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RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 1 of 42

1.3.1 Spouse Defined

RCM 1.3.1 through 1.3.133 has been replaced by FOM-I-320.

1.3.150 Including Spouse/Divorced Spouse in Ret. O/M

Refer to RCM 8.3.

1.3.155 Dependency Requirements for Husband's Prior To 3-1-77

Refer to RCM 8.3.20.

1.3.165 Evidence Requirements

See RCM 1.1.21.

1.3.180 Public Service Pensions

The 1977 SS Act Amendments provided in part that individuals receiving both an 

SS spouse benefit and a pension based on their own public service (i.e. 

government) employment, may be subject to offset in their SS benefit for their 

public service pension. The purpose of the public pension offset was to ensure 

that these individuals would not receive a combined monthly benefit greater than 

the monthly benefit received by individuals getting both an SS spouse’s benefit 

and a RIB/DIB based on their own employment.

The 1983 SS Act Amendments changed the public pension offset amount from 

the full amount of the public service pension to two thirds (.66667) of the pension 

amount effective December 1, 1984.

Because the spouse tier-one benefit and O/M benefit are computed like an SS 

Act benefit, we must reduce them for the public service pension just as SSA 

would.

1.3.181 When Public Service Pension Provisions Apply

Unless the conditions for exception to the public service pension offset as 

explained in RCM 1.3.192 through RCM 1.3.200 are met, tier 1 must be reduced 

for any public service pension (PSP) when a pension is payable based on the 

spouse, divorced spouse, or independently-entitled divorced spouse’s own 

employment by a unit of the federal, state or local government and:

The individual becomes entitled to an RR Act spouse or divorced spouse, or 

independently-entitled divorced spouse annuity, based on an application filed on 

or after December 1, 1977; and,
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FICA taxes were not deducted from the employment on which the pension is 

based as defined in RCM 1.3.190. 

Note: If an annuity converts from one type to another and no application is 

required, an individual is not subject to offset if her prior entitlement was based 

on an application filed prior to December 1977.

1.3.182 Employee Receiving Public Service Pension

Effective 1-1986, a reduction for a pension based on non-covered service may 

be applied to the employee's PIA computation as explained in RCM 1.1.15-

1.1.18. This PIA is then used to compute the spouse, divorced spouse, and 

independently-entitled divorced spouse Tier I benefit.

1.3.183 "Public Service" Defined

Public service means service performed for the U.S. government, a state 

government, or any political subdivision of a state, such as a city, county, town, 

township, village, school or sanitation district. Service for the government of a 

foreign country or any political subdivision is not included. The definition of 

"state" includes the 50 states, the District of Columbia, the Commonwealth of 

Puerto Rico, the Virgin Islands, Guam and American Samoa.

Interstate instrumentalities (i.e., an instrumentality of two or more states 

organized as a body corporate) are not considered public service employers for 

reduction purposes.

1.3.184 "Pension" Defined

A public service pension means any periodic benefit or lump sum payment made 

in lieu of a periodic benefit, payable to an individual because of her employment 

with a Federal, State, or local government unit. A pension is a payment based 

on earnings from employment, and as such, includes both retirement pensions 

(based on age and service) and disability pensions. The program under which 

the pension is paid does not have to be administered by the government entity by 

which the individual was employed; it may be administered by a different 

government agency or a private insurance company. 

Full salary benefits paid to a retired or resigned judge under the Federal Judiciary 

Retirement System are considered public service pensions.

1.3.185 Payments Not Considered A PSP

The following types of payments are not considered Public Service Pensions for 

offset purposes:
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• Lump Sum Payments - A lump sum payment that is actually a refund of the 

individual's contributions plus interest to an employee pension fund, is not a 

pension for offset purposes.

• Periodic Benefits - Periodic benefits that are not considered pensions for 

reduction purposes are: payments under the Federal Employee's Act (Office 

of Worker's Compensation Programs); black lung benefits; Railroad 

Retirement annuities; Social Security benefits; and VA payments of any kind.

• Worker’s Compensation Payments - Payments made under a specific Federal 

or State law which would cause an offset against disability benefits at SSA, 

are not considered pensions for reduction purposes. However periodic 

benefits made to State and local government employees because of work 

related injury or disease (i.e., payments in lieu of workmen's compensation) 

may not be exempt for reduction purposes. If such a case comes to your 

attention, refer it to RAC for handling.

• Military Service Pensions - Effective 1-95, military service pensions are also 

excluded from PSP offset. If a offset was deducted before January, 1995, it 

should have been removed effective January 1, 1995. 

Before January 1995, the PSP offset would not apply if the last day of 

employment in active military service was after 1956. However, if active duty 

after 1956 was not used to determine the pension or if the last day of service 

on which the pension is based was non-active duty reserve time, the PSP 

reduction will apply. All MS pensions which began before 1957 are subject to 

reduction, even though the individual may have received gratuitous SS wage 

credits for the pre-57 MS.

NOTE: Federal employment covered by Medicare only is not exempt from PSP 

offset.

1.3.190 Exemption Based on FICA Coverage 

A Employed by Federal Government.--If, on the last day of employment, the 

spouse was employed by the federal government, use this chart to determine if 

the PSP offset applies.

FICA 

Deductions 

Claimed 

FERS 

Elected 

Before

7-1-1988 

FERS 

Elected in 

1998 

Action to Be Taken
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Yes No No The record should show that 

Federal employment began after 

12/31/83. If the claim is supported, 

do not apply the PSP offset. If not, 

contact the F/O and have the 

spouse secure proof.

Yes Yes No If the record shows that SS 

deductions were made on the date 

last worked, do not apply the offset. 

If the earnings are shown under 

MQGE-non-covered or Medicare 

Total, apply the reduction.

No No No Apply the PSP reduction. 

Yes No Yes If the records show that SS 

deductions were made for 60 or 

more months after FERS was 

elected and before the ABD, do not 

apply the PSP offset.

Federal employees who are receiving a pension under the CSRS Offset 

retirement plan are in a unique category. In order to receive a CSRS Offset 

pension, the spouse must have been an employee of the federal government 

before 1983, had a break in service of at least 365 days and then returned to 

federal service after 12-1-83.

B. Employed by State or Local Government.--If, on the last day of employment, 

the spouse was employed by a state or local agency, determine if the PSP 

offset applies using the following instructions:

1. The spouse’s exemption is determined under P,L,108-203. P.L.108-203, 

enacted on March 2, 2004, changed the requirements for exemption from 

the PSP offset. 

If the spouse’s application is filed after March 2004 and the last day of 

public service employment is after June 30, 2004, FICA taxes must have 

been deducted from the public service wages for the last 60 months of 

employment. If not, the PSP offset applies.

Grandfather Provision

P.L.108-203 includes a grandfather provision to lessen the impact on 

public service employees who will retire within the next 5 years. Under 

this provision, any months before March 2004 in which FICA taxes were 

deducted from the public service wages are subtracted from the 60 
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months needed for exemption. They need not be continuous. A 

maximum of 59 months can be subtracted. The months of FICA covered 

service necessary to fulfill the 60-month period must be 1) continuous, 2) 

performed after March 2, 2004, and 3) include the last month of public 

service employment. 

Example 1: Ms. Jones was working for a state agency in March 2004. 

FICA taxes were not being deducted from her wages. For 12 months in 

1997 and 3 months in 2002, she worked under the same retirement plan 

and FICA taxes were deducted. Because FICA taxes were previously 

deducted for 15 months, the requirement that her last 60 months of public 

service employment have FICA deductions is reduced. Only the last 45 

months of her public service employment must have FICA deductions. 

Example 2: The spouse is working as a school teacher having been 

continuously employed paying FICA taxes on these earnings since 

September 2003, with an additional 12 months of FICA-covered 

employment with this employer from September 1989 through August 

1990. Because FICA taxes were previously deducted for 18 months prior 

to March 2004, the requirement that her last 60 months of public service 

employment have FICA deductions is reduced by 18. Only the last 42 

months of public service employment need have FICA deductions. Those 

42 months must be after March 2, 2004 (March 2004 can be counted as 

one of those months). If she works continually, she’ll be entitled to 

exemption from PSP offset in August 2007. 

The grandfather provision cannot apply if the applicant’s day last worked 

is after March 2, 2009. 

NOTE: If a determination is being made in a case where there is 

continuous entitlement (i.e., spouse to divorced spouse or spouse 

with children to aged spouse), use the filing date of the initial 

application to determine if P.L.108-203 applies

2. If the spouse’s application was filed before April 2004 or the last day of 

public service employment is before July 1, 2004, exemption is 

determined under the 1977 Social Security Act Amendments. Under 

these amendments, a spouse employed by a state or local agency was 

exempt from offset if FICA taxes were deducted on the last day of 

employment. Last day of employment is defined in the next section. 

1.3.191 Last Day of Employment Defined

The last day of employment is usually the same as the "last day worked" or the 

"official termination date." It is not the same as the last day worked when the 

position held on the last day worked is not covered under the pension plan. Do

not develop the last day of employment unless there is reason to believe that the 

date furnished is incorrect. These situations may require development:
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• The individual terminates employment in a position covered by a pension plan 

but not covered under the SS Act, and then returns to work for the same 

employer in a position not covered by a pension plan, but covered under SSA 

(e.g., a part-time position). Since the pension would not be based on any of 

the employment covered under the SS Act, the individual would be subject to 

reduction; or

• The individual terminates employment in a position covered by a pension plan 

but not covered under the SS Act, and then returns to work for the same 

employer in a position covered by the same pension plan and covered under

SSA. Since the pension is based on employment covered under the SS Act, 

the offset will not apply; or

• NOTE: This situation applies primarily to school teachers. Their teaching 

jobs were not covered under social security. On or after their last day of 

teaching, they worked at a non-teaching position that was covered under both 

the teacher retirement system and Social Security. The Office of the General 

Counsel has determined that if the last day of employment is covered under 

the SS Act and is used to compute the pension, the PSP offset will not apply. 

The length of employment in the second position does not matter. 

• The individual is transferred by his or her employer from a position not 

covered by SS to a position which is covered by SS. If only the position not 

covered by SS was covered under the pension plan, the individual's last day 

of employment is the last day she held the non-covered position. Since that 

position was not covered under SS, the offset would apply. 

• If however, in the same situation both positions were covered under the 

pension plan, the individual would be exempt from PSP offset because the 

position held was covered under SS on the last day of employment; or

• The individual holds a second job with the same employer for whom she is

working full time in a position covered by a pension plan but not by SS. If the 

second job (i.e., a part-time position) is covered by SS but not by the pension 

plan and the individual ceases employment in both positions on the same 

day, she would still be subject to reduction for PSP since the pension was 

based on the full-time position.

1.3.192 Exceptions to the PSP Provision

Exceptions to the PSP provision were made to lessen the impact on individuals 

who were within a few years of eligibility to their public service pensions at the 

time of enactment.

Conditions for Exception - Annuities payable for any month after November 1977 

will never be subject to reduction for a PSP if, at the time of filing, the applicant:
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1. Could meet the entitlement requirements for an SS spouse benefit, as in 

effect and being administered in January 1977 (if the EE's RR earnings had 

been covered under the SS Act); and

2. Is entitled to or eligible for the PSP for any month in the period from 

December 1977 through November 1982. If the applicant would have been 

eligible for the PSP before December 1982 except for a requirement which 

postponed eligibility for the PSP until the month after the month in which all 

other requirements were met, the annuity will not be subject to a PSP 

reduction, effective December 1, 1984.

For the purpose of applying this exception, the RRB filing date and ABD are 

immaterial. The applicant need not file for or become entitled to any annuity prior 

to December 1982 for it to apply.

In addition, for annuities payable for any month after November 1982, the public 

service pension offset will not apply if the applicant: 

1. Was dependent on the employee for at least one-half support at the time of 

the employee's tier-one beginning date, disability onset date, conversion date 

or date of death; and

2. Is entitled to or eligible for the PSP for any month prior to July 1983. If the 

applicant would have been eligible for a PSP before July 1983 except for a 

requirement which postponed eligibility for the PSP until the month after the 

month in which all other requirements were met, the annuity will not be 

subject to a PSP reduction, effective December 1, 1984.

1.3.193 SSA's January 1977 Requirements

To meet the first condition in 1.3.192 all of the requirements necessary for an SS 

Act spouse benefit that were in effect and being administered in January 1977, 

must be met at the time of filing for an RR Act spouse or divorced spouse 

annuity. The requirements need not have actually been met in January 1977 for 

this condition to apply. (For example, a reduced age spouse filing in 1981, must 

be age 62 in 1981, not 1977.)

Below is a list of spouse categories, who meet the SSA requirements in effect in 

January, 1977:

• Wives

• Young wives

• Divorced wives married at least 20 years

• Dependent husbands
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Categories of SS beneficiaries who do not meet the January 1977 eligibility 

requirements and do not qualify for exception in the offset to their benefits are:

• Divorced wives married less than 20 years

• Non-dependent husbands

• Young husbands

• Divorced husbands

1.3.194 "Entitled To” Defined

"Entitled To" means that all of the requirements for the pension have been met, 

the application has been filed and the pension is either being paid or is due to be 

paid for the month, although payment may not yet have actually been made.

1.3.195 “Eligible For” Defined

"Eligible For" means that the pension would be payable (i.e., all age and service 

requirements have been met) but the spouse has not yet ceased employment 

and has not filed an application for the pension.

If the spouse’s PSP was first payable after November 1982 or July 1983 and she 

meets the other condition for exception explained above, she must prove that 

she was eligible for a pension before December 1982 or July 1983 in order to 

qualify for that exception.

1.3.196 “Eligible for” Provision and Federal Employment

SSA has determined that the following types of federal employees may also 

qualify for exception under the "eligible for" provision:

• Those who meet the requirements for an "early-out" prior to December 1982 

or July 1983, but continue to work after that date.

• Those eligible for a discontinued service annuity (involuntary separation not 

due to misconduct, at age 50 with 20 years, or any age with 25 years) prior to 

December 1982 or July 1983, regardless of whether they take advantage of it 

or not.

• Those who elected a deferred retirement annuity (stopped federal 

employment at an early age knowing they would not be eligible for their 

pension until age 62); provided age 62 is attained prior to December 1982 or 

July 1983. This is regardless of whether or not they begin to receive their 

pension prior to December 1982 or July 1983.
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1.3.205 Timetable for Applying the Provision

The PSP reduction provision applies to RRB spouse annuitants payable for 

months after November 1977, based on applications filed December 1, 1977, or 

later. Specific categories of annuities are affected as follows:

PSP Eligibility/ 

Entitlement Date

Spouses Subject To PSP 

Offset

Spouses Exempt 

From PSP Offset

A. Before 12-1-82 Non-Dependent Males 

Divorced Female

Females 

Divorced Female

Married Less Than 20 Years

Divorced Males

Married 20 or More 

Years

Dependent Males

B. Before 7-1-83 All Non-dependent: Beginning with 

Annuities Payable 

for months after 

November 1982,

Males

Females

Divorced Males

Divorced Females

Regardless of Length of 

Marriage

All Dependant:

Males

Females

Divorced Males

Divorced Females

Regardless of 

Length of Marriage

C. After 6-30-83 All Categories Regardless of 

Dependency

Spouses who 

elected FERS 

during the Open 

Season which 

ended 7-1-1988.

Spouses who 

elected FERS 

during the Open 

Season which 

ended 12-31-1998 

and worked in 

covered Federal 

Employment for 60 

months or more 

after the effective 
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date of the election 

and before the ABD.

1.3.206 Examiner Action

In current cases the PSP information is entered on APPLE. Older cases in which 

a paper application was completed, the PSP information was entered on Form G208. When working a case with PSP involvement, examiners should take the 

following actions:

Initial Cases - Upon receipt of an application for an annuity the examiner needs 

to:

1. Review the Application Express System – Public Service Pension 

Screens. In general, there are four screens that can be completed for 

PSP. The screens that are completed depend on the responses to the 

questions on the APPLE application. The four APPLE public service 

pension screens are: 

(a) Public Service Pension – This screen provides general information 

about a spouse or survivor applicant’s entitlement to a public service 

pension. 

(b) PSP – Federal/State Employee – This screen is used to determine if 

the applicant is exempt from the PSP Offset due to FERS or FICA taxes 

being withheld. This screen will only be displayed if the applicant is 

receiving, or potentially entitled to, a PSP. If the applicant is exempt from 

the offset, the remaining screens will not be displayed.

(c) PSP Information – This screen provides general information about the 

PSP. It is also used to determine if the applicant will be exempt from the 

offset.

(d) PSP Rates – The rate information on this screen is only completed if 

the public service pension offset applies. All prefilled information should 

be verified.

2. Determine the effective date of reduction. If the pension has not been 

awarded, enter the date the applicant expects to begin receiving it. If the 

date is not known or the applicant will not provide a date, enter a logical 

date such as age 65. 

3. Allow the case to process on RASI or pay it final on ROC. 

Post Entitlement Cases - When an annuitant notifies the RRB of receipt of PSP 

after she has been receiving an annuity, it is necessary to secure a completed 

Form G-208 if none is in file Use the PREH on-line correction facility to keep the 

Research record up to date whenever a change in the PSP rate or entitlement 
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occurs and an award activity is not required. Enter the correct offset amount in 

3210-PSP-AMT. PSP Offset Does Not Apply – Enter the appropriate code into

the PREH record. Take one of the following actions to do this:

1. Using the PREH On-line Correction Facility, enter a “1” in 3200- PSPRED-STAT-CD. If the PSP is paid by OPM, enter a “1” in 3200- PSPSOURCE-CD. If the PSP is not paid by OPM, enter a “2”; OR

2. If an award action is necessary and the case will be paid on ROC, enter a 

“1” in PSP REDUCTION STATUS. Enter a “1” in PSP SOURCE if the 

pension is paid by OPM. Enter a “2” if it is not paid by OPM. The entries 

are found on the PUBLIC SERVICE PENSION screen in APPLE or paper 

form G-208. 

1.3.207 PSP Information - Handle the receipt of PSP information 

as follows:

At the Time of Filing – If there is an indication that the annuitant is receiving a 

monthly PSP amount it is necessary for the field to complete the Public Service 

Pension information on APPLE. There are two exceptions:

1. The spouse received a lump-sum payment which was a refund of her 

contributions plus interest; and,

2. The spouse states on the application that she was an employee of a state 

or local government and FICA taxes were deducted from the last 60 

months of employment. Refer to RCM 1.3.190 – Exemption Based on 

FICA Coverage for additional information.

See RCM 1.3.212 for handling cases with future entitlement.

Report of Pension Change - The annuitant is responsible for reporting any 

change in PSP entitlement or amount. Changes which will not result in a net tier I 

rate or spouse O/M benefit of zero must be verified. Otherwise the annuitant’s 

signed statement regarding the change will be sufficient. 

Refusal to Furnish Information - When an individual refuses to furnish information 

about the receipt of a PSP or the pension amount, apply a total tier I offset high 

enough to zero out the net tier I.

1.3.208 Comparing PSP Information with SS Earnings

Use this table to determine the action to be taken in determining if a PSP offset 

should apply: When determining whether or not a case should be reduced for a 

PSP, always compare the applicant’s allegation regarding SS coverage with the 

SS earnings posted.
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Employed by State or Local Government - If, on the last day of employment, the 

spouse was employed by a state or local government, use this chart to determine 

if the PSP offset applies.

SS Deductions 

Claimed

Action to be Taken

Yes If the earnings record shows that SS deductions were made, 

do not apply the PSP reduction. If the earnings are shown 

under MQGE-Non-covered or Medicare Total, apply the 

offset.

Yes If the wage record does not support the claim, have the F/O 

contact the spouse for verification of coverage.

No Apply the PSP reduction

1.3.210 How to Determine the Pension Amount

For reduction purposes, the pension is the amount payable before deductions for 

health insurance, allotments, bonds, etc.; but after reduction for early retirement 

or survivor benefits. If the spouse is receiving a “Medicare Reimbursement,” do 

not include it in the pension amount. If an individual receives more than one 

PSP, add the pensions together to determine the amount of reduction.

Periodic Payments - Because annuities are paid on a monthly basis, the PSP 

reduction should be based on the monthly rate. Multiply weekly pensions by 4.33 

to find the monthly rate. Multiply biweekly pensions by 2.166 to find the monthly 

rate. 

Pension Begins on Other than First Day of Month - If the pension begins on other 

than the first day of the month, the monthly pension rate should be prorated to 

equal the exact pension amount payable for that month. Subtract the day on 

which the pension begins from 31. Multiply the monthly rate by this figure and 

divide the product by 30. Prior to 12/84, use the prorated pension amount as the 

PSP reduction for that month. Beginning 12/84 and later, multiply the prorated 

pension amount by 2/3 to determine the PSP reduction amount for that month.

Example: The pension begins on 5/10/2005. Multiply the monthly pension rate 

by 21/30 (31 – 10 = 21 divided by 30) and then multiply this amount by 2/3. Use 

the result as the PSP reduction amount for the month of May (following normal 

rounding rules).

Only prorate the pension if it begins on a day other than the first of the month. If 

the pension increases, adjust tier 1 for the full amount of the increase from the 
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first day of the month in which it becomes payable regardless of the effective 

date of the increase or the date on which the increase is actually paid.

Lump-Sum Payments:

1) Full Lump Sum Payments: Defined as a lump sum payment in lieu of any 

periodic payment for a specific period of time (e.g., life), with no additional 

periodic payments being made. Determine the amount of the monthly pension 

for which the full lump sum was substituted and for the period of time that it 

covers. The PSP offset should begin with the month the periodic benefit would 

have been payable.

If the period of time is known, but the amount is not determinable, prorate the 

lump sum over that period of time, beginning with the month the pension would 

first have become payable.

If the only alternative to a lump sum is a life annuity, and the amount of the life 

annuity monthly benefit is known, use that amount for reduction purposes.

EXAMPLE: The spouse/widow elects a lump sum of $30,000.00 in lieu of 

periodic payments of $150.00 per month for life. The PSP reduction would be 

$100.00 (2/3 of $150.00). 

If either the monthly reduction amount or period of time cannot be determined, 

refer to –RCM1.3 Appendix D. 

A lump sum payment that is actually only a refund of the employee’s 

contributions to a pension fund, plus interest, is not a PSP for offset purposes.

2) Partial Lump Sum Payments: Defined as a lump sum benefit made in lieu of 

some part of the periodic payment due for a specified period. These lump sum 

payments, also known as the partial lump sum option(PLOP), can be elected by 

the beneficiary and paid in addition to a reduced periodic benefit. Oftentimes, 

the beneficiary can choose from a number of PLOP’s.

EXAMPLE 1: The spouse elected both a survivor option and a PLOP from her 

public service employer at the time of her retirement. Her periodic PSP would 

have been $1900 per month had she not chosen either option. Her survivor 

election reduced her periodic payment to $1700, while her election for a PLOP of 

$20,000 further reduced her periodic payment to $1500. Because PSP offset is 

based on a PSP after reduction for survivor benefits, but before the PLOP, the 

$1700 figure would be the basis of the PSP offset (2/3 of $1700 is the PSP offset 

amount = $1133.40), even though the spouse will be receiving a periodic 

payment of $1500.

Later increase in periodic rate where PLOP was paid: For the beneficiary who 

previously elected a PLOP and is now entitled to an increase in the periodic PSP 
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rate, add the amount of the PSP periodic rate increase to the amount of the PSP 

previously used to determine the PSP for offset purposes.

EXAMPLE 2: In the same example as example 1 above, the spouse’s periodic 

payment is now increased the following year from $1500 to $1550. The basis for 

the new PSP rate for offset purposes is $50 plus the earlier amount used (which 

includes the amount relinquished for the PLOP). Add $50 to $1700 for the new 

PSP amount = $1750. 2/3 of $1750 = $1166.70 is the new PSP offset amount, 

effective with the month of the PSP increase.

3) Teachers Retirement System of Texas (TRS) January, 2008 Lump-Sum 

Payment: The TRS paid an extra check in January, 2008 to PSP recipients, who 

began receiving their PSP prior to January, 2007. The payment represented 

something of a substitute for a cost-of living increase for 2007, and was in the 

amount of the August, 2007 payment, but not to exceed $2400. This one-time 

payment is treated as a PSP partial lump sum for purposes of PSP offset, and 

must be prorated over the lifetime of the beneficiary for determining the new PSP 

offset amount effective January, 2008.

RBD/SBD will recompute the PSP offset factoring in the one-time payment 

prorating it based on the amount of the payment and the spouse/widow’s age as 

of January 1, 2008. Actuarial tables for prorating the partial lump sum can be 

found in both RCM 1.3 Appendix D, and RCM 2.1 Appendix C. The factors to 

use for these cases will be those in the “Factors for Lump Sum Award Dates 

6/1/2007 or Later” column.

Steps for determining the January 2008 PSP offset amount is as follows:

Step Action

 1 Determine the lump sum amount, which is equal to the August, 2007 

PSP rate (use $2400 if the lump sum amount exceeds $2400)

 2 Determine the spouse/widow age as of January 1, 2008. 

 3 Determine the actuarial value from the tables in RCM 1.3 Appendix D 

or RCM 2.1 Appendix C.

 4 Divide the lump sum amount from step 1 by the actuarial value from 

step 3.

 5 Multiply the result from step 4 by 2/3.

 6 Round the result from step 5 up to the dime.

 7 Add the result from step 6 to the existing PSP offset amount = the 

new PSP offset amount.
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Example 1: The spouse is receiving a monthly PSP of $645.00 since January 

2001 from TRS. The PSP offset is $430.00 (2/3 of $645.00). We assume the 

one-time payment is in the amount of $645.00 (still in effect August 2007), 

without evidence to the contrary. The spouse is 65 years of age (DOB 5/9/1942) 

as of January 1, 2008. Divide the pension lump sum amount ($645.00) by the 

actuarial value in the table corresponding to the spouse’s age on the date of the 

lump sum payment (123.8), which equals $5.21. Multiply that result by 2/3, 

which equals $3.47, and round up to the dime ($3.50). Add that amount to the 

existing PSP offset amount, for a new PSP offset amount of $433.50 ($430.00 + 

$3.50) effective January, 2008. 

Example 2: The spouse is receiving a monthly PSP of $2703.30 since February, 

1998 from TRS. Her PSP offset is $1802.20 (2/3 of $2703.30). We assume the 

one-time payment is in the amount of $2400.00, the maximum. The spouse is 72 

years of age (DOB 3/10/1935) as of January 1, 2008. Divide the pension lump 

sum amount ($2400.00) by the actuarial value in the table corresponding to the 

spouse’s age on the date of the lump sum payment (101.2), which equals 

$23.72. Multiply that result by 2/3, which equals $15.81, rounded up to $15.90. 

Add that amount to the existing PSP offset amount, now totaling $1818.10

($15.90 + $1802.20), as the new PSP offset amount effective January 1, 2008.

Future PSP offset adjustments

Any future PSP offset adjustment for changes in the PSP after January, 2008 will 

need to factor in this one-time payment. We are compiling a list of TRS PSP 

cases in a Word document on the J drive, in the “PSP Texas Teachers” folder. It 

will serve as an aid to examiners in determining whether a one-time PSP lump 

sum was paid by TRS under this provision. The listing includes spouses and 

widows. 

While the list may not be all-inclusive, those cases identified by Field Offices this 

year should be on the list. Examiners should feel free to add cases to the listing, 

as identified, and then “save” the document to drive J.

If not otherwise available, examiners should be able to determine the amount of 

the re-computed PSP monthly rate used for PSP offset, by 

1) checking PREH screen 3210, page 1 of 2, PSP-AMT effective with the 1/08 

date break, 

2) multiplying the PSP offset amount by 3/2, and

3) rounding the result down to the dime.

Example: Using the spouse in Example 2 above, $1818.10 would be shown on 

PREH as the PSP offset amount as of January 2008. Multiply $1818.10 x 3/2, 

and round down to the dime = $2727.10, the PSP rate used as the basis for the 
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PSP offset effective January 2008. If for example, the spouse received a $15.00 

increase in her periodic monthly PSP (from $2703.30 to $2718.30) effective 

January 2009, the $15.00 increase would be added to $2727.10 as the new PSP 

monthly rate ($2742.10). 2/3 of $2742.10 ($1828.10, rounded up from $1828.07) 

would be the new PSP offset amount effective January 2009. 

Tolerance

As the example above shows, the PSP offset amount increase is small for most 

cases. Consider applying tolerance for any resulting overpayment, when 

applicable. 

1.3.211 How to Determine the Reduction Amount

The tier 1 or OM should be reduced by the amount of the PSP as follows:

Two-thirds Reduction Effective 12-84 and Later - Effective 12-1-84, the annuity is 

reduced by 2/3 of the PSP amount. Multiply the pension amount by .66667. If the 

product is not a multiple of $.10, round it up to the next higher multiple of $.10. 

PSP Eligibility Before 7-1-83 - If the spouse was eligible for a public pension 

before 7-1-83, reduce the annuity by the full amount of the public pension. This is 

true even if she was not entitled to a public pension until after 7-1-83. The full 

reduction is reduced to 2/3's effective 12-1-84.

PSP Eligibility 7-1-83 or Later - If the spouse was first eligible for a public pension 

7-1-83 or later, the annuity is reduced by 2/3's of the amount of the public 

pension. Multiply the pension amount by .66667. The product, if not a multiple of 

$.10, is rounded to the next higher multiple of $.10.

1.3.212 When to Begin Reducing for the PSP

Begin reducing for the PSP as follows:

Current PSP Entitlement - Reduce for the PSP beginning on the later of the tier I 

effective date or O/M effective date or the first day of the month for which a 

pension is payable, regardless of when the pension is actually paid.

When the conditions for exception in 1.3.192 are met, and the ABD is before 

December 1982, remove the reduction for all months after November 1982.

Never apply a PSP reduction to any month prior to December 1977 regardless of 

the RR ABD, filing date or O/M effective date. If an annuity is based on an 

application filed after November 1977, and the ABD retroacts to before 

December 1977, reduce the PSP effective December 1977.

Never reduce an annuity for PSP if it is based on an effective application filed 

before December 1977. This includes cases where entitlement under the RR Act 
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has changed since the application was filed, but no new application was 

required. Examples are a spouse with child who converts to a full age spouse, or 

a spouse who converts to a full age divorced spouse.

Potential Entitlement - Reduce for potential PSP entitlement only when the 

spouse claims to have already filed an application for the pension. Base the 

effective date of the PSP on the expected date of receipt and apply a reduction 

large enough to make the net tier I zero. Use code paragraph 437 on the award 

letter.

If the spouse has not filed an application for a PSP, set a tickler call-up for one 

month before the expected date of entitlement (item 16 on the Form G-208). 

Upon receipt of the case, develop for information concerning possible entitlement 

through the field. Do not suspend or reduce the annuity until the development 

has been completed and a determination has been made.

1.3.213 Verifying the Pension Amount

The following tells when the pension amount should or should not be verified:

When Not to Verify - Do not verify the pension rate if, after reduction for PSP, 

age, SS benefit and/or EE annuity, the net tier I or spouse O/M benefit equals 

zero. The individual’s allegation of the pension payable is sufficient for the 

purpose of applying total offset.

When to Verify - Verify the pension rate before initially paying or increasing a net 

tier I rate or spouse O/M benefit in any annuity reduced for PSP. The net tier I or 

spouse O/M benefit can increase because of a RECOMP or decrease in PSP or 

SS benefit rate. Do not verity the rate if the recalculated tier I or spouse O/M 

benefit remains zero.

Verity the pension rate with a copy of an award notice or other document from 

the agency issuing the pension.

1.3.215 Proofs Needed for Exemption from Offset

This section gives the different reasons a spouse could be exempt from PSP 

offset and the proofs needed to establish the exemption.

Exemption Based on PSP Eligibility Date - If the applicant claims to have been 

eligible for the pension before 12-1-82 or 7-1-83, but the pension did not begin 

until on or after 12-1-82 or 7-1-83, a letter from the employer or pension paying 

agency showing the date she was first eligible to retire and receive a pension is 

the desired proof.
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Exemption Based on Receiving a CSRS Offset Pension.—The spouse must 

submit a statement from OPM stating that (s)he is receiving a CSRS Offset 

pension.

Exemption Based on Dependency - If the applicant could be exempt from the 

PSP offset because she was dependent on the employee for one-half support 

and was eligible for the PSP before 7-1-83, she must complete Form G-134, 

Statement of Contributions and Support. Do not develop for Form G-134 if the 

tier I is reduced to zero by an SS benefit or employee annuity. There is not time 

limit for proving dependency in order to qualify for this exception.

Exemption Based on FICA Taxes Being Deducted - If the applicant is receiving a 

PSP from a state or local employer and claims that FICA taxes were withheld on 

the day last worked, verify her claim with a DEQY.

Exemption Based on FICA Taxes Being Deducted on Last Day of Employment.--

If the applicant is receiving a PSP from a State employer and claims that FICA 

taxes were not deducted during the majority of working years but were deducted 

on the last day of employment, secure proof that FICA taxes were being 

deducted (e.g., a pay stub) and a statement from the agency paying the pension 

verifying her claim. It must state that the day last worked is included in the 

pension computation.

Exemption Based on FERS Election Before 7/1/88 - If the applicant claims to 

have elected FERS before 7/1/88, secure one of the following:

• An Election of Coverage Form (OPM Form 1555) signed by the claimant, 

or a statement from OPM, or the employing agency showing a timely or 

belated election was filed, or 

• A FERS annuity statement from OPM showing an annuity commencement 

date before 1/1/88, or 

• A statement from OPM showing an open season election was deemed to 

have been filed before 7/1/88, or 

• A statement from the Merit System Protection Board (MSPB) showing a 

correction retroactive to 12/31/87 was allowed, or 

• A DEQY showing that covered Federal employment began before 1/1/88, 

or 

• A statement from OPM or the employing agency showing the Federal 

employment was covered under Social Security regulations. 

Exemption Based on FERS Election in 1998 - If the applicant claims to have 

elected FERS in 1998, secure the following:
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• A DEQY showing the 60 months of covered Federal employment. If the 

DEQY does not prove the applicant’s claim, secure one of the following: 

• An Election of Coverage Form (OPM Form 1555) signed by the claimant, 

or a statement from OPM, or the employing agency showing an election 

was filed, or 

• A FERS annuity statement from OPM showing the commencement date, 

or 

• A statement from OPM showing an open season election was filed. 

Federal Employee Hired After 12/31/1983 - If the applicant claims to be exempt 

from offset because she was hired for Federal employment after 12/31/1983, use 

a DEQY to verify her statement.

State or Local Employees Claiming Exemption Under P.L.108-103.-- If FICA 

taxes have been continuously deducted from the spouse’s wages for at least the 

last seven years, the claims representative will secure a statement from the 

employing agency giving this information.

If the applicant is unable to secure a statement, the field office will indicate, on 

APPLE, that headquarters will secure proof. In this situation, request a DEQY to 

verity the FICA deductions.

If FICA deductions were not made on a regular basis, a statement from the 

employing agency detailing the months in which FICA taxes were deducted is 

needed. 

1.3.216 Public Service Pension Monitoring

Public Service Pensions are monitored as follows:

Non-OPM-Pensions - The annual COLA operation identifies spouses who are 

receiving a public service pension with a net tier I greater than zero. These 

cases are referred to the field offices for monitoring.

OPM Pensions - Federal Public Service Pensions receive a COLA each 

December. The COLA operation determines the new PSP reduction amount 

based on the cost-of-living increase payable to Federal employees.

Once each year, a match is run to compare our records to OPM’s. Refer to RCM 

6.8 for Instructions on handling referrals generated by this run.

1.3.217 How PSP Cases are Processed Spouse (Male or Female)

Spouse applications are processed on RASI. If the spouse is receiving a Public 

Service Pension and is not exempt from the offset, RASI will set a 957 call-up. A 
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referral is issued with the message: “957 REQUIRED – PUBLIC SERVICE 

PENSION INDICATED – SPAR T1 NOW ZERO.” 

When a SPAR has been entered, RASI will zero out the tier I, but will pay the 

Tier II.

Process the RASI referral as explained in RCM 9.3.13.

Divorced Spouse - Divorced spouse applications are processed through ROC. 

Review the Public Service Pension screen on APPLE and pay the case 

accordingly.

1.3.220 SS Benefits Subject to the PSP Provision

SSA’s terminology for PSP reduction is “Government Pension Offset - GPO.” 

When paying an RRB annuitant entitled to an SSA auxiliary or survivor benefit, 

always check the LAF CODE to determine if a GPO has been applied. If the LAF 

CODE is “SH,” the GPO applies and the benefit is in suspense.

Since our PSP reduction provisions are based on the SS Act, the conditions for 

reduction (RCM 1.3.181) and exception (RCM 1.3.185) apply to all auxiliary and 

survivor SS beneficiaries who filed their applications on or after 12-1-77. (A GPO 

IS NEVER APPLIED TO A RIB OR DIB. However, these benefits may be 

subject to a non-covered service pension offset as explained in RCM 1.1.15 -

RCM 1.1.18.)

Appendices

Appendix A - Spouse Annuity Legislative History

Effective 

Date

Spouse Annuity Provision

11-1-1951 The spouse of an employee who was awarded a commuted value 

annuity on or after 10-30-51 is not disqualified from receiving a 

spouse annuity.

11-1-1951 Annuity for a spouse age 65 or a wife under age 65 with a minor 

child in her care who would be entitled to a child's insurance 

annuity (CIA) were the employee to die.

09-1-1954 Annuity for a wife under age 65 with a disabled child in her care 

who would be entitled to a CIA were the employee to die.

06-1-1959 Reduced spouse annuity at age 62, if the employee is age 65.
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Effective 

Date

Spouse Annuity Provision

10-1-1961 Spouse is eligible after one year of marriage. If she was entitled 

to certain survivor benefits under the RR Act before remarrying, 

no waiting period is necessary.

10-1-1965 Full dual benefit reduction repealed.

11-1-1966 Annuity for a wife under age 65 with a minor or disabled child in 

her care, even if the child would not be entitled to a CIA were the 

employee to die.

Provide for adjusting 1/180th reduction months when a reduced 

age annuity is increased after 10-29-66 by recomputation or by 

amendment.

11-1-1966 Rounding RR annuities so the last digit ends in 5.

02-1-1968 De facto spouse is eligible for an annuity.

Reduction for SS Act benefit entitlement in order to duplicate the 

increases provided in the 1965 and 1967 SS Act Amendments. 

(Guaranteed a minimum spouse increase of $5.00.)

01-1-1973 Child disabled before attaining age 22 may qualify a spouse for 

an annuity.

Grandchild who meets dependency requirements may qualify a 

spouse for an annuity.

01-1-1975 Full spouse annuity at age 60, or at any age if the spouse has the 

employee's minor or disabled child in her care, provided the 

employee retired after 6-30-74 with at least 354 service months 

and the employee has attained age 60.

Reduced spouse annuity at age 62 if the employee retired after 

12-31-74, has less than 354 service months, and has attained 

age 62.

Tiered annuity computation under the 1974 Railroad Retirement 

Act.

Work deductions applied to portions of a spouse annuity if there 

is a work deduction insured status and excess earnings or 

employee annuity is reduced for excess earnings. Work 
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RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 22 of 42

Effective 

Date

Spouse Annuity Provision

deductions for spouse’s own excess earnings removed when the 

spouse attains age 72.

03-1-1977 Nondependent male spouse is eligible for an annuity.

12-1-1977 Reduction established in tier I for a nondependent husband's 

public service pension.

01-1-1978 In work deduction computations, nonwork months are considered 

only in the first year after 1977 the beneficiary is entitled to an 

annuity. If a wife is entitled based on having a child in her care, 

non-work months are also considered in the year of termination if 

the termination is not due to the death of the beneficiary.

12-1-1978 A nondependent male spouse may receive a windfall at age 60 or 

be included in the O/M if he is eligible for an SS benefit based on 

having in his care a child eligible for a child's SS benefit based on 

the employee's wage record.

08-13-1981 No new vested dual benefits are payable to spouses beginning 8-

13-81.

09-1-1981 Tier 1 equals zero when the child attains age 16, if entitlement 

began 9-1-81 or later. NOTE: Per Board Order 92-263, full tier I 

is payable until age 18 in cases where the child attains age 16 

after 7-92. Per Board Order 93-108, tier 1 benefits terminated 

under the 9-81 provision were paid retroactive to 1-1-86.

Tier 1 may not begin before the first full month the eligibility 

requirements are met.
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Effective 

Date

Spouse Annuity Provision

Spouse Tier 1 is based on the EE's PIA 1 x 50% rounded down to 

a dollar effective with annuities awarded or adjusted after August 

1981.

10-1-1981 Divorced spouse is eligible for an annuity.

Spouse maximum eliminated for annuities first paid 10-1-81 or 

later.

10-1-1981 Age reduction is applied to each tier separately, effective with 

annuities awarded and adjusted 10-1-81 or later.

The age reduction factor applicable on the ABD will be applied to 

all annuity adjustments paid 10-1-81 or later.

The age reduction factor for spouse annuities initially paid 10-1-

81 or later is 1/144 for each month the annuitant is under age 65 

on the ABD.

The Tier 1 reduction sequence in spouse annuities initially paid 

10-1-81 or later, is public service pension, age, SS benefit and 

own EE annuity, as applicable.

The spouse's Tier 2 is based on 45% of the EE's Tier 2, if the 

spouse was initially paid 10-1-81 or later.

Creation of the Dual Benefits Payment Account, thereby 

necessitating cutbacks in the vested dual benefit payable.

01-1-1982 Reduced Tier 1 by the SS benefit amount payable before work 

deductions. Eliminate Tier 1 work deductions for any month in 

which an SS benefit reduction applies. Eliminate ABD month only 

work deductions except when the ABD is the first of the month 

and excess earnings are indicated for that month.

06-1-1982 Retroactivity of application limited for tier 1.
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Effective 

Date

Spouse Annuity Provision

09-1-1982 Tier 1 may be reduced if disability annuitant is entitled to worker's 

compensation or a public disability benefit.

12-1-1982 Reduction in Tier 1 for all spouse or divorced spouse annuitants 

who are eligible for a public service pension 12-1-82 or later. 

Reduction does not apply to any annuitant who is eligible for the 

public service pension before 7-1-83 and is dependent.

01-1-1983 Work deductions no longer apply in the month the annuitant 

attains age 70.

05-1-1983 A husband is eligible for a tier 1 only annuity, based on having a 

child in care.

07-1-1983 If an annuitant is first eligible for the PSP 7-1-83 or later, the tier 2 

reduction is only 2/3 of the PSP. Dependency does not cause 

exemption.

08-12-1983 The living with requirement is eliminated except for de facto 

(deemed) spouses and spouse entitlements beginning before 8-

12-83.

09-01-1983 Retroactivity of Tier 1 and tier 2 is limited for spouse applications 

filed 9-1-83 or later.

08-12-1983 Age reduction applied to a spouse annuity will not change when 

that annuity is converted to a divorced spouse annuity.

09-01-1983 Tier 2 and vested dual benefit (windfall) annuity components of 

employee of spouse benefits and supplemental annuities can be 

subject to community property settlements in dissolution of 

marriage cases.

09-01-1983 Military service reduction removed.

09-01-1983 The same ABD is established for the Tier 1 and Tier 2 benefit. 

The retroactivity of a spouse Tier 2 is limited to no more than 6 

months to agree with Tier I retroactivity.

12-01-1983 Cost-of-living increase changed from July 1 to December 1. The 

Tier 2 takeback provisions applied in the 12-1-83 COL operation.

01-01-1984 Annuities are subject to taxation.
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Effective 

Date

Spouse Annuity Provision

07-01-1984 Spouses of age and service employees who attain age 60 and 

acquire 30 years of service 7-1-84 or later, are subject to 

reduction for age if the employee retires before age 62. Spouses 

of disability annuitants who have a disability annuity beginning 

date on or after July 1, 1984 are subject to an age reduction.

12-01-1984 The PSP reduction is 2/3 of the PSP amount for all annuitants. 

The PSP reduction may be removed if the spouse is deemed to 

be eligible for the PSP in 11-82 or 6-83, when PSP entitlement 

was delayed because of a full month requirement.

01-01-1985 Divorced spouses are no longer subject to work deductions 

because of the employee's earnings, if they have been divorced 

at least two years.

The tier 1 of a spouse who is not a U.S. citizen, and is outside the 

U.S. more than six months, may be suspended under an alien 

nonpayment provision.

01-01-1986 Some spouse annuities are affected by the employee's 

noncovered service pension.

12-01-1988 Employee's or spouse's last pre-retirement nonrailroad 

employment permitted after ABD with earnings deduction in 

spouse's tier 2.

1-01-2001 Definition of “full retirement age” gradually changes from age 65 

to age 67 for spouse annuitants born after 1937.

1-1-2002 Age reduction no longer applies for an employee who receives a 

60/30 annuity with an ABD at age 60-61, provided the ABD is 

January 1, 2002, or later. Also, age reduction no longer applies 

to the annuities of their spouses. 

Age reduction no longer applies for spouses of 60/30 disability 

annuitants, regardless of the employee’s ABD, if the spouse ABD 

is 1-1-2002 or later. 

1-1-2002 RRA Max provision removed from RRA effective with rates 

payable from January 1, 2002.
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Effective 

Date

Spouse Annuity Provision

1-1-2002 Spouses or divorced spouses may qualify for annuities at age 62 

based the record of employees who have less than 120 months 

of railroad service, but at least 60 months of railroad service after 

1995. Tier 1 is payable only when the age and service employee 

has sufficient quarters of coverage based on combined railroad 

compensation and SSA wages for an SS Act Fully Insured Status 

or when the disability annuitant has an actual disability freeze.

08-17-2007 PL 109-280 allows for the independent entitlement of divorced 

spouses. Spouses who have been divorced from the employee 

for 2 years will be able to apply for divorced spouse benefits 

when both the employee and the spouse are 62 for a full month, 

and the employee has 120 months of service, or 60 months of 

service after 1995. The employee will not have to stop work in 

the railroad industry or relinquish rights in order for the 

independently entitled divorced spouse to receive an annuity. 

Appendix B - Dual Benefit Reduction under The 1937 Railroad Retirement 

Act

B1. When Reduction Was Applicable Under The 1937 Railroad Retirement 

Act

A. General - Prior to 10-1-65, a spouse annuity was reduced by the amount 

of any "other benefit" (except a WIB) the spouse was entitled or potentially 

entitled to under the 1937 RR Act or SS Act. However, a wife under age 

65 receiving a spouse annuity based on a child in her care was not subject 

to reduction for potential entitlement.

Effective 10-1-65, a spouse annuity was paid without a full reduction for 

any "other" benefit (social security or railroad retirement) (s)he may be 

receiving. An annuity was also paid to a spouse whose annuity was 

commuted prior to 10-1-65 because of entitlement to "other" benefits. 

However, effective 11-1-66 it is necessary to reduce a spouse annuity for 

social security benefits.

B. 1937 RR Act Benefits - A spouse annuity for any month was reduced by 

the amount of any retirement annuity or parent's insurance annuity to 

which the spouse was entitled or potentially entitled, (except as noted in A 

above) including the monthly amount on which a commuted award was 

based.
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C. SS Act Benefits - A spouse annuity for any month was reduced by the 

amount of any monthly insurance benefit (except a WIB) to which the 

spouse was entitled or potentially entitled (except as noted in A above). 

The term "monthly insurance benefit" refers to an RIB or DIB based on the 

spouse's wage record or an SSA benefit based on a wage record other 

than the spouse's or employee's.

If the spouse, because of entitlement to another insurance benefit under 

the SS Act, had not been awarded a WIB, became disentitled to a WIB 

after having been awarded such benefit, or had a WIB reduced, the 1937 

RR Act spouse annuity was reduced only by the amount that the other 

benefit EXCEEDED the WIB to which the spouse would have otherwise 

been entitled.

NOTE: When a spouse was receiving a reduced RIB before age 65 and 

the O/M was never applied to increase the employee's retirement annuity, 

the spouse annuity under the 1937 RR Act was reduced by the amount of 

the reduced RIB.

B2. If Spouse Applicant Had Been Awarded An Employee Or Parent's 

Insurance Annuity

When a spouse's employee annuity or parent's insurance annuity equaled or 

exceeded the amount of the spouse annuity, the application for the spouse 

annuity was denied. If the spouse annuity exceeded the employee annuity or 

parent's insurance annuity, only the amount by which it exceeded such annuity 

was payable.

B3. When To Assume That A Spouse, Entitled To An RIB, Was Also Entitled 

To A WIB

In any case in which a spouse annuity was subject to reduction due to

entitlement to an RIB and the employee annuitant was also entitled to an RIB, it 

was assumed that the spouse was entitled to a WIB or would have been if (s)he 

were not entitled to an RIB. The amount of the WIB was determined as 

explained in sections A, B, and C below.

A. Spouse at Least Age 65 in First Month of Employee's Entitlement to RIB -

The amount of the WIB was assumed to be equal to one-half of the 

employee annuitant's PIA. The amount was rounded to the next higher 

multiple of ten cents.

B. Spouse Under Age 65 in First Month of Employee's Entitlement to RIB, 

Applying for Reduced Spouse Annuity on Basis of Child in Her Care -

Same as A above.
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C. Spouse Under Age 65 in First Month of Employee's Entitlement to RIB, 

Applying for Reduced Spouse Annuity - The amount of the WIB was 

assumed to be equal to one-half of the employee annuitant's PIA rounded 

to the next higher multiple of ten cents reduced by 1/144 for each month 

the spouse was under age 65 when entitlement began.

B4. Reduction For RIB Or Parent's Insurance Benefit When Spouse Was 

Entitled Or Had Been Disentitled To WIB

When a spouse was entitled to an RIB or parent's insurance benefit which was 

equal to or less than the WIB to which the spouse was otherwise entitled, the 

spouse annuity was not subject to any reduction. If the RIB or parent's insurance 

benefit was more than the WIB to which the spouse was otherwise entitled, only 

the difference between the two benefits was deducted from the spouse annuity.

Under the SS Act, a spouse cannot become entitled to a WIB if (s)he is already 

entitled to an RIB or parent's insurance benefit which is more than the WIB. 

When a spouse never became entitled to a WIB for this reason, the same rules 

applied as in the case of a spouse who had once been entitled and later became 

disentitled to a WIB.

B5. When Spouse Was Entitled To WIB

When the WIB equaled or exceeded the RIB or parent's insurance benefit, or 

when the spouse was entitled only to a WIB, no reduction was made in the 

spouse annuity under the 1937 RR Act.

B6. When Spouse Was Entitled To RIB Or To Parent's Insurance Benefit 

Underthe SS Act

When the SSA benefit data indicated that a spouse was entitled or, if age 65 or 

older, was potentially entitled to an RIB or parent's insurance benefit and no WIB 

was involved, the spouse 1937 RR Act annuity was reduced by the total amount 

of the benefit payable under the SS Act. If the spouse applicant was under age 

65 and only potentially entitled to an RIB, A or B below applied.

A. Wife Applied for a 1937 RR Act Wife's Annuity on the Basis of Having a 

Child in Her Care - The wife's annuity was not reduced for potential 

entitlement.

B. Spouse Applied for a Reduced Spouse 1937 RR Act Annuity - The spouse 

annuity was reduced by the amount of the reduced RIB to which the 

spouse would have been entitled on the beginning date of the spouse 

annuity if the spouse were to have filed an application at SSA. If potential 

entitlement first occurred after the beginning date of the spouse annuity, 

reduction was by the amount of the RIB to which the spouse would have 

been entitled on the first day of potential entitlement.
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B7. Elimination Of Dual Benefit Reduction Under The 1937 Railroad 

Retirement Act

The dual benefit reduction under the 1937 Railroad Retirement Act was repealed 

effective 10-1-65. This permitted the Board to:

A. Pay full benefits to spouse 1937 RR Act annuitants whose annuities were 

reduced prior to 10-1-65 because of entitlement to "other benefits."

B. Reinstate payments effective 10-1-65 in cases in which a 1937 RR Act 

spouse annuity was suspended, terminated, or denied because of 

entitlement to "other benefits."

C. Begin monthly payments in cases in which a spouse 1937 RR Act annuity 

was commuted before 10-1-65 because of entitlement to "other benefits." 

In this type of case, the spouse was permitted to retain the commuted 

lump sum amount. However, the monthly rate was reduced by the amount 

of the monthly rate on which the commuted lump sum was based. (See 

following example.)

EXAMPLE

Before 10-1-65 Effective 10-1-65

Spouse annuity rate = $50.00 Spouse annuity rate = $50.00

Reduction for "Other 

Benefits"

= -47.00 Reduction for 

commuted lump-sum

= -3.00

Monthly rate = 3.00 Monthly rate = $47.00

Commuted lump-sum 

paid

= $450.00

The 1974 Railroad Retirement Act provisions for dual benefits are explained in 

RCM 1.3.10 - 1.3.11.

Appendix C - Spouse's Annuities

C1. History Of Spouse Elections.

A. Initiation of Spouse Election Procedure - The Social Security Act was 

amended effective 11-1-56 to provide reduced benefits for wives ages 62-

64 11/12 if the wage earner was at least age 62 or had a DIB Insured 

Status (see RCM 5.6.11). At that time, the Railroad Retirement Act stated 

that a wife of an RR annuitant 65 or over could not qualify for an RRA 

spouse annuity until age 65 unless she had a minor or disabled child of 

the employee in her care.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 30 of 42

The spouse election procedure was initiated to permit the inclusion of 

wives age 62-64 11/12, who would have qualified under SSA rules, in the 

O/M computation provided the employee had attained age 62 or had a 

DIB Insured Status. The employee's annuity increased under the O/M to 

include a share for his wife until she became entitled to a RR spouse 

annuity ate age 65. By filing an election, the wife agreed to have her 

spouse annuity permanently reduced by a specific amount in order to 

permit her husband's annuity to be increased under the O/M.

B. Effect of 1959 RRA Amendments - Effective 6-1-59, a reduced spouse 

annuity became payable to a spouse 62-64 11/12 provided the employee 

was 65 or over. As a practical matter, this amendment eliminated the 

need for spouse elections except in cases where the employee annuitant 

was ages 62-64 11/12 or had a DIB Insured Status. With the enactment 

of the 1959 RRA amendments, the Board discontinued soliciting spouse 

elections.

C. Effect of 1972 RRA Amendments - Effective 9-1-72, limitations were 

placed on the switching of annuity rates to the O/M formula from the RR 

formula.

Cases were initially tested for a possible spouse election on the basis of 

the age of the spouse shown on the employee's application. A message 

was printed on the award form if the O/M would apply immediately or a 

call-up was established if the O/M could apply when the employee or 

spouse attained age 62. Examiners developed all possible spouse 

election cases when payable.

D. Effect of 1974 Railroad Retirement Act - The benefits payable under the 

1974 Railroad Retirement Act eliminated the need for a spouse election in 

most cases (see RCM 1.3.7). The Board again discontinued soliciting 

spouse elections. Spouse election information is released only when an 

inquiry concerning benefit entitlement or adjustment is received from an 

eligible employee or age 62-64 11/12 spouse.

The 1981 RR Act Amendments have no effect on spouse election 

procedure.

E. Spouse Election Cases Under the 1937 Railroad Retirement Act - The 

employee's age and service O/M or DIB O/M computation could be 

increased on the basis of a "spouse election" filed by the employee and 

spouse to include the spouse age 62-64 11/12 (without a child in her care 

if the spouse is female), who is not eligible for a railroad spouse annuity 

until the employee attains the required age, as an IPI in the employee's 

O/M computation. The employee must have been insured for the O/M as 

explained in RCM 8.3.8 and the spouse must meet all the eligibility 

requirements explained in RCM 8.3.22l.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 31 of 42

An adjustment computed on Form G-168 for the reduced age spouse

benefits paid before the spouse qualifies for the railroad spouse annuity is 

later applied as an actuarial reduction to the spouse annuity railroad 

formula rate when payable under the 1937 RR Act or 1974 RR Act (see 

RCM 8.3 Appendix A).

A spouse election was not required to include a spouse age 65 or a 

female spouse with the employee's minor or disabled child in her care as 

an IPI either in the employee's age and service O/M, if the employee is at 

least age 62; or in the employee's DIM O/M, if the employee has DIB 

Insured Status (see RCM 5.6.11). The spouse must have met all the 

eligibility requirements in RCM 8.3.22. No reduction is applied to a future 

railroad spouse annuity for these IPI spouse benefits paid without an age 

reduction before the RR spouse annuity ABD.

F. Spouse Election Cases Under 1974 Railroad Retirement Act - Assuming 

the spouse meets all other eligibility requirements, a spouse election is 

currently required to increase the employee's annuity under the 

Retirement O/M computation only in the following cases:

• The Employee ABD and Filing Date are Both Before 1-1-75 - The 

spouse is not eligible for a railroad spouse annuity until the employee 

attains age 65 if the employee's reduced age annuity (2(a)3 or 

disability annuity (2(a)4 or 2(a)5):

• began before July 1, 1974; or,

• began between July 1, 1974 and December 31, 1974 and the 

employee had less than 30 years of railroad service.

The spouse age 62-64 11/12 (without the employee's minor or disabled 

child in care if female spouse, or male spouse effective December 

1978 or later) may file a "spouse election" to be included as an IPI in 

the O/M computation if the employee either has attained age 62 or has 

a "DIB Insured Status as explained in RCM 5.6.11.

• The Employee ABD or Filing Date is 1-1-75 or Later With Less Than 

30 Years Service - If the employee is receiving an annuity based on 

disability (2(a)(1)(iv) or 2(a)(1)(v)), the spouse is not eligible for a 

railroad spouse annuity until the employee attains age 62. A spouse 

age 62-64 11/12 (without the employee's minor or disabled child in 

care, if female spouse, or male spouse effective December 1978 or 

later) may file a "spouse election" if the employee is under age 62 and 

has a DIB Insured Status as explained in RCM 5.6.11.

• The Employee ABD is 7-1-74 or Later With 30 or More Years of 

Service - If the employee under age 60 is receiving an annuity based 
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 32 of 42

on disability, the spouse is not eligible for a railroad spouse annuity 

until the employee attains age 60. A spouse age 62-64 11/12 (without 

the employee's minor or disabled child in care, if female spouse, or 

male spouse effective December, 1978 or later) may file a "spouse 

election if the employee has a DIB Insured Status as explained in RCM 

5.6.11.

Spouse elections in force are adjusted as explained in RCM 8.3 Appendix 

A.

C2. Disability Freeze Cases Previously Code For Call-Up When Disability 

Annuitant's Wife Attains Age 62

A number of disability freeze cases were previously coded for call-up upon the 

attainment of age 62 of the wife of a disability annuitant who would still be under 

the required age to qualify his wife for a spouse annuity when she reaches age 

62. No action to solicit a wife's election is to be taken in these cases when the 

wife attains age 62, unless the annuitant or his wife had previously inquired about 

additional benefits payable for the spouse.

In those cases where the wife is older than her husband and will attain age 65 

before the month her husband will attain the required age to qualify her for a 

spouse annuity, make a new call-up for the first day of the month in which the 

wife will attain age 65, if the inclusion of the wife in the computation of her 

husband's annuity under the O/M would result in a larger annuity.

C3. Answering Inquiries From Employee Or Spouse When Election 

Information Previously Furnished

If Forms RL-162, RL-162a, RL-163 or a dictated spouse election letter were 

previously furnished, the time limit of 30 days has expired, it is past the O/M 

effective date, and the employee or spouse inquiries about entitlement to a 

spouse election, use Code Letters 452 and 453 to answer these inquiries.

EXCEPTION: In a case where a spouse is older than the employee, and the O/M 

is being paid at the time the spouse attains age 65, she may be included in the 

O/M computations even though she refused the election at age 62 or did not 

respond to the election information.

C4. Effects Of Death Of Employee Or Spouse On Spouse Election

A spouse election was not to be solicited after the death of the employee 

annuitant. However, an election filed after the death of the employee annuitant 

was a valid election and any increase in annuity due to the election is paid as an 

accrued annuity due but unpaid at death.

An election is not valid if received at an office of the Board after the date of the 

spouse's death or after the date a spouse's annuity award is approved.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 33 of 42

C5. Retroactivity Of Spouse Election

The spouse may be included in the employee annuity retroactive to the first of 

the month in which the employee and spouse meet the eligibility requirements 

(see RCM 1.3.7) provided the spouse election is filed within thirty days of the 

release of the spouse election information.

C6. Computation Of Spouse Election Reduction

The initial computation of the spouse election reduction is explained in RCM 8.3, 

Appendix A.

Recomputation of the estimated adjustment amount is required for spouse 

elections in force when the spouse files for an RR spouse annuity if the spouse 

was not included as an IPI in the Retirement O/M computation for all months 

used in the computation of the estimate, or if the Retirement O/M monthly rate 

changed after the computation of the estimate.

C7. Use Of Form Letters Rl-162, Rl-162a, And Rl-163

Prior to the 1974 Railroad Retirement Act, spouse elections were solicited by the 

adjudication units by the release of Form Letter RL-162 when the spouse was 

younger than the employee or Form Letter RL-162a when the spouse will attain 

age 65 before the month in which the employee will reach age 65. Form Letter 

RL-163 was released to the employee with an attached copy of the letter that 

was released to the spouse. These letters were not controlled or traced for a 

response.

The spouse must have responded to these letters within 30 days to be eligible for 

the spouse election. However, elections received after the 30 day period but 

before the first month the O/M was applicable (attainment of age 62 in most 

cases) were accepted.

The form letters, RL-162, RL-162a and RL-163 are now obsolete.

C8. Current Procedure For Release Of Spouse Election Information

If the employee or spouse inquires about entitlement of the spouse to benefits at 

RRB, the adjudication units are to determine if a spouse election is possible. If an 

election is possible have the required rates computed and forward the case to 

M&P-A for release of a dictated letter to the employee and spouse.

An application for a spouse's annuity which must be denied because the 

annuitant is under age 65, or an application for a wife's benefit at SSA on the RR 

employee's wage record will also be considered as an inquiry for spouse benefits 

for the purpose of considering a spouse election.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 34 of 42

C9. Application Required In Spouse Election Cases

In order to process a "spouse election" the spouse must file Form G-319 plus a 

signed statement witnessed by a Board representative, indicating that s(he) 

understand that:

• The amount of the spouse's annuity (s)he may receive in the future will be 

permanently reduced to take into account the additional amount paid to the 

employee before (s)he becomes entitled to a spouse annuity; and,

• This election will not cause a reduction in any annuity payable to her(him) as 

a widow(er); and,

• This election cannot be revoked or changed in any way after the employee's 

annuity has been increased.

• The employee must also file Form G-319 plus a signed statement, witnessed 

by a Board representative, indicating that (s)he understands that as a result of 

the election made by the spouse:

• His(her) annuity will be increased and (s)he will receive at least the amount 

his(her) spouse and (s)he would receive if his(her) railroad service were 

covered by the Social Security Act; and,

• The amount of the spouse annuity that the spouse may receive in the future 

will be permanently reduced to take into account the additional amount paid 

to him(her) before his(her) spouse became entitled to a spouse annuity; and,

• All or part of the increase will not be payable if:

• While under age 72, the spouse

(1) works outside the U.S.; or,

(2) works in the United States and earns over the annual earnings 

exempt amount; or,

• The employee or spouse receives social security benefits; or,

• The marriage is terminated by death or divorce.

The employee must agree to notify the Board promptly of the occurrence of any 

of these events.

Form G-340, which was previously used in these case, is now obsolete.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 35 of 42

C10. Evidence Required In Spouse Election Cases

The following evidence is required in spouse election cases:

Evidence When Required

G-319 Statement Regarding 

Family And Earnings For 

Special Guaranty 

Computation

Always from both the employee and the 

spouse

Age of spouse Always

Marriage Always (prior to 6-1-58 documentary evidence 

not required, spouse's statement was 

acceptable if verified by employee's G-346.)

Termination of prior marriage If reasonable doubt whether prior marriage of 

either wife or husband was ended.

Proof of one-half support of 

husband

In male spouse cases prior to 3-1-77.

Living with Required for months prior to 9-1957 and for 

awards and recertifications made after 10-4-

72.

Statements described in 

Appendix C9

Always

C11. Work Deduction In Spouse Election Cases

The increase to the employee benefit due to the inclusion of the spouse benefit in 

the O/M computation is subject to work deductions if the employee or spouse has 

excess earnings (see RCM 8.3.135 - 8.3.143).

C12. Finality Of Spouse Election

Once the O/M computation rate is paid with the spouse election, the election 

cannot be cancelled. The spouse election reduction can, however, be adjusted 

for non-payment months when the spouse annuity is payable (see RCM 8.3, 

Appendix A).

The employee's monthly rate may revert back to the RR formula computation 

whenever this rate exceeds the O/M computation rate.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 36 of 42

C13. Recovery Of Overpayment From Spouse Election Accrual

An accrued employee O/M annuity due to the "spouse election" may be used to 

recover the employee's previous annuity overpayment. The spouse IPI benefits 

are considered to be "paid" and the reduction for these months of payment 

before the spouse ABD is to be applied to the spouse annuity when payable. 

This should be explained when releasing the spouse election information.

RUIA clearance is not required if the annuity is being increased solely because of 

a spouse election.

C14. Non-Payment Months In Spouse Election Cases Before Spouse 

Annuity ABD

If the spouse was not included in the computation of the monthly benefits actually 

paid to the employee for a month that was included on Form G-168 in the 

computation of the estimated spouse election reduction, the spouse election 

reduction is recomputed to drop the non-payment months when the spouse 

becomes entitled to an RR spouse annuity.

NOTE: The age reduction under the Retirement O/M computation is not adjusted 

to drop non-payment months until the spouse attains age 65.

The net increase in the employee's 100% O/M or 110% grandfather O/M 

computation due to the "spouse election" is not payable when:

1. The employee or spouse suffers a full work deduction under the Social 

Security formula (see RCM 8.3.136 and RCM 8.3.139); or,

2. The employee annuity is not payable because the employee worked in 

"employer" or last person" service; or,

3. The employee's disability annuity is not payable because of earnings in 

excess of $200 a month; or,

4. The DIB O/M employee annuitant is reported by the SSA to have refused 

vocational rehabilitation and a VR deduction would be assessed under the 

Social Security Act; or,

5. The employee's railroad formula rate exceeds the family O/M computation 

rate.

Before 8-1-61 three non-payment months were necessary to recompute the 

spouse election reduction. Effective 8-1-61 only one non-payment months is 

necessary to recompute the spouse election reduction.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 37 of 42

C15. Termination Of Increase In Employee Annuity

The increase made in the employee's annuity by reason of a spouse election will 

end with the month immediately preceding the month in which:

(1) The marriage of the employee and the spouse is ended by a final divorce 

decree; or,

(2) The defacto wife or husband enters into a valid marriage with another 

person; or,

(3) The spouse dies; or

(4) The spouse is awarded a spouse annuity.

NOTE 1: If a person other than the spouse included in the O/M qualifies for a 

spouse benefit under the SS Act as the legal spouse of the employee, send the 

case to M&P-A.

NOTE 2: If the spouse annuity ABD is after the first of the month, the spouse 

election increase is payable up to the day before the spouse annuity ABD.

If the employee is under age 62 and the DIB Insured Status is terminated, the 

increase made in the employee's annuity by reason of the spouse election will 

end the second month after the month in which the disability ceased.

C16. Adjustment Of Estimated Reductions When Spouse Files AA-3

The figures used in the computation of the estimated reduction amount on Form 

G-168 are based on the known facts at the time the estimate is computed. When 

the spouse files for the RR spouse annuity, the actual reduction amount must be 

determined as explained in RCM 8.3 Appendix A.

C17. Spouse Later Does Not Qualify For RR Annuity

A spouse who has filed a valid "spouse election" is retained in the O/M 

computation as long as (s)he meets the Social Security Act eligibility 

requirements, even though (s)he is later not eligible for a railroad spouse annuity 

(e.g. working in LPS or RR service) or does not file for a spouse annuity.

The additional amount included in the employee annuity under the over all 

minimum provision due to the "spouse election" cannot in itself be regarded as 

regular contributions towards the spouse's support to qualify the spouse for an

RR spouse annuity. The O/M payment is made only to the employee with nothing 

in the statute requiring it to be paid to the spouse or used for her support. The 

employee must either file an assignment of payment (see RCM 8.3.170) or make 

regular contributions to the spouse to meet the support requirement.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 38 of 42

C18. Effect Of Spouse Election On Spouse's Own Retirement Annuity 

Calculation

The spouse's own employee retirement annuity is affected by the spouse election 

only to the extent of the adjustment required for the dual benefit entitlement (see 

RCM 8.3.112 for Retirement O/M Cases).

The spouse election reduction is an "actuarial adjustment" to the spouse annuity 

only. It is never transferred to the spouse's own employee retirement annuity.

C19. Effect Of Spouse Election On Future Widow(er)'S Annuity Calculation

The spouse election reduction is never applied to the widow(er)'s annuity. Where 

the spouse made an election to be included in the 100% O/M or 110% 

Grandfather O/M computation of the employee's annuity and subsequently does 

not become entitled to a railroad spouse annuity in a month before the month in 

which the employee died, no reduction is required due to the "spouse election."

Where the spouse made an election to be included in the 100% O/M or 110% 

Grandfather O/M computation of the employee's annuity and subsequently was 

paid a spouse annuity that had a "spouse election" reduction in the month before 

the month in which the employee died, the spouse minimum rate used in the 

computation of the widow(er)'s annuity is the spouse annuity rate before the 

spouse election reduction.

EXAMPLE: The spouse RR annuity effective 9-1-79 before the "spouse election" 

reduction is $198.44. The reduction of $5.89 results in a spouse benefit payable 

of $192.55. The employee dies 12-3-79. The spouse minimum rate considered in 

the WIA computation effective 12-1-79 is $198.44 (rate before "spouse election" 

reduction).

Appendix D - Determining the PSP Amount When the Spouse Receives a 

Lump-Sum Payment

If the spouse receives a lump-sum payment for an unspecified period of time, 

determine the monthly PSP amount as follows:

1. Divide the lump-sum amount by the factor in the table shown below. Use the 

value that corresponds to the spouse’s age, in years, at the time the lumpsum payment is made.
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 39 of 42

Age When Lump-sum 

was Paid

Factors for 

Lump Sum 

Award Dates 

6/1/2011 or 

Later

Factors for 

Lump Sum 

Award Dates 

6/1/2007 thru 

5/31/2011

Factors for 

Lump Sum 

Award Dates 

5/31/2007 or 

Earlier

40 or under 183.1 179.7 172.7

41 181.7 178.3 171.1

42 180.2 176.8 169.3

43 178.6 175.2 167.6

44 177.1 173.6 165.7

45 175.4 172.0 163.8

46 173.7 170.2 161.8

47 171.9 168.4 159.7

48 170.1 166.6 157.6

49 168.2 164.7 155.4

50 166.3 162.7 153.2

51 164.3 160.6 150.8

52 162.2 158.4 148.4

53 160.1 156.2 146.0

54 157.9 153.9 143.5

55 155.6 151.5 140.9

56 153.2 149.0 138.3

57 150.7 146.5 135.6

58 148.2 143.9 132.8

59 145.5 141.2 130.0

60 142.8 138.4 127.2
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 40 of 42

Age When Lump-sum 

was Paid

Factors for 

Lump Sum 

Award Dates 

6/1/2011 or 

Later

Factors for 

Lump Sum 

Award Dates 

6/1/2007 thru 

5/31/2011

Factors for 

Lump Sum 

Award Dates 

5/31/2007 or 

Earlier

61 140.1 135.6 124.2

62 137.3 132.8 121.3

63 134.4 129.8 118.2

64 131.4 126.8 115.2

65 128.4 123.8 112.1

66 125.3 120.7 109.1

67 122.1 117.5 106.0

68 118.8 114.4 102.9

69 115.5 111.1 99.8

70 112.2 107.8 96.7

71 108.7 104.5 93.5

72 105.3 101.2 90.4

73 101.8 97.8 87.2

74 98.3 94.4 84.0

75 94.8 91.0 80.9

76 91.2 87.5 77.7

77 87.6 84.0 74.6

78 84.0 80.5 71.6

79 80.4 77.1 68.6

80 or older 76.8 73.6 65.6
RCM 1.3

RCM 1.3 Spouse Annuities Revised February 18, 2014 Page 41 of 42

2. If after multiplying the PSP rate by 2/3, the result is not a multiple of $.10, 

round up to the next multiple of $.10.