[Federal Register Volume 60, Number 61 (Thursday, March 30, 1995)]
[Rules and Regulations]
[Pages 16368-16372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7778]



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RAILROAD RETIREMENT BOARD

20 CFR Parts 228 and 237

RIN: 3220-AA59


Computation of Survivor Annuities

AGENCY: Railroad Retirement Board.

ACTION: Final rule.

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SUMMARY: The Railroad Retirement Board amends its regulations by adding 
a new part dealing with the computation of survivor annuities as 
provided in the Railroad Retirement Act of 1974 (Act). This part 
replaces part 237 of the Board's regulations, which is removed. The 
Board's previous regulations regarding the computation of survivor 
annuities were promulgated under the Railroad Retirement Act of 1937 
and no longer reflect the computational provisions contained in the 
Act.

EFFECTIVE DATE: March 30, 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, (FTS 312-386-4513), TTD 312-
751-4701, TTD (FTS 312-386-4701).

SUPPLEMENTARY INFORMATION: This regulation provides the rules for 
computing the amount of a survivor 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 generally computed under social security rules based on 
the employee's earnings under both the railroad retirement and the 
social security systems. The second tier (tier II) is based solely on 
the employee's railroad earnings and is a set percentage of the 
employee's tier II annuity component.
    The rule is divided into three subparts, A-C:
    Subpart A is an introduction to the part. It provides a listing of 
other relevant regulations, part 225, Primary Insurance Amount 
Determinations, and part 216, Eligibility for an Annuity (Sec. 228.1) 
and sets forth a general explanation of tier I and tier II annuity 
components (Sec. 228.2).
    Subpart B sets forth the computation of the tier I annuity 
component. Section 228.10 describes the tier I of the widow(er)'s 
annuity; Sec. 228.11, the tier I of widow(er) with a child in care; 
Sec. 228.12, the tier I of child's annuity; and Sec. 228.13, the tier I 
of a parent's annuity.
    Section 228.14 describes when and how the tier I annuity component 
is reduced for the family maximum, which is a provision in the Social 
Security Act that limits the total monthly benefits to which 
beneficiaries may be entitled.
    Section 228.15 describes the age reduction applicable to the tier I 
annuity component if the survivor begins to receive benefits prior to 
the retirement age specified in the Social Security Act.
    Section 228.16 describes the adjustment of the age reduction factor 
when the widow(er) attains retirement age.
    Section 228.17 describes how the widow(er)'s annuity is adjusted if 
the employee died before he or she reached age 62.
    Section 228.18 describes how the tier I is reduced due to receipt 
of a public pension.
    Section 228.19 describes how the tier I component is reduced due to 
receipt of a social security benefit.
    Sections 228.20-228.22 describe the reduction in a survivor annuity 
due to receipt of other types of railroad retirement annuities.
    Section 228.23 describes the order in which the above-described 
reductions are made. Finally, Sec. 228.40 describes the cost-of-living 
increases applicable to the tier I annuity component.
    Subpart C describes the computation of the tier II annuity 
component. Section 228.50 describes the tier II annuity component for 
various types of survivor annuitants. It also describes the age 
reduction applicable to the tier II annuity component.
    Section 228.51 describes the reduction to the tier II annuity 
component known as the takeback amount which was imposed by the 1983 
amendments to the Railroad Retirement Act.
    Section 228.52 describes the increase in the tier II annuity 
component when a widow(er) is entitled to a railroad retirement annuity 
which caused a reduction in the widow(er)'s tier I annuity component.
    Section 228.53 describes the increase in the tier II annuity 
component to insure that a widow(er)'s annuity is no less than the 
spouse annuity the widow(er) was receiving before the employee died.
    Finally, Sec. 228.60 describes the cost-of-living increase 
applicable to the tier II annuity component.
    The Board published this rule in proposed form on September 30, 
1993 (58 FR 51024) inviting comment by November 1, 1993; no comments 
were received.
    The Board, with the concurrence of the Office of Management and 
Budget, 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 228

    Pensions, Railroad employees, Railroad retirement.

    For the reasons set out in the preamble, chapter II of title 20 of 
the Code of Federal Regulations is amended as follows:
    1. Part 228, Computation of Survivor Annuities, is added to read as 
follows:

PART 228--COMPUTATION OF SURVIVOR ANNUITIES

Subpart A--General

Sec.
228.1  Introduction.
228.2  Tier I and tier II annuity components.

Subpart B--The Tier I Annuity Component

228.10  Computation of the tier I annuity component for a widow(er), 
disabled widow(er), remarried widow(er), and a surviving divorced 
spouse.
228.11  Computation of the tier I annuity component of a widow(er) 
with a child in care, remarried widow(er) with a child in care, or a 
surviving divorced spouse with a child in care.
228.12  Computation of the tier I annuity component of a child's 
insurance annuity.
228.13  Computation of the tier I annuity component of a parent's 
insurance annuity.
228.14  Family maximum.
228.15  Reduction for age.
228.16  Adjustments in the age reduction factor 
(ARF). [[Page 16369]] 
228.17  Adjustments to the widow(er)'s, disabled widow(er)'s, 
surviving divorced spouse's, and remarried widow(er)'s tier I 
annuity amount.
228.18  Reduction for public pension.
228.19  Reduction for a social security benefit.
228.20  Reduction for an employee annuity.
228.21  Entitlement as a spouse or divorced spouse and as a 
survivor.
228.22  Entitlement to more than one survivor annuity.
228.23  Priority of reductions.
228.40  Cost of living increase applicable to the tier I annuity 
component.

Subpart C--The Tier II Annuity Component

228.50  Tier II annuity component for widow(er), child, or parent.
228.51  Takeback amount.
228.52  Restored amount.
228.53  Spouse minimum guarantee.
228.60  Cost of living increase.

    Authority: 45 U.S.C. 231f.

PART 228--COMPUTATION OF SURVIVOR ANNUITIES

Subpart A--General


Sec. 228.1  Introduction.

    (a) What does this part include? This part includes the computation 
of a widow(er)'s, disabled widow(er)'s, remarried widow(er)'s, 
surviving divorced spouse's, parent's, and child's insurance annuity 
under the Railroad Retirement Act. This part describes the two annuity 
components or tiers which are included in these annuities. The tier I 
annuity component, which may be payable in all of the above annuities, 
is described in subpart B of this part. Subpart C of this part 
describes the tier II annuity component which is only applicable to the 
widow(er)'s, disabled widow(er)'s, parent's, and child's annuity.
    (b) Other relevant parts. (1) Part 225, Primary Insurance Amount 
Determinations, describes the various types of primary insurance 
amounts which form the basis of the computation of the tier I annuity 
component described in this part.
    (2) Part 216, Eligibility for an Annuity, describes the eligibility 
requirements for receipt of the annuity computations described in this 
part.


Sec. 228.2  Tier I and tier II annuity components.

    (a) Tier I annuity component. The Tier I annuity component is 
generally the amount that would have been payable under the Social 
Security Act if all of the employee's earnings after 1936 under both 
the railroad retirement system and the social security system had been 
creditable under the Social Security Act.
    (b) Tier II annuity component. The tier II annuity component is the 
portion of the survivor's annuity which is based on an employee's 
railroad earnings only. The tier II component of an annuity described 
in this part is a specified percentage of the employee's actual or 
anticipated tier II annuity component.

Subpart B--The Tier I Annuity Component


Sec. 228.10  Computation of the tier I annuity component for a 
widow(er), disabled widow(er), remarried widow(er), and a surviving 
divorced spouse.

    The tier I annuity component for these beneficiaries is generally 
based on the survivor tier I Primary Insurance Amount (PIA). The 
survivor tier I PIA is determined in accordance with section 215 of the 
Social Security Act using the deceased employee's combined railroad and 
social security earnings after 1950 (or after 1936 if a higher PIA 
would result) up to the maximum creditable amounts through the year of 
the employee's death. See part 225 of this chapter. This amount may be 
further adjusted for certain reductions or deductions as described in 
Secs. 228.15-228.20 of this part and is subject to the family maximum. 
See Sec. 228.14 of this part.


Sec. 228.11  Computation of the tier I annuity component of a widow(er) 
with a child in care, remarried widow(er) with a child in care, or a 
surviving divorced spouse with a child in care.

    The tier I annuity component of a widow(er), remarried widow(er), 
or a surviving divorced spouse with a child of the employee in his or 
her care is 75 percent of the PIA computed under Sec. 228.10 of this 
part. The amount may be adjusted for certain reductions and deductions 
described in Secs. 228.15-228.20 of this part and is subject to the 
family maximum. See Sec. 228.14 of this part.


Sec. 228.12  Computation of the tier I annuity component of a child's 
insurance annuity.

    The tier I annuity component of a child's insurance annuity is 75 
percent of the PIA computed under Sec. 228.10 of this part. The amount 
may be adjusted for the family maximum. See Sec. 228.14 of this part.


Sec. 228.13  Computation of the tier I annuity component of a parent's 
insurance annuity.

    The tier I annuity component of a parent's insurance annuity is 
dependent on whether one or two parents are entitled.
    (a) One parent entitled. A parent's tier I annuity component is 
equal to 82\1/2\ percent of the PIA computed under Sec. 228.10 of this 
part.
    (b) More than one parent entitled. A parent's tier I annuity 
component is equal to 75 percent of the PIA computed under Sec. 228.10 
of this part.
    (c) The amounts computed under paragraph (a) or (b) of this section 
may be adjusted for the family maximum. See Sec. 228.14 of this part.


Sec. 228.14  Family maximum.

    (a) Family maximum defined. Under the Social Security Act, the 
amount of total monthly benefits that can be paid for any month on one 
person's earnings record is limited. This limited amount is called the 
family maximum. The family maximum is based on the survivor tier I PIA 
(see part 225 of this chapter). Generally, if three or more persons are 
entitled to benefits, their benefits will be adjusted for the family 
maximum.
    (b) Computation of the family maximum.--(1) The employee attains 
age 62, has a period of disability or dies prior to 1979. The maximum 
is the amount appearing in column V of the applicable table published 
each year by the Secretary of Health and Human Services on the line on 
which appears in column IV the primary insurance amount of the insured 
individual whose compensation is the basis for the benefits payable. 
Where the total of the survivor benefits exceeds the maximum, the total 
tier I benefits for each month after 1964 are reduced to the amount 
appearing in column V. Each survivor's benefit is proportionately 
reduced, based on the percentage of the PIA used to compute the 
survivor benefits. However, when any of the persons entitled to 
benefits on the insured individual's compensation would, except for the 
limitation described in Sec. 404.353(b) of title 20 (dealing with the 
entitlement to more than one child's benefit), be entitled to a child's 
annuity on the basis of the compensation of one or more other insured 
individuals, the total benefits payable may not be reduced to less than 
the smaller of--
    (i) The sum of the maximum amounts of benefits payable on the basis 
of the compensation of all such insured individuals, or
    (ii) The last figure in column V of the applicable table published 
each year by the Secretary of Health and Human Services. The 
``applicable table'' refers to the table which is effective for the 
month the benefit is payable.
    (2) The employee attains age 62, has a period of disability or dies 
in 1979. The maximum is computed as follows:
    (i) 150 percent of the first $230 of the individual's primary 
insurance amount, plus [[Page 16370]] 
    (ii) 272 percent of the primary insurance amount over $230 but not 
over $332, plus
    (iii) 134 percent of the primary insurance amount over $332 but not 
over $433, plus
    (iv) 175 percent of the primary insurance amount over $433.
    If the total of this computation is not a multiple of $0.10, it 
will be rounded to the next lower multiple of $0.10.
    (3) The employee attains age 62, or has a period of disability or 
dies after 1979. The maximum is computed as in paragraph (b)(2) of this 
section. However, the dollar amounts shown there will be updated each 
year after 1979 as average earnings rise. This updating is done by 
first dividing the average of the total wages for the second year 
before the individual dies or becomes eligible, by the average of the 
total wages for 1977. The result of that computation is then multiplied 
by each dollar amount in the formula in paragraph (b)(2) of this 
section. Each updated dollar amount will be rounded to the nearer 
dollar, if the amount is an exact multiple of $0.50 (but not of $1), it 
will be rounded to the next higher $1. Before November 2 of each 
calendar year after 1978, the Secretary of Health and Human Services 
will publish in the Federal Register the formula and updated dollar 
amounts to be used for determining the monthly maximum for the 
following year.
    (c) Special minimum PIA. Regardless of the method used to compute 
the primary insurance amount, if the special minimum primary insurance 
amount described in Sec. 404.261 to this title is higher, then the 
family maximum will be based upon the special minimum primary insurance 
amount.


Sec. 228.15  Reduction for age.

    (a) Widow(er), surviving divorced spouse, or remarried widow(er). 
The tier I annuity component is reduced 19/40 of 1 percent multiplied 
by the number of months before the annuitant attains full retirement 
age (presently age 65) effective with the annuity beginning date for 
widow(ers) born before 1/2/40. (For widow(ers) born after 1/1/40, see 
section 216(l) of the Social Security Act.)
    (b) Disabled widow(er), disabled surviving divorced spouse, or 
disabled remarried widow(er). The tier I annuity component is reduced 
for a maximum of 60 months even though the annuity may begin at age 50.


Sec. 228.16  Adjustments in the age reduction factor (ARF).

    Upon the attainment of retirement age, the previously-computed age 
reduction factor is adjusted to remove those months for which a full 
annuity was not paid even though the individual was entitled.


Sec. 228.17  Adjustments to the widow(er)'s, disabled widow(er)'s, 
surviving divorced spouse's, and remarried widow(er)'s tier I annuity 
amount.

    (a) If the employee died before attaining age 62 and after 1978 and 
the widow(er), disabled widow(er), remarried widow(er), or surviving 
divorced spouse is first eligible after 1984, the Board will compute 
the tier I annuity amount as if the employee had not died but had 
reached age 62 in the second year after the indexing year (see 
Sec. 225.2 of this chapter); provided, however, that if the employee 
was entitled to a primary insurance amount based on average monthly 
wages this section is not applicable. The indexing year is never 
earlier than the second year before the year of the employee's death. 
Except for this limitation it is the earlier of----
    (1) The year the employee attained age 60, or would have attained 
age 60 had the employee lived, and
    (2) The second year before the year in which the widow(er), 
remarried widow(er), or surviving divorced spouse becomes eligible for 
such an annuity, has attained age 60, or is age 50-59 and disabled.
    (b) The tier I annuity component is increased if the employee's 
annuity was increased or would have been increased based on delayed 
retirement credits (see Sec. 225.36 of this chapter).
    (c) The tier I annuity component is reduced if the employee had 
been entitled to an age reduced annuity, including an annuity based on 
30 years of service, which is reduced for age because it began before 
the employee attained age 62. In this instance, the widow(er)'s, 
remarried widow(er)'s, or surviving divorced spouse's tier I annuity 
component after applying any reduction for age is further reduced to 
the larger of amount the employee would have received as a tier I 
annuity component if still alive or 82\1/2\ percent of his or her 
primary insurance amount.


Sec. 228.18  Reduction for public pension.

    (a) The tier I annuity component of a widow(er), remarried 
widow(er), surviving divorced spouse, or disabled widow(er) annuity, as 
described in the preceding sections of this part, is reduced if the 
survivor is in receipt of a public pension.
    (b) When reduction is required. Unless the survivor annuitant meets 
one of the exceptions in paragraph (d) of this section, the tier I 
annuity component is reduced each month the survivor annuitant is 
receiving a monthly pension from a Federal, State, or local government 
agency (Government pension) 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, or if they 
are covered under social security solely by an election to become 
subject to the Federal Employees and Retirement System made after 
December 31, 1987, and have not worked 60 months under that system.
    (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. 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 for the equivalent monthly pension benefit is not clear, it may 
be necessary for the Board to determine the reduction period on an 
individual case basis.
    (d) Exceptions. The reduction does not apply:
    (1) If the survivor is receiving a Government pension based on 
employment for an interstate instrumentality; or
    (2) If the survivor receives or is eligible to receive a Government 
pension 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, assuming the employee's 
earnings had been covered under that Act (even though he or she did not 
actually claim such benefits or become entitled for 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 surviving 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 a survivor 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 [[Page 16371]] or she 
meets the one-half support test (see paragraph (e) of this section). If 
a survivor 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 a survivor annuitant was 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 (3) of this section. If an 
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 survivor annuity is 
based had a period of disability which did not end before he or she 
became entitled to an age and service or disability annuity, or died, 
the survivor annuitant must have been receiving at least one-half 
support from the employee--
    (i) At the beginning of his or her period of disability; or
    (ii) At the time he or she became entitled to an age and service or 
disability annuity; or
    (iii) At the time of his or her death.
    (2) If the employee upon whose compensation the survivor annuity is 
based did not have a period of disability at the time of his or her 
entitlement or death, the survivor annuitant must have been receiving 
at least one-half support from the employee--
    (i) At the time he or she became entitled to an age and service 
annuity or disability annuity; or
    (ii) At the time of his or her death.
    (f) Amount of reduction. (1) If a survivor annuitant becomes 
eligible for a Government pension after June 1983, the Board will 
reduce (but not below zero) 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 a survivor 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 (but 
not below zero) 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 benefits prior to 
December 1977.


Sec. 228.19  Reduction for a social security benefit.

    The tier I annuity component is reduced for the amount of any 
social security benefit to which the survivor annuitant is entitled.


Sec. 228.20  Reduction for an employee annuity.

    (a) General. If an individual is entitled to an annuity as a 
survivor, and is also entitled to an employee annuity, then the 
survivor annuity must be reduced by the amount of the employee annuity. 
However, this reduction does not apply (except as provided in paragraph 
(b) of this section) if the survivor or the individual upon whose 
earnings record the survivor annuity is based worked for a railroad 
employer or as an employee representative before January 1, 1975.
    (b) Tier I reduction. If an individual is entitled to an annuity as 
a survivor, then the tier I component of the survivor annuity must be 
reduced by the amount of the tier I component of the employee annuity 
after reduction for age. Where the survivor is entitled to a tier II 
component and either the survivor or the employee had railroad earnings 
before 1975, a portion of this reduction may be restored in the 
computation of the tier II component (see Sec. 228.52 of this part).


Sec. 228.21  Entitlement as a spouse or divorced spouse and as a 
survivor.

    If an individual is entitled to both a spouse or divorced spouse 
and survivor annuity, only the larger annuity will be paid. However, if 
the individual so chooses, he or she may receive the smaller annuity 
rather than the larger annuity.


Sec. 228.22  Entitlement to more than one survivor annuity.

    If an individual is entitled to more than one survivor annuity, 
only the larger annuity will be paid. However, if the individual so 
chooses, he or she may receive the smaller annuity rather than the 
larger annuity.


Sec. 228.23  Priority of reductions.

    The tier I component of the survivor annuity is first reduced by 
the family maximum, if applicable, then any applicable age reduction, 
then by any public pension offset, then by any social security benefit 
payable, then by the tier I component of any employee annuity payable 
to the survivor annuitant.


Sec. 228.40  Cost of living increase applicable to the tier I annuity 
component.

    The tier I annuity component of a survivor annuity is increased at 
the same time and by the same percentage as the increase provided for 
under section 215(i) of the Social Security Act. The amount of the 
increase is published in the Federal Register annually. The cost-of-
living increase is payable beginning with the benefit for the month of 
December of the year for which the increase is due. The increase is 
paid in the January payment.

Subpart C--The Tier II Annuity Component


Sec. 228.50  Tier II annuity component widow(er), child, or parent.

    (a) General. The tier II annuity component is an additional amount 
payable to a widow(er), disabled widow(er), child, or parent, but not 
to a surviving divorced spouse or remarried widow(er), and a parent as 
provided in paragraph (b)(2) of this section, based on the railroad 
employee's earnings in the railroad industry. Unlike the tier I annuity 
component it is not reduced for any other social insurance benefit 
except a railroad retirement annuity. See Secs. 228.20-228.23 of this 
part.
    (b) Amount of the tier II annuity component (1981 amendment).--(1) 
Widow(er) or disabled widow(er). The amount of a widow(er)'s or 
disabled widow(er)'s tier II annuity component is 50 percent of the 
amount of the employee's tier II which would have been payable in the 
month in which the widow became entitled had the employee been alive 
and in receipt of an annuity under the Railroad Retirement Act at that 
time.
    (2) Parent. The amount of a parent's tier II annuity component is 
35 percent of the amount of the employee's tier II annuity component 
which would have been payable in the month in which the parent became 
entitled had the employee been alive and in receipt of an annuity under 
the Railroad Retirement Act at that time. However, if another 
[[Page 16372]] survivor is entitled, or potentially entitled, to a tier 
II annuity component, the parent tier II annuity component is zero.
    (3) Child. The amount of each child's tier II annuity component is 
15 percent of the employee's tier II annuity component which would have 
been payable in the month in which the child became entitled had the 
employee been alive and in receipt of an annuity under the Railroad 
Retirement Act at that time.
    (c) Minimum tier II survivor annuity components. If the total tier 
II annuity components payable to survivors is less than 35 percent of 
the employee's tier II annuity component which would have been payable 
in the month the survivors became entitled had the employee been alive 
and in receipt of an annuity under the Railroad Retirement Act at that 
time, the individual tier II annuity components computed in paragraph 
(b) of this section shall be increased proportionally so that the total 
of all such tier II annuity components equals 35 percent of the 
employee's tier II annuity component.
    (d) Maximum tier II annuity components. If the total tier II 
survivor annuity components payable to survivors exceeds 80 percent of 
the employee's tier II annuity component which would have been payable 
in the month the survivors became entitled had the employee been alive 
and entitled to an annuity under the Railroad Retirement Act at that 
time, the individual tier II annuity components computed in paragraph 
(b) of this section shall be reduced proportionally so that the total 
of all such tier II annuity components totals no more than 80 percent 
of the employee's tier II annuity component.
    (e) Age reduction. The tier II annuity component of a widow(er) or 
disabled widow(er) is subject to reduction by the same age reduction 
factor as is applicable to the tier I annuity component. See 
Sec. 228.15 of this part.


Sec. 228.51  Takeback amount.

    (a) The 1983 amendments to the Railroad Retirement Act provided 
that a portion of the cost-of-living increases payable on the tier I 
annuity component be offset from the amount of the tier II annuity. 
This amount is the takeback amount. The amount of the takeback and its 
application depends on the employee and survivor's annuity beginning 
dates.
    (b)(1) The tier II takeback amount for survivors whose annuity 
beginning date is January 1, 1984 or later is usually the amount of the 
employee's takeback amount. That amount is equal to 5 percent of the 
employee's primary insurance amount, less all applicable reductions 
(net tier I), on November 1, 1983. However, if the employee's annuity 
was reduced for a social security benefit but the survivor's annuity is 
not, the takeback amount is the amount the employee's annuity would 
have been reduced for the takeback if the employee's annuity had not 
been reduced for a social security benefit. If the employee's annuity 
had not been tiered or was being paid under the overall minimum, the 
Board will compute the amount of the tier II takeback that would have 
been applicable to the employee's annuity.
    (2) The tier II takeback amount for survivors whose annuity 
beginning date is before January 1, 1984 is equal to 5 percent of the 
survivor's net tier I annuity component, before deduction on account of 
work, on November 1, 1983.
    (3) The tier II takeback will be applied in accord with the above 
paragraphs in any case where the employee died or retired before 
January 1, 1984. If the employee died or retires after December 31, 
1983, or the employee never retired and dies after December 31, 1993, 
no takeback will be applied to the survivor's annuity.
    (c) No takeback is applied if the survivor tier II annuity amount 
before the takeback is applied is $10.00 or less and cost-of-living 
increases have not increased the tier II annuity amount to more than 
$10.00 (the takeback may never reduce the tier II to an amount less 
than $10.00).


Sec. 228.52  Restored amount.

    (a) General. A restored amount is added to the tier II annuity 
component of a widow(er)'s annuity whose annuity is reduced for receipt 
of an employee annuity under the Railroad Retirement Act provided 
either the employee or the widow(er) had ten years of creditable 
railroad service prior to January 1, 1975.
    (b) Amount. The amount of the tier II restored amount for a 
widow(er) is the difference between the amount payable as a widow(er) 
under the Railroad Retirement Act of 1937 as increased by all annual 
social security cost-of-living percentage increases from January 1, 
1975, until the later of the annuity beginning date of either the 
employee's annuity or the widow(er)'s annuity and the amount payable to 
the widow(er) under the Railroad Retirement Act of 1974 under the rules 
set forth in this part.
    (c) Widower. In order to qualify for an annuity under the 1937 Act 
and thus for a restored amount, a widower must have been dependent on 
his spouse for at least 50 percent of his support in the year prior to 
her death or at the time the spouse's annuity began.

Sec. 228.53  Spouse minimum guarantee.

    The Railroad Retirement Act provides that a spouse should receive 
no less as a widow(er) than he or she received as a spouse. However, if 
the widow(er) becomes entitled to a social security benefit, thus 
reducing his or her annuity, the spouse minimum guarantee is payable 
only to the extent that it guarantees the amount that the widow(er) 
would have received as a spouse had he or she been entitled to a social 
security benefit in the month preceding the employee's death in an 
amount equal to the amount of the social security benefit payable at 
the time the widow(er) first became entitled to the social security 
benefit.

Sec. 228.60  Cost-of-living increase.

    The tier II annuity component of a survivor annuity under the 
Railroad Retirement Act is increased by 32.5 percent of the percentage 
increase under section 215(i) of the Social Security Act at the same 
time that any such increase is payable. The amount of the increase is 
published in the Federal Register annually. The cost-of-living is 
payable beginning with the benefit payable for the month of December of 
the year for which the increase is due. The increase is paid in the 
January payment. In addition, in determining the amount of the tier II 
component at the time the survivor annuity begins, all cost-of-living 
increases that were applied or would have been applied after the 
employee's annuity beginning date or death and prior to the surviving 
annuity beginning date are taken into consideration.

PART 237--[REMOVED AND RESERVED]

    2. Part 237 consisting of Secs. 237.101-237.108 is hereby removed 
and reserved.

    Dated: March 24, 1995.

    By authority of the Board.

    For the Board,

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 95-7778 Filed 3-29-95; 8:45 am]
BILLING CODE 7905-01-P