and
    (2) The spouse tier II rate which is or would be effective on the 
employee's annuity beginning date, the date the employee's tier I 
benefit begins, or the date the employee's tier II rate is reduced for 
a vested dual benefit, as shown in Sec. 226.11. This rate includes the 
restored amount but does not include any cost-of-living increase in the 
tier II original rate or restored amount. It is the rate before 
reduction for the railroad retirement family maximum or age minus any 
cost-of-living increases.

Subpart E--Years of Service and Average Monthly Compensation


Sec. 226.60  General.

    The years of service and average monthly compensation used in 
computing an employee's tier II annuity rate are based on the 
employee's creditable railroad service and compensation as described in 
parts 210 and 211 of this chapter. In computing the average monthly 
compensation, the compensation for each year cannot be higher than 
twelve times the tier II monthly maximum creditable for that year, as 
described in part 211 of this chapter.


Sec. 226.61  Use of military service.

    (a) Claim for use of military service. An employee is deemed to 
have filed a claim for the use of military service and earnings as 
service and compensation under the Railroad Retirement Act if--
    (1) The employee indicates on the annuity application or another 
signed statement that he or she has military service;
    (2) The employee does not specifically request that the military 
service be credited as wages under the Social Security Act;
    (3) The military service is creditable under the Railroad 
Retirement Act, as shown in part 212 of this chapter; and
    (4) Using the military service as railroad service and compensation 
would be to the employee's advantage [[Page 7735]] (the employee and 
his or her family would receive higher total benefits than if the 
military service were credited under the Social Security Act).
    (b) Effective date for use of military service. Military service 
can be used as service and compensation under the Railroad Retirement 
Act starting with the date the annuity begins but no earlier than 
twelve months before the employee files an application or statement 
showing that he or she has military service.


Sec. 226.62  Computing average monthly compensation.

    The employee's average monthly compensation is computed by first 
determining the employee's highest 60 months of railroad compensation 
(disregarding compensation in excess of the maximum creditable tier II 
compensation for that year). The total of the highest 60 months is then 
divided by 60 to determine the average monthly compensation.


Sec. 226.63  Determining monthly compensation.

    (a) Based on yearly compensation. If Board records do not show 
monthly compensation for a year, the monthly compensation is determined 
by dividing the total compensation reported for the year by the number 
of months of service credited to the employee for that year.
    (b) For employee with government employment and no railroad service 
for 60 month period before annuity begins.--(1) General. The 
compensation used in determining the average monthly compensation (AMC) 
for an employee who has not worked in the railroad industry for the 60 
month period before the month the employee's annuity begins and whose 
major employment during that period was for a government agency listed 
in Sec. 216.16 of this chapter is indexed. The compensation is indexed 
by multiplying it by the quotient obtained by dividing the average 
annual wage for the indexing year by the average annual wage for the 
year being indexed. If the month for which compensation is being 
indexed is before 1951, the average annual wage for 1951 is used.
    (2) Indexing year defined. The indexing year is the second year 
before the year in which the annuity begins.

Subpart F--Reduction for Workers' Compensation and Disability 
Benefits Under a Federal, State or Local Law or Plan


Sec. 226.70  General.

    For any month an employee disability annuitant is entitled to 
workers' compensation or a public disability benefit, the tier I 
benefit of the spouse or divorced spouse is reduced due to receipt of 
such benefits. (If both spouse and divorced spouse annuities are 
payable, the reduction amount is divided and applied in equal amounts 
to both the spouse and divorced spouse tier I benefits.) The employee 
tier I is reduced by the difference between the total reduction amount, 
described in Sec. 226.71 of this part, and the reduction in the spouse 
and divorced spouse tier I benefits.


Sec. 226.71  Initial reduction.

    (a) When reduction is effective. A reduction for other disability 
benefits begins with the first month the employee is receiving both a 
disability annuity and workers' compensation or a public disability 
benefit. The reduction ends with the month before the month in which 
the employee becomes 65 years old or with the month in which the 
workers compensation or public disability benefit ends.
    (b) Amount of reduction. The reduction for other disability 
benefits equals the difference between--
    (1) The total tier I rates of the employee, spouse, and divorced 
spouse, before any reductions (age, public pension, social security 
benefits, etc.) plus the monthly amount of the workers' compensation of 
public disability benefit; and
    (2) The higher of--
    (i) Eighty percent of the employee's average current earnings, as 
defined in this section; or
    (ii) The total tier I rates, as described in paragraph (1) of this 
section.
    Example 1: Harold is entitled to a monthly disability annuity with 
a tier I component of $507 and a monthly public disability benefit of 
$410 from the state. Eighty percent of Harold's average current 
earnings is $800. Because this amount is higher than Harold's tier I 
component, to determine the reduction for other disability benefits the 
Board subtracts this amount ($800) from the total of Harold's tier I 
component ($507) and public disability benefit ($410) which results in 
a reduction amount of $117 ($917-$800). This leaves Harold with a 
reduced tier I amount of $390 ($507-$117).
    Example 2: Tom is entitled to a disability annuity with a tier I 
component of $560. His wife and divorced wife are both entitled to 
annuities with tier I components of $280 each. Total benefits are 
$1,120. Tom is receiving a monthly workers' compensation benefit of 
$500 from the state. Eighty percent of Tom's average current earnings 
is $820. Because the total benefit ($1,120) is higher than Tom's 
average current earnings, to determine the reduction for other 
disability benefits the Board subtracts this amount from $1,620 ($1,120 
plus $500) which results in a reduction amount of $500. This means that 
the tier I of the spouse and divorced spouse annuity are each reduced 
by $250.
    (c) Average current earnings, defined. An employee's ``average 
current earnings'' is the highest of--
    (1) The average monthly wage (AMW) used to compute the tier I AMW 
PIA. (The earnings are not indexed, even if the tier I PIA which is 
being paid is based on average indexed monthly earnings. See part 225 
of this chapter.); or
    (2) One-sixtieth of the employee's total earnings covered under 
either the Social Security or Railroad Retirement Acts (including 
earnings that exceed the maximum earnings used in computing social 
security benefits) for the five consecutive years after 1950 in which 
the employee had the highest earnings. The result, if not multiple of 
$1, is rounded to the next lower multiple of $1; or
    (3) One-twelfth of the employee's total earnings covered under 
either the Social Security or Railroad Retirement Acts (including 
earnings that exceed the maximum earnings used in computing social 
security benefits) for the year of highest earnings in the period which 
includes the year in which the employee became disabled and the five 
preceding years. The result, if not a multiple of $1, is rounded to the 
next lower multiple of $1.


Sec. 226.72  Benefits that do not cause a reduction.

    The tier I is not reduced for the following types of benefits:
    (a) A benefit paid under a law or plan that provided, on February 
18, 1981, for reducing the benefit for entitlement to a disability 
insurance benefit under the Social Security Act.
    (b) A Federal disability benefit based on service for other than a 
state or local government, if all or part of that service is covered 
under the Social Security Act.
    (c) A disability benefit paid by the Federal government or a state 
or local government based on state or local employment, if all or 
substantially all of that employment is covered under the Social 
Security Act. ``Substantially all'' means 85 percent or more of the 
employment.
    (d) A benefit paid by the Veteran's Administration.
    (e) Private disability benefits.
    (f) Amounts paid under the Federal Employers' Liability Act (FELA). 
[[Page 7736]] 
    (g) Benefits based on need, such as welfare benefits or 
supplementary security income.


Sec. 226.73  Changes in reduction amount.

    The reduction amount is not changed when a tier I benefit increases 
because of a recomputation or a general adjustment in annuity rates, 
such as a cost-of-living increase. However, the reduction amount may 
change for the following reasons:
    (a) A spouse or divorced spouse becomes entitled to a tier I 
benefit after the effective date of the reduction. The reduction amount 
is recomputed as if the spouse or divorced spouse were entitled to a 
tier I benefit on the date the reduction first applied. The new 
reduction amount applies beginning with the date the spouse or divorced 
spouse tier I benefit begins.
    Example: An employee became entitled to an annuity with a tier I 
component of $500 on May 1, 1991. He was also receiving a state 
disability benefit of $300 a month based on employment not covered 
under the Social Security Act. On June 1, 1991, the employee's tier I 
increased to $520.70. On October 1, 1991, the employee's wife becomes 
entitled to an annuity with a tier I benefit of $260.00. The tier I 
amount ($250) that would have been payable to the wife on May 1, 1991 
(assuming she had been eligible for a benefit at that time) is used to 
determine the reduction for other disability benefit beginning October 
1, 1991.
    (b) The tier I benefit of a spouse or divorced spouse annuity ends 
after the effective date of the reduction. The new reduction amount is 
computed using the tier I rate to which the employee was entitled when 
the reduction first applied. The new reduction amount applies beginning 
with the month after the month in which the spouse or divorced spouse 
tier I benefit ends.
    (c) The average current earnings are redetermined, as shown in 
Sec. 226.74.
    (d) The amount of the other disability benefit changes. The 
reduction amount is recomputed to use the new benefit rate beginning 
with the date on which the new rate is payable. Any increases in the 
tier I amounts which were effective after the reduction first applied 
are not included in computing the new reduction amount.
    Example: The employee's tier I benefit is $500 on May 1, 1991, when 
the annuity is first reduced for other disability benefits. The tier I 
increases to $520 effective June 1, 1991. When the amount of the 
disability benefit changes on October 1, 1991, $500, not $520, is used 
as the employee tier I amount in recomputing the reduction amount.


Sec. 226.74  Redetermination of reduction.

    (a) General. The average current earnings are redetermined in the 
second year after the year the reduction for other disability benefits 
was first applied and every third year after that. The redetermined 
amount is used only if it results in a lower reduction amount. The new 
reduction amount is effective with January of the year after the 
redetermination is made.
    (b) Redetermined average current earnings. The average current 
earnings are redetermined by multiplying the initial average current 
earnings amount by--
    (1) The average of the total wages (including wages that exceed the 
maximum used in computing social security benefits) of all persons for 
whom wages were reported to the Secretary of the Treasury for the year 
before the year of redetermination, divided by the average of the total 
wages reported to the Secretary of the Treasury for 1977 or, if later, 
the year before the year for which the reduction was first computed. If 
the result is not a multiple of $1, it is rounded to the next lower 
multiple of $1; or
    (2) If the reduction was first computed before 1978, the average of 
all taxable wages reported to the Secretary of Health and Human Service 
for the first quarter of 1977, divided by the average of all taxable 
wages reported to the Secretary of Health and Human Services for the 
first quarter of the year before the year for which the reduction was 
first computed. If the result is not a multiple of $1, it is rounded to 
the next lower multiple of $1.

Subpart G--Recomputation To Include Additional Railroad Service and 
Compensation


Sec. 226.90  When recomputation applies.

    An employee's annuity may be recomputed to include additional 
railroad service and compensation and social security wages which the 
employee earns after the beginning date of the employee annuity. The 
annuity is recomputed only if the recomputation increases the annuity 
rate by more than $1 a month or results in a lump-sum payment of more 
than $5. Before a recomputed rate can be paid, the employee must stop 
working in the railroad industry. A recomputed tier I component is 
payable beginning with January 1 of the year after the year in which 
the wages or compensation are earned or (provided the employee is age 
62 or disabled), in the case of railroad compensation, in the year 
after the employee stops working in the railroad industry.
    A recomputed tier II component is payable from the date the annuity 
is reinstated after the employee has ceased railroad work.


Sec. 226.91  How an employee annuity rate is recomputed.

    (a) Tier I. A recomputation is made if any social security wages or 
railroad compensation for a year in which the employee returned to work 
are higher than the earnings for a year included in the previous 
computation of the tier I PIA, as shown in part 225 of this chapter. 
The higher earnings are used instead of the lower earnings for the 
earlier year to determine the average monthly wage or average indexed 
monthly earnings. Part 225 of this chapter describes how a PIA is 
recomputed.
    (b) Tier II. The additional service is added to the years of 
service previously used in computing the tier II rate. The additional 
compensation is used to recompute the average monthly compensation, if 
the compensation for a month in which the employee returned to railroad 
service is higher than the compensation for a month used in the 
previous computation of the average monthly compensation. The higher 
monthly compensation is used instead of the lower compensation for a 
previous month to determine the new average monthly compensation as 
shown in Sec. 226.62 of this part. The increased years of service and 
average monthly compensation are used in computing a new tier II rate, 
as shown in Sec. 226.11 of this part.
    Example: An employee receiving an annuity which began on January 1, 
1992, returns to railroad service for 10 months in 1992 and 2 months in 
1993. He stops work on February 20, 1993. He has earnings of $34,500.00 
in 1992 and $5,200.00 in 1993. His tier II rate effective January 1, 
1992, was based on 26 years (312 months) of service and an average 
monthly compensation of $2,995 ($179,700<divide>60). The additional 12 
months of service increases the year of service used in computing the 
tier II rate to 27 (312 months+12 months=324 months<divide>12=27). The 
1992 earnings of $34,500.00 are used instead of 1987 earnings of 
$32,700.00. The 1993 earnings are not used because they are lower than 
the earnings for previous months used in computing the average monthly 
compensation. The additional $1,800.00 in earnings increases the 
average monthly compensation to $3,025 ($179,100 +$1,800.00= 
$181,500.00<divide> 60). The initial tier II [[Page 7737]] amount is 
increased from $545.09 (26 x $2,995 x .007) to $571.73 
(27 x $3,025 x .007), effective with the date of annuity reinstatement, 
March 1, 1993.


Sec. 226.92  Effect of recomputation on spouse and divorced spouse 
annuity.

    The annuity of a spouse or divorced spouse is recomputed to use the 
employee's recomputed tier I PIA and tier II rate, if the recomputation 
results in a lump-sum payment of more than $5 or an increase in the 
spouse or divorced spouse annuity rate of more than $1 a month. The 
spouse or divorced spouse annuity rate is recomputed beginning with the 
same date the employee's annuity rate is recomputed.

PART 232--SPOUSES' ANNUITIES--[REMOVED]

    2. For the reasons set out in the preamble, Part 232-- Spouses' 
Annuities, is proposed to be removed.

    Dated: February 1, 1995.

    By Authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 95-3278 Filed 2-8-95; 8:45 am]
BILLING CODE 7905-01-P