Program 

Letter

United States Railroad 

Retirement Board

Office of Programs

Quality Reporting Service Center

e-mail: qrsc@rrb.gov

 Phone: (312) 751-4992

 Fax: (312) 751-7190

Letter No. 2004-07 Date: September 21, 2004

TO: Service and Compensation Contact Officials

SUBJECT: Redesigned Forms ID-40Q “Quarterly Notice to Employers – Railroad Unemployment 

Insurance Act” and ID-40R/S “Annual Notice to Employers – Railroad Unemployment Insurance Act”

Please distribute this notice to all individuals within your organization who may need the 

information in connection with their work. 

Enclosed are copies of the redesigned Forms ID-40Q and ID-40R/S, “Quarterly Notice to Employers 

– Railroad Unemployment Insurance Act” (RUIA) and “Annual Notice to Employers – Railroad 

Unemployment Insurance Act.” The previous forms only provided general benefit information, 

while the revised notices now provide you with more information regarding your employer account.

The former quarterly notice only provided employers with limited information on cumulative benefit 

balances and contributions. The redesigned Form ID-40Q now includes a specific breakdown of the 

amounts of unemployment (UI) and sickness benefits (SI) that were paid and recovered for the report

quarter. The previous form only provided two cumulative figures. Also, subsidiary employers listed 

on page two of FormsID-40Q may be either active subsidiaries or predecessors of your company that 

are no longer active. The employers listed are included in your employer balances due to former 

relationships or links to your company based on the assetsthey previously owned which are or were 

under control of your company. Please note: Only the employer accounts of subsidiaries listed 

on the Form ID-40Q covering the quarter ending June 30th of each year are included in your 

contribution rate. 

The redesigned Form ID-40R/S combines the forms ID-40R with the ID-40S, “Annual Proclamation 

– Railroad Unemployment Insurance Act” into one document. The revised form provides a more 

detailed breakdown of how your employer contribution rate under the RUIA is calculated. The 

redesigned Form ID-40R/S will be released by October 15, 2004, to convey employers’ 2005 

contribution rates.

To assist you in better understanding the attached forms, we are including the definitions listed 

below in the order they appear on the forms.
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Terms Contained on Upper Portion of Form ID-40Q

Gross Sickness Benefit Charges – Sickness benefits paid by the RRB to employees or former 

employees of your company or subsidiaries during the applicable calendar quarter for whom you 

were the base year employer.

Sickness Benefit Recovery Credits – Sickness benefit recoveries made by the RRB from any 

employees or former employees of your company or subsidiaries during the applicable calendar 

quarter for whom you were previously charged the benefits.

Net Sickness Benefit Charges – The net total calculated for the applicable quarter when subtracting 

the Sickness Benefit Recovery Credits from the Gross Sickness Benefit Charges. The total can be 

positive or negative.

Gross Unemployment Benefit Charges – Unemployment benefits paid by RRB to employees or 

former employees of your company or subsidiaries during the applicable calendar quarter for whom 

you were the base year employer.

Unemployment Benefit Recovery Credits – Unemployment benefit recoveries made by RRBfrom 

any employees or former employees of your company or subsidiaries during the applicable calendar 

quarter for whom you were previously charged the benefits.

Net Unemployment Benefit Charges – The net total calculated for the applicable quarter when 

subtracting the Unemployment Benefit Recovery Credits from the Gross Unemployment Benefit 

Charges. The total can be positive or negative.

Net Unemployment and Sickness Benefit Charges for this Quarter – The net total calculated for 

the applicable quarter when adding the Net Sickness Benefit Charges with the Net Unemployment 

Benefit Charges. The total can be positive or negative.

Terms Contained on Lower Portion of Form ID-40Q

Cumulative Total Contributions – The total amount of contributions (RUIA taxes) paid by your 

company during the period January 1, 1990 through the present calendar quarter.

Cumulative Administrative Contributions – The total amount of Administrative Fund Charges 

paid by your company during the period January 1, 1990 through the present calendar quarter.

Administrative Fund Charge – A charge for the Railroad Retirement Board to administer the 

RUIA program. The charge is a constant 0.65% that all employers pay. The amount is added to the 

Basic Contribution Rate. 
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Cumulative Repayment Taxes - During the period 1986-1993 a repayment tax was added to the 

contribution rates of all employers deemed covered at the time. This repayment tax was used to 

repay funds borrowed from the Railroad Retirement Account and used to pay UI and SI benefits 

under the RUIA. If your company paid any of these taxes, the total amount of the repayment taxes 

will be reflected in this amount.

Cumulative Pooled Credits – The total amount of pooled credits allocated to your company during 

the period January 1, 1990 through the present calendar quarter.

Net Cumulative Contribution Balance – The Cumulative Contribution Balance minus the 

Cumulative Administrative Fund plus the Cumulative Repayment Tax plus the Cumulative Pooled 

Credits. Used to calculate the Reserve Balance.

Cumulative Net Benefits Charge – The gross amount of UI and SI benefits paid by the RRB to 

employees or former employees of your company or subsidiaries during the period January 1, 1990 

through the present calendar quarter MINUS the amount of UI and SI benefits recovered during the

same period.

Cumulative Unallocated Charge - Each employer is responsible for a proportionate share of the 

system unallocated charge balance. The system unallocated charges includes benefits paid due to a 

strike, benefit balance of defunct employers, benefit payments which exceed the compensation 

earned by the employee in the base year and other charges. Offsetting credits include the 

contribution balance of defunct employers, transfers from the Administrative Fund, interest income 

and other credits. Historically, this figure has been a negative number which results a credit for 

employers.

Cumulative Benefit Balance – The Cumulative Net Benefits Charge plus the Cumulative 

Unallocated Charge. Used to calculate the Reserve Balance. 

Terms Contained on Upper Portion of Page 1: Form ID-40R/S

Net Benefit Charge for 12 Calendar Quarters- Also called “3-Year Net Benefits Charged” 

amount. The amount is the gross amount of UI and SI paid minus the amount of UI and SI benefits 

recovered during the 12 quarters ending June 30th. Used to calculate the Benefit Ratio.

3-Year Compensation Base – The sum of the latest three, one-year compensation bases ending June 

30th. Used to calculate the Benefit Ratio.

Benefit Ratio – The ratio of chargeable benefits to creditable RUIA compensation for the three-year 

period ending June 30th. It is calculated by dividing the 3-Year Net Benefits Charged amount by the 

3-Year Compensation Base. This amount may be either positive or negative.

Net Cumulative Contribution Balance – See definition under “Terms Contained on Lower Portion 

of Form ID-40Q”.
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Cumulative Benefit Balance – See definition under “Terms Contained on Lower Portion of Form 

ID-40Q”.

Reserve Balance – The Net Cumulative Contribution Balance lessthe Cumulative Benefit Balance. 

This amount may be either positive or negative. Used to calculate the Reserve Ratio.

1-Year Compensation Base – The compensation reported on Form DC-1, “Employer’s Quarterly 

Report of Contributions”, for the four calendar quarters ending June 30th. Used to calculate the 

Reserve Ratio.

Reserve Ratio – The ratio of the Reserve Balance to the 1-Year Compensation Base. It is calculated 

by dividing the Reserve Balance by the 1-Year Compensation Base. This amount may be either 

positive or negative.

Terms Contained on Lower Portion of Page 1: Form ID-40R/S

Basic Contribution Rate – The Benefit Ratio minus the Reserve Ratio minus the Pooled Credit 

Ratio. The result is then multiplied by 100 and rounded to four decimal places. 

Pooled Credit Ratio - When the RUI Account balance is above the indexed $250 million amount, 

the excess is “refunded” to the employers in the form of a rate reduction. The pooled credit ratio is 

any excess over the indexed $250 million amount divided by the system compensation base. Each 

employer’s tax rate, prior to application of individual maximum and minimum limitations, is reduced 

by that same amount.

Basic Contribution Rate Adjusted for Minimum – If the Basic Contribution Rate is equal to or 

higher than zero, the adjusted rate equals the Basic Contribution Rate. However, if the Basic 

Contribution Rate is less than zero the adjusted rate is increased to zero.

Administrative Fund Charge – – See definition above for “Terms Contained on Lower Portion of 

Page 1: Form ID-40Q.

Surcharge Rate – A surcharge is added to each employer’s basic contribution rate whenever the 

balance to the RUI Account falls below a certain indexed amount. The surcharge can be 1.5%, 2.5%

or 3.5% depending on the balance of the RUI Account.

Pooled Charge Ratio – Also called risk-shared benefit component. Each employer is responsible 

for a proportionate share of the pooled charge. The pooled charge covers benefits that are chargeable 

to an employer but that cannot be collected because of a maximum contribution rate.

Computed Contribution Rate – Equals the total of the Basic Contribution Rate Adjusted for 

Minimum, Administrative Fund Charge, Surcharge Rate and Pooled Charge Ratio.
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Contribution Rate Adjusted for Maximum OR New Employer Calculations - – If the Computed 

Contribution Rate is equal to or lower than the maximum contribution rate (usually 12.0%), the 

adjusted rate equals the Computed Contribution Rate. However, if the Basic Contribution Rate is 

more than the maximum rate, the adjusted rate is decreased to the maximum rate.

If a company is deemed a “new employer” by the RRB, then they are given a “new employer rate”. 

If a new employer rate is applicable, it will be reflected in this position.

Terms Contained on Upper Portion of Page 2: Form ID-40R/S

RUI Account Balance – The balance of the Railroad Unemployment Insurance account as of June 

30 of the applicable year.

System Compensation Base - The total amount of all employer 1-year compensation bases for the 

benefit charge year.

Cumulative System Unallocated Charge Balance – See the definition “Cumulative System 

Unallocated Charge Balance” above under the heading “Terms Contained on Lower Portion of 

Form ID-40Q”.

Terms Contained on Lower Portion of Page 2: Form ID-40R/S

System Pooled Credit Ratio – See definition above for “Terms Contained on Lower Portion of Page 

1: Form ID-40R/S.

System Pooled Charge Ratio – See definition above for “Terms Contained on Lower Portion of 

Page 1: Form ID-40R/S.

Administrative Fund Charge - See definition above for “Terms Contained on Lower Portion of 

Page 1: Form ID-40R/S.

System Surcharge Rate – - See definition above for “Terms Contained on Lower Portion of Page 1: 

Form ID-40R/S.

Maximum Contribution Rate – Indicates the maximum contribution rate for the applicable year. 

Usually this rate is 12.0%, except in a rare case where the System Surcharge Rate is 3.5% for the 

year. The maximum contribution rate in those years would be 12.5%.

Contribution Rate for New Employers - A general rate calculated and to be used by companies 

deemed “new employers” by the RRB. These employers have no employer records of their own and 

therefore contribution rates cannot be calculated for them. A New Employer Rate is calculated each 

year and is based upon the average contribution rate of all covered employers under the RUIA during 

the previous three calendar years.
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If you have any questions regarding the redesigned Forms ID-40Q and ID-40R/S, please call the 

Quality Reporting Service Center at the number listed on the top of this program letter.
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