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8.3.1 Scope of Chapter

This chapter contains the basic provisions of the 1937 Railroad Retirement Act (RRA), 

the 1974 Railroad Retirement Act and the 1981 Amendments to the 1974 Act for the 

payment of retirement annuities under the age and service or disability overall minimum 

(O/M). It covers such topics as who is eligible to be included in the O/M computation; 

the effective date of the O/M; adjustments for social security benefit entitlement, dual 

railroad retirement annuities, worker's compensation or Megacap benefits; and 

adjustments for earnings after the annuity beginning date.

The basic computation of the overall minimum is also covered in RCM 8.6, Form 

G-354.3 Instructions.

8.3.2 Definition of "O/M Is Applicable"

The term "O/M is applicable" means that in a particular month there is overall minimum 

(O/M) entitlement and the O/M family total for the persons included in the O/M is higher 

than the RR formula family total.

Since deductions on account of work do not affect the O/M eligibility requirements, the 

O/M would be considered "applicable" in a month in which a retirement annuity is paid 

under the RR formula solely because of excess earnings. 

8.3.3 Definition of "O/M Is Inapplicable"

The term "O/M is Inapplicable" means that in a particular month there is O/M entitlement 

but the RR formula family total is greater than the O/M family total for the persons then 

eligible for inclusion in the O/M.

8.3.5 Over-All Minimum Provisions of 1937 Railroad Retirement Act

The over-all SSA minimum provision of section 3(e) of the 1937 RRA guarantees that 

the total annuities payable under the 1937 RRA effective 11-1-51 or later for a full 

month to an employee and his family will not be less than 100% of the monthly amount 

which would be payable under the Social Security Act if railroad service after 1936 were 

credited as "employment" under the Social Security Act. The O/M guarantee was 

increased to 110% of the monthly amount that would be payable under the SS Act 

effective 6-1-59 or later.

To be entitled to this O/M computation, the employee must have filed his annuity 

application and have an annuity beginning date before January 1, 1975. These benefits 

are converted to 1974 Act rates effective 1-1-75.
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8.3.6 Over-All Minimum Provisions of 1974 Railroad Retirement Act

A. 110% Grandfather Over-all minimum - The 110% over-all minimum provision of 

section 3(f)(2) of the 1974 Railroad Retirement Act guarantees that, in cases 

where an employee's annuity under the 1974 Railroad Retirement Act began to 

accrue after December 31, 1974 but before January 1, 1983, the total monthly 

annuities (including any supplemental annuity payable before full retirement age 

but excluding any VDB) payable to an employee and his family will not be less 

than the total amount that would have been payable under the O/M provisions of 

the Railroad Retirement Act of 1937 as in effect on December 31, 1974.

The employee's service and earnings after 1974 can be included in the 

computation of the O/M PIA based on combined wages and compensation that 

would have been payable under the rules in effect on December 31, 1974 (PIA 

#11). However, the maximum creditable yearly earnings for years after 1974 are 

frozen at the 1974 maximum. PIA #11 is not subject to recomputation for 

earnings after the employee's annuity beginning date or for cost-of-living 

increases after December 31, 1974.

To be entitled to this O/M computation, the employee must have filed his annuity 

application or have an annuity beginning date after December 31, 1974.

B. 100% Over-all Minimum - The 100% over-all SSA minimum provision of section 

3(f)(3) of the 1974 Railroad Retirement Act guarantees that the total monthly 

benefits payable (including vested dual benefit but excluding supplemental 

annuity) to an employee and his (her) family will not be less than the monthly 

amount which would be payable under the Social Security Act if railroad service 

after 1936 were credited as "employment" under the Social Security Act.

The current PIA based on combined wages and compensation (PIA #9) is used 

in this computation. PIA #9 is subject to recomputation for earnings after the 

employee's annuity beginning date and for cost-of-living increases.

8.3.7 Basic Types of Retirement Over-All Minimum

There are three basic types of O/M payments possible under the 110% or 100% O/M 

Guaranty depending on the status of the employee:

A. Full O/M - The employee may be entitled to the full O/M computation if (s)he has 

attained full retirement age before the O/M effective date.

A male or female spouse (without a "child in care") or a divorced spouse 

annuitant (effective 10-1-81 or later), might still be subject to an age reduction if 

(s)he is under full retirement age on the date (s)he is included in the O/M 

computation.
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B. Reduced O/M - The employee may be entitled to a reduced age and service O/M 

computation if (s)he has attained age 62. The employee's benefit is reduced for 

the months the employee is under full retirement age on the O/M effective date.

A male or female spouse (without a "child in care") or a divorced spouse 

annuitant (effective 10-1-81 or later), might be subject to an age reduction if (s)he 

is under full retirement age on the date (s)he is included in the O/M computation.

C. DIB O/M - The DIB O/M can be paid to the employee with a DIB insured status at 

any age up to full retirement age without an age reduction. (Initial entitlement to 

the employee O/M benefit computation after full retirement age is covered under 

the full age and service O/M.)

A male or female spouse must have attained age 62, or have an eligible child of 

the employee in care to be included in the DIB O/M computation. (Benefits for a 

male spouse with child in care are effective Dec. 1978 or later). If the spouse is 

under full retirement age and does not have an eligible child of the employee "in 

care" on the date (s)he is included in the DIB O/M computation, the spouse 

benefit is reduced for age. 

NOTE: A divorced spouse cannot be included in the DIB O/M based on a "child 

in care". The employee must be age 62 before a divorced spouse annuitant age 

62 or over can be included in the DIB O/M.

In all cases described in A through C above, a divorced spouse cannot be included in 

the O/M as in IPI (see section 8.3.21).

8.3.8 Requirements for Increasing the Employee Annuity under the 

O/M

A. O/M COMPUTATION BASED ON AGE AND SERVICE - In order to have an 

annuity increased under the O/M based on age and service, the employee must:

• Have filed an annuity application; and

• Have 120 or more months of railroad service, or at least 60 months of railroad 

service after 1995; and

• Relinquish all rights (s)he may have to return to the service of employers 

under the RR Act. (Prior to 12-01-1988, this also applied to Last Person 

Employer (LPE); and

• Have attained age 62. Effective September 1, 1982, an employee must have 

attained age 62 for a full month before first eligibility is established; and

• Be fully or transitionally insured* under the Social Security Act. The 

employee's railroad service after 1936 is treated as employment covered 
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under the Social Security Act when determining the employee's insured status 

for the O/M computation. (Refer to RCM Chapter 5.6) 

The O/M fully insured status determination is separate from the determination of 

fully insured status based on wages only that may entitle the employee to a 

Social Security benefit payment (see RCM Chapter 5.6).

The insured status of the wage earner also entitles his (her) spouse, divorced 

spouse annuitant, or child(ren) to be included in the O/M computation as long as 

they meet the other requirements for entitlement under the 1974 RRA (or the 

1981 amendments to that Act).

*NOTE: Entitlement to a "Prouty" benefit, as explained in RCM Chapter 5.6

Appendix B will not give an employee the insured status necessary to increase 

the annuity under the O/M. In order to have a transitional insured status as 

explained in RCM Chapter 5.6 Appendix A, an employee must have attained age 

72 before 1969. Therefore, the payment of O/M annuities under the 1974 RRA 

will seldom be based on transitional insured status.

B. O/M Computation Based on Disability - In order to have an annuity increased to 

the O/M based on disability, the employee must:

• Have filed a disability application; and, 

• Have 120 or more months of railroad service, or at least 60 months of railroad 

service after 1995; and,

• Be permanently disabled within the meaning of the SS Act as explained in 

RCM Chapter 1.2. (An allowance under section 216(i) of the SS Act is 

sufficient for DIB O/M purposes unless visual impairment is involved. If the 

diagnostic code in item 21 of the G-325 or item 18 of the SSA-831 is 37406, 

37506, 37806 or 37906, the employee must also be rated disabled for cash 

benefit purposes under section 223(c) of the SS Act in item 27 of form G-325 

before the DIB O/M can be paid); and,

• Have a DIB insured status as explained in RCM 5.6.11. (The employee's 

railroad service after 1936 is treated as employment covered under the Social 

Security Act when determining the employee's DIB insured status for the O/M 

computation.

The disability freeze determination for the O/M is separate from the determination 

of insured status based on wages only that may entitle the employee to a DIB at 

SSA or RR disability windfall.

The employee's DIB Insured Status also entitled his (her) spouse, or divorced 

spouse (when EE attains age 62), or child(ren) to be included in the O/M 
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computation as long as they meet the other requirements for entitlement under 

the 1974 RRA (or the 1981 amendments to that Act); and

• Serve a waiting period, if required, as explained in RCM 5.6.11. 

8.3.9 ARP O/M Test

Automated Retirement Payments (ARP) will identify potential O/M Cases and refer them 

to Retirement Survivor Benefits Division (RSBD) s for further testing and or 

development. 

8.3.10 Manual O/M Test

Where the employee is age 62 or older at the time the claim is processed or attains age 

62 while on the annuity rolls, or meets the requirements for a DIB-O/M, test the case for 

the applicability of the O/M computation as follows:

A. 110% Grandfather O/M - This is no longer tested but we kept this in procedure 

for historical reasons. For annuity rates payable before 6-1978, test for the 110% 

Grandfather O/M by comparing the employee's Gross Tier I, net Tier II and any 

supplemental annuity payable before age 65, to PIA #11 plus 10% or, if an 

eligible spouse or child is involved, compare the total employee and spouse 

gross Tiers I, net Tiers II and any supplemental annuity payable before age 65 to 

the family maximum for PIA #11 plus 10%.

B. 100% O/M - Test for the 100% O/M depending on the O/M effective date as 

follows:

1. Employee Only

(a) O/M Effective Date Before Proration of RR Annuity - Compare the 

total of the employee's gross tier I, net tier II and windfall benefit 

(before any windfall cutback) to PIA #9.

(b) O/M Effective Date at Proration or Later - Compare the total of the 

employee's gross tier I before any reductions, net tier II before 

reduction for age and/or M/S, and windfall after any COL but before 

reduction for age and/or M/S or WF cutback, to PIA #9. 

2. Employee Plus Spouse and/or Child

(a) O/M Effective Date before Proration of RR Annuity - Compare the 

total employee and spouse gross tiers I, net tiers II, and windfall 

benefits (before windfall cutback) to the family maximum for PIA #9.

(b) O/M Effective Date at Proration or Later - Compare the total of the 

employee's and the spouse's gross tiers I before any reductions, 
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net tiers II before reduction for age and/or M/S, and windfall after 

any COL but before reduction for age and/or M/S or WF cutback, to 

the family maximum for PIA #9.

3. Employee Plus Divorced Spouse Annuitant Only - Compare the total of 

the employee's and the divorced spouse's gross tier I's before any 

reduction, the employee's net tier II before reduction for age and/or M/S 

and the employee's windfall after any COL but before reduction for age 

and/or M/S or WF cutback, to 150% of PIA #9. 

4. Employee Plus Divorced Spouse Annuitant and Other Auxiliaries - 

Compare the total employee, divorced spouse and spouse gross tier I's 

before any reductions, the employee and spouse net tier II's before 

reduction for age and/or M/S, and the employee and spouse windfalls 

after any COL but before reduction for age and/or M/S or WF cutback, to 

the family maximum for PIA #9 plus 50% of PIA #9.

A divorced spouse's annuity rate may never be increased under the O/M to an 

amount that exceeds his/her RR formula tier 1 rate. Any O/M increase payable 

over that RR rate would be paid to the employee and spouse annuitants. Refer 

these cases to Policy and Systems-RAC. In 60/30 cases, the AIME PIA #9 on 

the G-90 for the initial annuity award may be an estimated PIA (see RCM 7.4 

Appendix A, Form G-90 Instructions). An asterisk (*) will identify such 

calculations. If the O/M could apply in cases where an IPI spouse or child is 

involved, request a current G-90 with the actual PIA #9 amount. Since there are 

no deeming provisions for PIA #9, this PIA will be computed with an eligibility 

year based on the employee's actual attainment of age 62. The resulting AIME 

PIA bend points for employee's who attain age 62 in 1979 or later will differ from 

the formula used to compute PIA #1.

If Forms G-319 and/or G-320 were developed and it is determined, based on all 

information, that the O/M is not applicable, release Form Letter RL-300 to the 

employee as explained in RCM Part 11. 

8.3.11 Effective Date of Retirement Over-All Minimum Computation

A. O/M Computation Based on Age and Service - The effective date of the 100% 

O/M or 110% Grandfather O/M based on age and service is the later of:

1. Prior to September 1981, the first day of the month in which the employee 

attains age 62. After August 1981, the first day of the month after the 

month in which the wage earner's 62nd birthday falls unless his birthday is 

the 1st or 2nd day of the month (in such case, the effective date is the first 

day of that month); or,

2. The employee's annuity beginning date or Tier I date of entitlement, if 

later; or,
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3. The first day of the calendar quarter in which the annuitant became 

insured under the Social Security Act, treating RR service after 1936 as 

social security employment.

B. O/M Computation Based on Disability - The effective date of the 100% O/M or 

110% Grandfather O/M based on disability is the later of:

1. The annuity beginning date; or,

2. The first day of the month following the month in which the disability 

waiting period ends, in a case requiring a waiting period; or,

3. The first day of the first month in which the employee is disabled and 

meets the DIB insured status requirements under the Social Security Act, 

if no waiting period is required.

NOTE: A disability waiting period of five full months after the month an 

employee's disability began must be served before payment of the O/M based on 

disability unless the employee previously had a period of disability (disability 

freeze) which ended within five years (60 months) before the month his current 

disability began (see RCM Chapter 1.2). 

A six month waiting period applied to benefits payable under the 1937 RRA

before January 1973.

If a disability period established at SSA conflicts with a disability period 

established at the RRB in O/M cases, refer to RCM 8.3.41.

8.3.12 Switch from RR Formula Award to O/M Rate Permitted

A. Initial Change to O/M Formula on ABD or Month Immediately after Disability 

Waiting Period - Practically all retirement annuities are initially awarded under the 

RR formula. The 100% O/M or 110% Grandfather O/M computation increase, if 

applicable, is awarded later by means of a recertification award.

Child(ren) may be included in the family group at this time if they meet the 

eligibility requirements explained in RCM 8.3.24 and the O/M effective date is 

either the ABD or the first day of the month following the month in which a 

disability waiting period ends.

The spouse may be included in the family group at this time if (s)he meets the 

eligibility requirements in RCM 8.3.20 and the O/M effective date is either the 

ABD or the first day of the month following the month in which a disability waiting 

period ends.

A divorced spouse annuitant may be included at this time if (s)he meets the 

requirements in RCM 8.3.21. (Refer these cases to Policy and Systems-RAC).
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B. Change To 100% O/M or 110% Grandfather O/M Effective After ABD or Month 

Not Immediately After Disability Waiting Period - If it was initially determined that 

neither the 100% O/M or 110% Grandfather O/M was applicable on the ABD or 

on the first day after the month in which a disability waiting period ends or if the 

employee was under age 62 and not entitled to a disability freeze and therefore 

was not eligible for the O/M at that time, the annuity can be increased under the 

100% O/M or 110% Grandfather O/M effective the month in which:

1. The employee meets the O/M eligibility requirements (RCM 8.3.8). 

Request the RRB district office to develop the information needed to 

determine the current family composition and include an eligible spouse 

and/or child(ren) as explained in RCM 1.1.21. 

2. The spouse, who was married to the employee when the employee's 

annuity began, meets the eligibility requirements (RCM 8.3.20) and the 

employee is eligible for the O/M. Include the spouse and any eligible 

child(ren). Request the RRB district office to develop the current 

information to pay the O/M with this family composition as explained in 

RCM 1.1.21. Do not develop for additional entitled child(ren).

3. The spouse who was married to the employee after the employee's

annuity began becomes entitled to an RR spouse annuity and the 

employee is eligible for the O/M.

Include only the employee and spouse in the family group. Do not include 

child(ren) even if a spouse is entitled based on child(ren) in care.

4. PIA #9 is increased by a general benefit or cost-of-living increase and the 

O/M formula rates exceed the RR formula rates. Include only the 

employee, divorced spouse annuitant and spouse annuitant. Do not 

include child(ren) even if a spouse is entitled to an annuity based on 

child(ren) in care. Do not include an IPI spouse.

5. Under a limited set of circumstances, a child adopted after the O/M test 

date may be included in the O/M. The following conditions must be met:

--the adoption must occur in the United States; --for the twelve months 

prior to the O/M test date, the child must have lived with the employee and 

been dependent on the employee for at least one half support.

If these conditions are met, then in the FIRST FULL MONTH AFTER THE 

ADOPTION, the child could trigger a switch from the railroad computation 

to the O/M computation.

EXAMPLE: The child is born in 2010. The employee’s disability annuity began 

February 2013. The final adoption order is issued on February 17, 2021. 

Normally, we would not include a child adopted after the test date in the O/M. 
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However, using normal living with and support procedures, the field office finds 

that the child has been living with the employee since February 2012. The child 

has also been dependent for at least one half support on the employee since 

February 2012 (one year prior to the ABD, the date we would test for the O/M). 

Therefore, if the O/M computation is higher, the child could be used to pay the 

O/M effective March 2021 (the first full month of the adoption).

Refer cases involving a divorced spouse annuitant to Policy and Systems-RAC. 

C. Entitlement to 100% O/M or 110% Grandfather O/M Computation After O/M 

Previously Paid - If the annuity had been paid under the O/M formula and then 

switched to the RR formula, breaking the continuity of the O/M computation, the 

annuity rate may again be changed from the RR formula to the 100% O/M or 

110% Grandfather O/M computation effective in the month in which:

1. The spouse who was married to the employee when the employee's 

annuity application was filed meets the eligibility requirements to be 

included in the O/M (RCM 8.3.20). Children or divorced spouse annuitants 

may be included in the family group at this time.

2. The spouse who married the employee after the employee's annuity 

application was filed becomes entitled to a spouse annuity. A divorced 

spouse annuitant may be included in the family group. Children may not 

be included in the family group at this time, even though a spouse is 

entitled based on child(ren) in care.

3. An eligible phase-out full time student who was excluded for the months of 

May through August can again be included in September provided the 

switch to the RR formula was caused by the student suspension in May. 

Refer cases involving a divorced spouse annuitant to Policy and Systems-RAC. 

8.3.13 Switch from RR Formula to O/M Rate Prohibited 

The annuity rate cannot be changed from the RR formula to the 100% O/M or 110% 

Grandfather O/M computation if it was initially determined that the O/M did not apply or 

the O/M did apply but later was removed, breaking the continuity of the O/M 

computation, when the following situations occur (even though the O/M rate may be 

higher than the RR formula):

(1) The employee marries after the ABD and the spouse is not receiving a spouse 

annuity; or,

(2) The employee adopts a child after the ABD and does not meet the conditions 

described in 8.3.12 B 5; or,
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(3) A child who was previously removed from the O/M computation becomes reentitled in a month after a month in which the RR formula applies (e.g., a child 

returns to FTA after ceasing full time school attendance.)

(4) A child who qualified a spouse for a spouse annuity which was paid under the 

RR formula attains age 18 and is an FTS.

(5) A child who qualified a spouse for a spouse annuity which was paid under the 

RR formula attains age 16.

(6) PIA #9 increases and the spouse is not entitled to an annuity. In these cases, 

only the employee is entitled to the OM computation. Therefore, the OM will not 

apply.8.3.14 Changes From 100% O/M Or 110% Grandfather O/M To RR 

Formula Rate Permitted

The annuity rate can be changed from the 100% O/M or 110% Grandfather O/M to the 

RR formula rate whenever the RR formula yields a higher monthly benefit.

EXAMPLE #1 - The employee and spouse become entitled to social security benefits 

based on the employee's wages only. The RR formula rate after adjustment for the SS 

benefit is higher than the 100% O/M rate after adjustment for the SS benefits. The RR 

formula rates would apply.

EXAMPLE #2 - A phase-out full time student is not included in the O/M for the months 

May through August. The RR formula rate is higher than the 100% O/M rate after 

excluding the FTS. The RR formula rate applies for those months.

8.3.15 Evidence Requirements for Retirement O/M

Refer to RCM 1.1.21 for the evidence requirements for the Retirement O/M.

8.3.18 Auxiliary Beneficiary Defined

An auxiliary beneficiary under the Social Security Act is a person in a life case, other 

than the wage earner, who would be entitled to benefits on the wage earner's account if 

SSA had jurisdiction of payments.

The 1972 Technical Amendments to the 1937 Railroad Retirement Act and sections 

3(f)(3)(i) of the 1974 RRA exclude a divorced wife and a non-living with spouse from the 

retirement O/M computations as an IPI prior to 9-1-65 and after 10-4-72. The Railroad 

Retirement Solvency Act of 1983 eliminated the living with requirement for spouse 

eligibility in the O/M effective 8-12-83.

If a divorced spouse meets the eligibility requirements for a divorced spouse annuity 

under the 1981 RR Act Amendments in October 1981 or later, (s)he may be included in 

the retirement O/M computation. The divorced spouse's annuity rate may never be 

increased under the O/M to an amount that exceeds his/her RR formula tier 1 rate, 
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however. Any O/M increase payable over that RR rate would be paid to the employee 

and spouse annuitants. (Refer retirement O/M cases with a divorced spouse annuitant 

to P&S-RAC after completing Form G-354.3.)

8.3.19 IPI (Ineligible Person Included) Defined

A spouse who is not receiving a railroad retirement spouse annuity, or a child can be 

included in the retirement O/M computation as an "ineligible person included" (IPI), if 

(s)he would be entitled to an auxiliary social security benefit if the employee's railroad 

service were covered under the Social Security Act and (s)he is not excluded under the 

Railroad Retirement Act as indicated in RCM 8.3.18 (e.g. spouse election cases).

A divorced spouse who is not receiving a divorced spouse annuity cannot be included in 

the O/M computation as an IPI.

8.3.20 Eligibility of Spouse Under 100% Computation or 110% 

Grandfather O/M Computation

If the employee has attained age 62 for at least one full month and is insured under 

Social Security Act rules, or is entitled to a disability freeze and has served any 

necessary waiting period, the spouse may be included in the family group for purposes 

of computing the 100% O/M or 110% Grandfather O/M if (s)he meets the following 

requirements:

A. Marriage Requirements - To be included in the family O/M computation, the 

spouse must be:

1. The legal of defacto spouse; and,

2. Either the natural parent of the employee's natural child; or,

3. Married to the employee for at least one year; or,

4. Eligible for a widow(er)'s, parent's, or disabled child's insurance annuity 

under the RRA in the month before the month of marriage to the 

employee. The term eligible means that the spouse was entitled to an 

annuity if an application had been filed and (s)he had attained the required 

age. It is not necessary for the spouse to have filed a survivor application 

or to have attained age 60 before the month of marriage to be included in 

the O/M from the first day of the month of marriage; or

5. Entitled or potentially entitled to widow(er)'s, parent's, or childhood 

disability benefits under the SS Act in the month the spouse married the 

employee. A spouse is considered potentially entitled under the SS Act if 

the spouse meets all requirements for entitlement under that Act, other 

than the filing of an application, and, in the case of widow(er)'s or parent's 

benefits, attainment of age 62.
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B. Living with Requirements - Prior to 8-12-83, and as of the O/M effective date, the 

spouse must:

1. Be a member of the employee's household; or,

2. Receive regular contributions from the employee toward support; or,

3. Have a court order requiring the employee to contribute toward her (his) 

support.

The Railroad Retirement Solvency Act of 1983 eliminated the living with 

requirement for spouse eligibility in the O/M effective 8-12-83.

C. Child-in Care Requirements - A female spouse (or male spouse effective 

December 1978 or later) is entitled at any age if (s)he has the employee's minor 

child under age 16 in care or disabled child in care.

Note: If the spouse was entitled under the Retirement O/M based on having a 

child in care in August 1981, the spouse was included in the O/M based on child 

in care through the earlier of the month before the month in which the youngest 

child attained age 18, or August, 1983.

Effective July 1, 1996 or later, a step-child can only qualify the spouse as an IPI if 

the step-child is dependent on the employee for 1/2 support.

D. Spouse Age Requirements - Prior to September 1981, a male or female spouse 

was eligible for a reduced age spouse benefit under SSA rules on the first day of 

the month after the month in which the spouse attained age 62. After August 

1981, the spouse is eligible for a reduced age spouse benefit effective the first 

day of the month after the month in which her(his) 62nd birthday falls unless the 

birthday is the 1st or 2nd day of the month. In such case, the eligibility for the 

spouse benefit is the first day of that month.

If a spouse is eligible for a reduced for age spouse benefit under SSA rules and 

is not receiving a RR spouse annuity, refer to RCM 8.3, Appendix A, "Spouse 

Election Cases".

E. Dependency Requirements - A husband must have been dependent on the 

railroad employee for 1/2 of his support in order to be included in the 110% 

Grandfather O/M or to be included in the 100% O/M prior to 3-1-77.

8.3.21 Eligibility of Divorced Spouse Under 100% O/M Computation

If the employee has attained age 62 for at least one full month in an age and service 

O/M case or, in a DIB O/M case, has attained age 62 at any time during the month and

is insured under the Social Security Act rules, the divorced spouse annuity may be 

subject to the 100% O/M computation if (s)he meets the eligibility requirements for a 

divorced spouse annuity as explained in RCM 1.3.81. 
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A divorced spouse's annuity rate may never be increased under the O/M to an amount 

that exceeds his/her RR formula tier 1 rate. Any O/M increase payable over the 

divorced spouse's RR rate would be paid to the employee and spouse annuitants.

Refer retirement O/M cases involving a divorced spouse annuitant to P&S-RAC after 

the completing Form G-354.3.

There are no provisions in the RR Act for paying a divorced spouse as an IPI on the 

basis of her (his) age or having a minor or disabled child of the employee in her(his) 

care.

8.3.22 Effective Date of Spouse 100% or 110% Grandfather O/M 

Benefit

A. Married When Employee Filed for Annuity - A spouse who was married to the 

employee at the time (s)he filed for the employee annuity can be included in the 

family group for purposes of the O/M computation on the later of:

1. The employee's ABD; or,

2. The first day of the month after the month in which a disability waiting 

period ends; or,

3. Prior to September 1981, the first day of the month in which the employee 

attains age 62. After August 1981, in reduced age O/M cases, the first day 

of the month after the month in which the employee's 62nd birthday falls 

unless his (her) birthday is the 1st or 2nd day of the month (in such cases, 

the effective date is the first day of that month;) or,

4. The first day of the month in which the spouse meets the eligibility 

requirements in RCM 8.3.20; or,

5. The date a PIA increase or adjustment causes the total O/M rate to 

exceed the total RR formula rate if the spouse is an annuitant.

B. Married After Employee Filed for Annuity

1. O/M Computation Rate In Force When Spouse Become Eligible - If the total 

O/M computation rates exceed the total RR formula rates for the month 

before the month in which the spouse meets the eligibility requirements in 

RCM 8.3.20, the spouse can be included in the family group as soon as (s)he 

meets the eligibility requirements.

EXAMPLE: The family group on the employee's ABD of 5-1-77 consists of 

the employee and an FTS. The 100% O/M is in force. On 8-1-78 the spouse 

meets the eligibility requirements and can be included in the family group. 
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2. RR Formula Rate In Force When Spouse Becomes Eligible - A spouse 

annuitant who was married to the employee after (s)he filed for the employee 

annuity and meets the eligibility requirements in RCM 8.3.20 can be include in 

the family group for purposes of the O/M computation on the later of: 

a. The first day of the month after the month in which a disability waiting 

period ends; or,

b. The spouse annuity beginning date; or,

c. The date a PIA increase or adjustment causes the total O/M rate to 

exceed the total RR formula rate.

8.3.23 Effective Date of Divorced Spouse O/M Benefit

The divorced spouse annuitant can be included in the family group for purposes of the 

O/M Test on the later of:

1. The employee's ABD; or

2. The first day of the month after the month in which the employee's 62nd birthday 

falls unless his (her) birthday is the 1st or 2nd day of the month (in such cases, 

the effective date is the first day of the month); or,

3. October 1, 1981; or,

4. The divorced spouse's annuity beginning date; or

5. The date a PIA increase or adjustment caused the total O/M rate to exceed the 

total RR formula rate.

If the O/M computation exceeds the RR formula rate, refer the case to P&S-RAC. 

8.3.24 Eligibility and Date of Entitlement of Child Under 100% O/M 

Computation or 110% Grandfather O/M Computation

The 1937 and 1974 Railroad Retirement Acts did not provide a child's annuity in 

retirement cases. However, if the employee has attained age 62 or is entitled to a 

disability freeze and is insured under the Social Security Act, a child can be included in 

the O/M computation as an Ineligible Person Included (IPI), subject to the restrictions in 

section B, if (s)he meets the eligibility requirements under the Social Security Act and 

the total O/M family monthly rate is higher than the total monthly employee, spouse 

and/or divorced spouse annuities payable under the railroad formula.

A. Social Security Act Rules - To be included in the family group under the Social 

Security Act, the child(ren) must be:
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1. The child, step-child, grandchild, or step-grandchild of the wage earner as 

explained in RCM Chapter 4.4; and,

2. Unmarried (a widowed or divorced child, or a child whose marriage is void 

or has been annulled is considered unmarried); and,

3. Dependent on the wage earner (as explained in RCM Chapter 4.7); and,

4. Under age 18; or

5. Over age 18 and either:

a. A post-secondary school student under the student phase-out 

provision; or

b. A full time elementary or secondary school student age 18-19 

under the non-phase-out student provision; or,

c. Disabled before age 22.

Effective September 1, 1981, a child who was not included in the O/M as an IPI 

on any earnings record prior to September 1, 1981 must be eligible as an IPI for 

the entire month before first eligibility is established.

B. 1974 Railroad Retirement Act Restrictions

1. Child Eligible on ABD or After Disability Waiting Period - If the child meets 

the requirements in Section (A) above on the employee's annuity 

beginning date or on the first day of the month following the month in 

which the disability waiting period ends, the child can be included in the 

family group for the purposes of computing the O/M computation rates.

EXAMPLE: The family group on the employee's ABD consists of the 

employee and two eligible full time students. The students can be included 

in the O/M computation.

2. O/M in Force When Child Becomes Eligible - If the total O/M computation 

rates exceed the total RR formula rates for the month before the month in 

which the child meets the requirements in (A) above, the child can be 

included in the family group for the purposes of recomputing the O/M 

computation rates.

EXAMPLE: The family group on the employee's ABD of 5-1-77 consists of 

the employee, spouse and minor child. The 100% O/M computation is in 

force. On 9-1-77 a second child becomes an FTS. This child may be 

included in the family group for the O/M computation.
RCM 8.3

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3. RR Formula In Force When Child Becomes Eligible - If the total RR 

formula rates exceed the total O/M computation rates for the month before 

the month in which the child meets the requirements in (A) above, the 

child cannot be included in the family group for the purposes of computing 

the O/M computation rates (except as explained for phase-out students in 

section 8.3.12C. 

EXAMPLE 1: The family group on the employee's ABD consists of the 

employee and RR spouse annuitant with a minor child in her care. The 

RR formula employee and spouse rates exceed the total O/M formula 

rates. The child attains age 18 in 9-78 and the spouse annuity terminates. 

Although the child is an FTS, he cannot be included in the family group for 

the O/M computation.

EXAMPLE 2: The family group on the ABD 1-1-77 consisted of the 

employee and FTS. The O/M formula applied. The child ceased FTA on 

5-13-77. This caused the employee annuity to revert to the RR formula. 

When the child returned to FTA on 1-1-78, the child's benefit cannot be 

considered in the O/M computation to cause an increase from the RR 

formula to the O/M, because of the break in the continuity of the O/M 

formula.

8.3.25 Termination or Suspension of Employee Annuity under the O/M 

Computation

When the employee's annuity is not payable, life benefits are not payable for the 

spouse, divorced spouse, or child based on the employee's wage record.

NOTE: If the employee benefit is suspended to recover an overpayment, the benefit is 

still considered to be "payable."

A. Termination Events - The employee benefit under the 100% O/M or 110% 

Grandfather O/M computation terminates with the last day of:

1. The month before the month in which the employee dies; or,

2. The second month after the month the employee disability annuitant 

recovers from the disability. If the SSA determination of recovery conflicts 

with the RRB determination of disability in O/M cases, refer to RCM 

8.3.41.

B. Suspension Events - The employee benefit under the 100% O/M or 110% 

Grandfather O/M computation is not payable for months in which the following 

events occur:

1. Railroad Retirement Act - The employee annuity is not payable for months 

in which the employee works in railroad service or LPE (prior to 12-1-
RCM 8.3

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1988). It is also subject to the earnings restrictions as explained in RCM 

8.3.135 - 8.3.137 and RCM 8.3.143. 

2. Social Security Act - The employee annuity may not be increased under 

the 100% or 110% Grandfather O/M when any of the following events 

occur. These non-payment provisions would apply under the Social 

Security Act, and therefore may affect the payment of the O/M.

a. Vocational Rehabilitation Deductions - A VR deduction is imposed 

against the DIB O/M for any month in which the employee refuses, 

without good cause, to accept VR service available to him under an 

approved VR program. For any month in which a DIB is subject to 

VR deduction, the same VR deductions are imposed against any 

auxiliary benefits which are being paid (see SSCM 6608).

b. SGA Suspension for Blind Workers Over Age 55 - An employee 

who is entitled to DIB O/M on the basis of the definition of disability 

in RCM 1.2 will continue to be entitled for months in which he is 

engaging in "non-comparable" SGA. However, no O/M payment 

will be made to the employee or his auxiliaries on a recurring basis 

for any such months. Payment under the O/M may be initiated or 

reinstated for any month in which it is determined that the employee 

is not engaging in "comparable" SGA.

c. Deductions for Work Outside the U.S. - For months before May, 

1983, a 7-day work test is applied to the age and service O/M if the 

employee works outside the U.S. Effective 5-1-83, work deductions 

may apply to the age and service O/M if the employee works 

outside the U.S. for more than 45 hours in a month (see SSCM 

3800-3815 and RCM Chapter 5.7).

d. Deportation - Payment of age and service or DIB O/M benefits may 

be withheld if the employee is deported from the U.S. after 9-1-54 

(see SSCM sec 3840ff).

e. Conviction for Subversive Activities - Payment of age and service 

or DIB O/M may be affected when the employee has been deprived 

of certain benefit rights by sentence of a court after conviction on a 

charge involving espionage, sabotage, treason, sedition, or 

subversive activities (see SSCM 5400ff).

f. Confined to a Penal or Correctional Facility - Payment of the 

employee's share of the DIB O/M or, effective 5-1-83, the age and 

service O/M is suspended while the employee is confined to a 

penal or correctional facility for conviction of an offense which 

constitutes a felony. Benefits to the remaining members of the 
RCM 8.3

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family group are payable as if the employee were receiving benefits 

(refer to RCM 6.3.7.).

8.3.26 Termination or Suspension of Spouse Benefit under the O/M 

Computation

The spouse benefits are taken into account in figuring the family 100% O/M or 110% 

grandfather O/M computations only for those months in which the spouse would have 

been eligible for benefits under the Social Security Act.

A. Termination Events - The spouse benefits end with the last day of the month 

before the month in which:

1. The spouse dies; or

2. The marriage between the spouse and the employee is ended by absolute 

divorce or, in some cases of putative marriage, by knowledge that the 

marriage was invalid. When California law is applicable, and the parties 

undertake in good faith to legalize their marriage within a reasonable time 

after learning of the defect, benefits do not end. Entitlement is not ended 

by a limited decree until such decree becomes final. (See RCM 1.3.81 for 

divorced spouse benefits); or,

3. The employee's annuity terminates due to death or actual recovery from 

disability; or,

4. Prior to 9-1-83, the spouse under age 62 who does not have in care a 

child of the employee who is either under age 16 if the spouse was not 

included in the O/M in 8-1981; or age 18, if the spouse was included in the 

O/M in 8-1981; or disabled before attaining age 22.

Effective 9-1-83, the spouse under age 62 who does not have in care a child of 

the employee who is either under age 16 or disabled before attaining age 22.

NOTE #1: If the youngest child is age 16-17 in September 1981, a spouse who 

was entitled based on a child in care prior to 9-1-81 can continue to be entitled 

based on that child until the earlier of the month the youngest child attains age 18 

or September 1, 1983.

NOTE #2: Under the regular retirement formula, the spouse under age 62 with a 

minor child in care is entitled to tier I until the youngest child attains age 16 and is 

entitled to tier II until the youngest child attains age 18.

The Monthly Attainment Processing (MAP) program will generate a referral which 

is uploaded to USTAR in cases on the rolls where the spouse IPI is included in 

the O/M based on a child in care to alert the examiner to terminate the spouse 

benefit when:
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• The spouse IPI was not included in the O/M based on a minor child prior to 9-

1981; and

• The spouse IPI is under age 60 in a 60/30 case or under age 65 in other 

cases; and

• The youngest child in care attains age 16. 

If Note #1 applies, the MAP program will generate referral which is uploaded to 

USTAR when spouse IPI's on the rolls prior to 9-1981 who are under age 60 in 

60/30 cases or under age 65 in other cases when the youngest child attains age 

18 or September 1983, whichever is earlier. Effective 9-1-83, all spouse IPI diary 

cards based on child in care will be released when the youngest child attains 16 

regardless of when the spouse IPI came on the rolls.

See RCM 6.3.16 for examiner action in these cases.

B. Suspension Events

1. Railroad Retirement Act - The spouse annuity is not payable for months in 

which the employee or spouse works in railroad service or LPE. (However, 

if the spouse annuity is in suspense due to work in RR service or LPE 

(prior to 12-1-1988), the spouse's share under the O/M may be 

redistributed among the other auxiliaries as explained in RCM 8.3.139.)

2. Social Security Act - The spouse O/M benefit is not payable for any month 

in which the employee O/M benefit is not payable due to events described 

in RCM 8.3.25B. 

In addition, the spouse O/M benefit is not payable for any month in which 

the following events occur:

a. Deductions for Work Outside the U.S - For months prior to May 

1983, the 7-day work test is applied if the spouse works outside the 

U.S. as explained in SSCM 3800-3815 and RCM Chapter 5.7. 

Effective 5-1-83, work deductions may apply if the spouse works 

outside the U.S. for more than 45 hours in a month.

b. Conviction for Subversive Activities - The spouse O/M benefit is not 

payable when the spouse has been deprived of certain benefit 

rights by sentence of a court after conviction on a charge involving 

espionage, sabotage, treason, sedition, or subversive activities 

(see SSCM 5400ff).

c. Confined to a Penal or Correctional Facility - Effective 5-1-83, 

payment of the spouse's share of the O/M is suspended while the 

spouse is confined to a penal or correctional facility for conviction of 

an offense which constitutes a felony. Refer to RCM 6.3.7.
RCM 8.3

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If the spouse is receiving an annuity based on child-in-care which is being 

paid under the O/M, the child attains age 16, and the O/M is still payable 

(e.g., O/M rate exceeds RR rate), the spouse cannot be included in the 

O/M, but can still receive a tier II benefit. The amount of the spouse tier II 

benefit is to be deducted from the total O/M rate payable to the employee 

for himself and child. Show this computation in the "Remarks" section of 

the G-354.3. Do not show the spouse on the G-354.3 worksheet. A G-355 

showing the spouse tier I terminated in item 8 and a spouse tier II 

worksheet must be attached to the G-357 when it is vouchered. Use code 

paragraphs 410.4 and 410.5 in the adjustment letters.

8.3.27 Termination or Suspension of Child's Benefit under the O/M 

Computation

The child's benefits are taken into account in figuring the family O/M or DIB O/M 

computations only for those months in which the child would have been eligible for 

benefits under the Social Security Act rules, subject to the restrictions in RCM 8.3.24. 

A. Termination Events - A child's O/M benefit terminates:

1. The last day of the month before the month in which the child dies; or,

2. The last day of the month before the month in which the child attains age 

18, unless the child is determined to be disabled before attaining age 22, 

or is a full-time elementary or secondary school student under age 19 (see 

RCM Chapter 1.5); or,

3. The last day of the month in which the child ceases to be an FTS; or,

4. Two months after the month in which the disabled child recovers from the 

disability. For months before 9-1960, the child's eligibility ended with the 

month before the month in which (s)he was no longer considered 

disabled; or

5. The last day of the month before the month in which the child marries. 

EXCEPTION: Under the Social Security Act, a disabled child age 18 or 

over can marry any SS beneficiary, other than a child beneficiary under 

age 18 or a child beneficiary entitled because (s)he is a full-time student, 

without loss of benefits. However, in the case of a female disabled child 

whose marriage is to a man entitled to a childhood disability benefit or to a 

DIB, prior to June 1983, such female's entitlement ends the same month 

her husband's benefits are ended (e.g., recovery from disability), unless 

the husband's entitlement (either childhood disability benefits or DIB) ends 

because of death or (in the case of DIB only) entitlement to an RIB.
RCM 8.3

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Effective 6-1-83, the female disabled child's entitlement on her husband's 

E/R does not end, even if he recovers from his disability; or,

6. In the case of a stepchild of the employee, the month after the month in 

which the divorce between the employee and the natural parent becomes 

final.

The Monthly Attainment Processing (MAP) program will generate a referral which 

is uploaded to USTAR in cases on the rolls where the child is included in the O/M 

as an IPI, to alert the examiner to terminate the child's benefit when:

• The minor child is attaining age 18; or

• The non-phase-out student is attaining age 19; or

• The phase-out student is attaining age 22.

See RCM sections 6.3.16 and 1.5.60, for examiner action in these cases.

NOTE: If a child being included in the O/M is within 4 months of age 18, special 

action is required at the time of vouchering because the case will not be called up 

timely by MAP at age 18.

1. In the O/M award letter, after ALTA paragraph 442 (age and service O/M) 

or 449 (DIB O/M), include code paragraph 1756, Child Attains Age 18 – 

O/M Adjustment Possible, which says,

A child in this case will attain age 18 in (1) , and no longer be included in 

the computation of your annuity under the special guaranty formula 

UNLESS one of the following conditions is met:

1. The child is totally and permanently disabled, or

2. The child is a full-time student at an elementary or secondary school.

If the child meets either of these conditions, call or write the field office 

shown below as soon as possible to avoid any disruption or adjustment 

in your annuity. If you have already contacted the field office concerning 

this issue, you may disregard this issue.

(1) Enter MM/YEAR of attainment.

2. Put the folder in the DORMANT file with a call up for the first day of the 

month before the child attains age 18. Then take the appropriate action 

based on the employee's response. If no response, remove the child from 

the O/M computation.

B. Suspension Events
RCM 8.3

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1. Railroad Retirement Act - The child may not be included in the O/M for 

months in which the employee works in railroad or LPE (prior to 12-1-

1988) or months in which the child works in railroad service. (However, if 

the child is in railroad service, the child's share may be redistributed 

among the other auxiliaries as explained in RCM 8.3.139).

The child's O/M share is also subject to earnings restrictions as explained 

in RCM 8.3.138-8.3.139 and 8.3.143. 

2. Social Security Act - The child's O/M share is not payable for any month in 

which the employee O/M benefit is not payable due to events described in 

RCM 8.3.25B.

In addition, the child's O/M share is not payable for any month in which 

child's benefits would not be payable under the Social Security Act, due to 

the following events:

a. Vocational Rehabilitation Deductions - A VR deduction is imposed 

against the disabled child's O/M share for any month in which the 

disabled child refuses, without good cause, to accept VR service 

available to him under an approved VR program (see SSCM 6608).

b. SGA Suspension for Blind Workers Over Age 55 - If the child is a 

disabled adult child based on the special blindness provisions

described in RCM Chapter 1.2, the disabled child's O/M share may 

be affected when the child engages in substantial gainful activity. 

c. Deductions for Work Outside the U.S - Prior to 5-1-83, the 7-day 

work test is applied if the child works outside the U.S. as explained 

in SSCM 3800-3815 and RCM Chapter 5.7. Effective 5-1-83, work 

deductions may apply if the child works outside the U.S. for more 

than 45 hours in a month.

d. Conviction for Subversive Activities - Payment of the child's share 

may be affected when the child has been deprived of certain benefit 

rights by sentence of a court after conviction on a charge involving 

espionage, sabotage, treason, sedition, or subversive activities 

(see SSCM 5400ff).

e. Confined to a Penal or Correctional Facility - Prior to 5-1-83, 

payment of a disabled child's share of the age and service or DIB 

O/M is suspended while the disabled child is confined to a penal or 

correctional facility for conviction of an offense which constitutes a 

felony. Effective 5-1-83, any child's share of the O/M is not payable 

if the child is confined to a penal or correctional facility as explained 

above (refer to RCM 6.3.7.).
RCM 8.3

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f. Phase-out Students - A phase-out student cannot be included in 

the O/M for the months of May, June, July or August for each year 

1982 through 1985.

8.3.28 Termination or Suspension of Divorced Spouse Benefit under 

the 100% O/M Computation

Divorced spouse benefits are included in the 100% O/M only for those months in which 

the divorced spouse is eligible for an RR annuity.

A. Termination Events - The divorced spouse benefit ends with the last day of the 

month before the month in which:

1. The divorced spouse dies; or,

2. The employee's annuity terminates due to death or the employee age 62-

64 recovers from his (her) disability; or 

3. A divorced wife initially included in the 1937 RR Act O/M between 

September 1964 and October 4, 1972 or the divorced spouse annuitant 

payable under the 1981 RR Act Amendments remarries; or,

4. A divorced spouse becomes entitled to a RIB or DIB SS benefit that is 

based on a PIA which equals or exceeds one half of the employee's PIA 

#1 or #9. 

B. Suspension Events

1. Railroad Retirement Act - The divorced spouse annuity is not payable for 

months in which the employee or divorced spouse work in railroad service 

or LPE (prior to 12-1-1988). (The divorced spouse share has no effect on 

the other auxiliaries.)

The divorced spouse annuity is also subject to earnings restrictions as 

explained in RCM Chapter 8.3.140. 

2. Social Security Act - The divorced spouse O/M benefit is not payable for 

any month in which the employee O/M benefit is not payable due to 

events described in RCM Chapter 8.3.25B. 

In addition, the divorced spouse O/M benefit is not payable for any month 

in which the following events occur:

a. Deductions for Work Outside the U.S - Prior to 5-1-83, the 7-day 

work test is applied if the divorced spouse works outside the U.S. 

as explained in SSCM 3800-3815 and RCM Chapter 5.7. Effective 
RCM 8.3

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5-1-83, work deductions may apply if the divorced spouse works 

outside the U.S. for more than 45 hours in a month.

b. Conviction for Subversive Activities - The divorced spouse O/M 

benefit is not payable when the divorced spouse has been deprived 

of certain benefit rights by sentence of a court after conviction on a 

charge involving espionage, sabotage, treason, sedition, or 

subversive activities (see SSCM 5400ff).

c. Confined to a Penal or Correctional Facility - Effective 5-1-83, 

payment of the divorced spouse's share of the O/M is suspended 

while the divorced spouse is confined to a penal or correctional 

facility for conviction of an offense which constitutes a felony (refer 

to RCM 6.3.7.).

8.3.30 Employee Only Case

The basic employee original benefit in the O/M computation, before adjustment for age, 

delayed retirement credits or "other benefits" is the amount of PIA #9 (100% O/M 

computation) or PIA #11 (110% Grandfather O/M before 10% increase guaranty). 

If the employee is the only person that would be entitled under the social security 

formula, the adjusted employee O/M computation benefit must exceed the employee's 

railroad formula rate if the O/M is to apply.

8.3.31 Spouse and/or Minor Child, Disabled Child or FTS Included in 

Family Group

An additional amount may be included in the O/M computation of the employee annuity 

if the spouse and/or a minor child, disabled child or full time student are included in the 

family group for purposes of computing the O/M rates.

The amount of the spouse and child(ren)'s benefit before the adjustment for the family 

maximum, for age (if the spouse age reduction is applicable), or "other benefits" are 

each 50% of the employee's PIA #11 (110% Grandfather O/M before 10% increase 

guaranty) of 50% of the employee's PIA #9 (100% computation).

The total family O/M computation rate payable to the employee, spouse and/or 

child(ren) must exceed the employee and/or spouse total railroad formula annuity rate is 

the O/M is to apply.

See section 8.3.32 for information concerning inclusion of a divorced spouse in the 

family group.
RCM 8.3

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8.3.32 Divorced Spouse Included In O/M

An additional amount may be included in the 100% O/M computation for benefits 

payable October 1, 1981 or later if a divorced spouse annuitant is included in the O/M 

for the purposes of computing the O/M rates.

The amount of the original divorced spouse benefit before adjustment for age or other 

benefits is 50% of the employee's PIA #9 (100% O/M computation). The divorced 

spouse benefit is not reduced for the family maximum.

The total O/M rate payable to the employee, spouse, child(ren) and/or divorced spouse 

must exceed the employee, spouse and/or divorced spouse total railroad formula 

annuity rates if the O/M is to apply.

A divorced spouse's annuity rate may never be increased under the O/M to an amount 

that exceeds his/her RR formula tier 1 rate. Any O/M increase payable over the 

divorced spouse's RR rate would be paid to the employee and spouse annuitants.

Do not pay the O/M if a divorced spouse is included. Refer the case to M&P-A after 

completing Form G-354.3.

8.3.33 Proportionate Shares when Spouse or Divorced Spouse 

Entitled to RR Spouse or Divorced Spouse Annuity

If the spouse is receiving a railroad spouse annuity under either spouse conversion of 

spouse 1974 Act computation and the total family 100% O/M or 110% Grandfather O/M 

computation rates after adjustment for family maximum, age reduction, delayed 

retirement and "other benefits" exceeds the combined employee, spouse, and divorced 

spouse railroad formula rates, the total O/M rate is prorated between the employee and 

spouse. A divorced spouse's annuity rate may never be increased under the O/M 

increase payable over the divorced spouse's RR rate would be paid to the employee 

and spouse annuitants. Refer these cases to P & S -RAC after completing Form G354.3.

A. 100% O/M Computation

1. Employee 1974 Act Case - The employee's proportionate share is always 

2/3 of the family total. The spouse's proportionate share is always 1/3 of 

the family total.

2. Employee Conversion Case

Step 1 - Divide the employee's total tier rate by the sum of the employee 

and spouse total tier rates. (Carry the division out of our decimal places.)
RCM 8.3

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Step 2 - Multiply the Step 1 result times the amount of the 100% O/M 

increase (O/M rate minus the total tier rate including WF) rounded to the 

nearest cent.

Step 3 - Add the Step 2 result to the employee's total tier rate. The result 

will be the employee's proportionate share.

Step 4 - The spouse's proportionate share is the difference between the 

total 100% O/M rate and the employee's proportionate share (Step 3 

result).

EXCEPTION: Refer to the case to M&P-A if:

• The spouse is receiving a windfall on her own wage record but no SS benefit; 

or,

• The employee is a conversion annuity and the spouse is entitled under the 

1974 RR Act with a windfall on other than the employee's wage record. 

B. 110% Grandfather O/M Computation

1. Employee 1974 Act Case - If neither the employee nor the spouse is 

entitled to an SS benefit, the employee's proportionate share is always 2/3 

of the family total. The spouse's proportionate share is always 1/3 of the 

family total.

If either the employee or the spouse is entitled to an SS benefit, calculate 

the employee's proportionate share as follows:

Step 1 - Add together the employee's current net tiers I and II under the 

RR formula.

Step 2 - Add together the spouse's current net tiers I and II under the RR 

formula.

Step 3 - Divide the step 1 result by the sum of the step 1 result and the 

step 2 result. (Carry the division out to 4 decimal places.)

Step 4 - Multiply the step 3 result times the total family O/M rate. The 

result (rounded to the nearest cent) is the employee's proportionate share.

Step 5 - Subtract the employee's share in step 4 from the total family O/M 

rate. The result (rounded to the nearest cent) is the spouse's proportionate 

share.

2. Employee Conversion Case - The 100% O/M must be computed in a 

conversion case if the 110% O/M applied prior to 1-1-75 and there is a 

change in family composition or another event which affects the O/M 
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computation. The O/M increase is prorated between the employee and 

spouse in the proportion that their RR formula annuities bear to the total 

amount payable under the RR formula.

8.3.34 When Employee Annuity is not Payable for Entire Month

When the employee annuity begins after the first of the month, the amount payable 

under the 110% Grandfather O/M or 100% O/M computations for the partial month is 

one thirtieth of the monthly rate multiplied by the number of days in such part of a month 

(total days in month limited to 30). The resulting rate for the partial month is rounded to 

the nearest cent.

8.3.35 When Spouse Annuity or Divorced Spouse Annuity is not 

Payable for Entire Month

A. Spouse Annuity - When a spouse's annuity begins after the first day of the 

month, determine the monthly rate payable under the 110% Grandfather or 100% 

O/M as follows:

1. Spouse Not Included in O/M COMPUTATION PRIOR TO Beginning Date 

of Spouse Annuity - The amount payable to the employee for the month in 

which the spouse's annuity begins to equal to:

• 1/30 of the monthly amount payable under the higher of the RR formula or the 

O/M excluding the spouse, multiplied by the number of days in the month 

before the spouse ABD; plus

• 1/30 of the employee's proportionate share of the O/M computation, with the 

spouse included in the family group, multiplied by the number of days 

remaining in that month (total for month not to exceed 30 days) beginning 

with the spouse's ABD.

The amount payable to the spouse under the O/M computation for the 

partial month is equal to 1/30 of the spouse's proportionate share of the 

O/M computation, with the spouse included in the family group, multiplied 

by the number of days remaining in the month (total for month not to 

exceed 30 days) beginning with the spouse's ABD.

2. Spouse Included in O/M Computation as IPI Prior to Beginning Date of 

Her Annuity

(a) O/M Still Applies with RR Spouse Annuity - If the O/M rate is still 

higher than the railroad formula rate after the spouse becomes 

entitled to a railroad annuity, the amount payable to the employee 

for the month in which the spouse's annuity begins is equal to:
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• 1/30 of the O/M rate, including the spouse, multiplied by the number of days 

before the spouse ABD; plus,

• 1/30 of the employee's proportionate share multiplied by the number of days 

remaining in the month (total for month not to exceed 30 days) beginning with 

the spouse's ABD.

The amount payable to the spouse for the partial month is equal to 

1/30 of the spouse's proportionate share multiplied by the number 

of days remaining in the month (total for month not to exceed 30 

days) beginning with the spouse's ABD.

(b) RR Formula Higher With Spouse Annuity - Where the sum of the 

employee and spouse annuities determined under the railroad 

retirement formula is greater than the total O/M computation rate, 

the amount payable to the employee for the month in which the 

spouse's annuity begins is equal to:

• 1/30 of the monthly amount payable under the O/M including the spouse in 

the family group, multiplied by the number of days in the month before the 

spouse's ABD; plus

• 1/30 of the employee's railroad formula rate multiplied by the number of days 

left in the month (total days in month not to exceed 30) beginning with the 

spouse's ABD.

The amount payable to the spouse for the partial month is equal to 

1/30 of the spouse's railroad formula rate multiplied by the number 

days left in the month (total days in month not to exceed 30) 

beginning with the spouse's ABD.

B. Divorced Spouse - Refer these cases to P&S-RAC. 

8.3.40 Definition of Primary Insurance Amount (PIA)

The Primary Insurance Amount (PIA) is the basis of all Social Security Act benefits and, 

therefore, all retirement annuity rates payable under the O/M. Refer to RCM Chapter 

8.11, "PIA Determinations," for an explanation of the computation of PIA. PIA #9 and 

PIA #11 are used in the Retirement O/M computation.

Under the 1977 Amendments to the Social Security Act, the type of computation used to 

compute the PIA depends upon the "eligibility year". In Retirement 100% O/M cases, 

this is either the year in which the employee attains age 62 or the year of disability onset 

(even if (s)he does not acquire the required O/M insured status until a later year).

A. Eligibility Year Before 1979 - The PIA #9 or PIA #11 computed for retirement O/M 

benefits is the higher of:
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1. "New Start" Method - The PIA is obtained directly from the average 

Monthly Wage (AMW) under the "New Start" method. After 1-1979 this 

PIA is identified as the AMW PIA.

The PIA's and Family Maximums for the AMW PIA are found in RCM 8.11

Appendix B.

2. "Old Start" Method - The PIA is obtained from the Primary Insurance 

Benefit (including the 1977 Old Start Computation for eligibility in 1978). 

After 1-1979 this PIA is identified as the AMW PIA.

The PIA's and Family Maximums for the Old Start AMW PIA are found in 

RCM 8.11 Appendices A + B.

3. Special Minimum PIA - The PIA is obtained by multiplying an amount 

specified in the law by the number of "Years of Coverage" under the 

Special Minimum PIA.

The Special Minimum PIA's and Family Maximums are found in RCM 8.11

Appendix C.

B. Eligibility 1-1979 or Later - The PIA #9 computed for Retirement 100% O/M 

benefits is the higher of:

1. AIME PIA - The PIA is obtained by a formula based on the "eligibility year" 

applied to the average indexed monthly earnings (AIME).

The AIME PIA Family Maximum is determined by a formula explained in 

RCM 8.11.86. 

2. Frozen Minimum PIA (FRZN MIN PIA) - The minimum starting AIME PIA 

cannot be less than $122.00. The AIME family maximum formula 

explained in RCM 8.11.86 is used to determine the maximum for the 

Frozen Minimum PIA.

3. Transitional Guarantee PIA - (TRANS PIA) - This PIA is a "New Start" 

AMW based PIA limited to age and service cases for employees who 

attain age 62 in 1979 through 1983, even though the O/M effective date is 

after the year the employee attains age 62. This PIA does not include 

earnings in the eligibility year or later years.

The conversion chart for the TRANS PIA and Family Maximum Benefit is 

found in the RCM 8.11 Appendices D and E under the "Benchmark Year."

4. 1977 Old Start Computation (1977 O.S. PIA) - The Primary Insurance 

Amount is determined by computing the PIB and then converting it to 6-

1978 PIA and family maximum using a conversion chart. However, the 

AMW cannot include earnings in the eligibility year or later years.
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The conversion chart for the 1977 Old Start PIA and Family Maximum 

Benefit is found in RCM 8.11 Appendices A, D and E under the 

"Benchmark Year."

5. Special Minimum PIA (SPC MIN PIA) - This PIA is obtained by multiplying 

an amount specified in law by the number of "years of coverage" under 

the Special Minimum Guarantee.

The Special Minimum PIA's and Family Maximums are found in RCM 8.11

Appendix C.

6. DIB Guarantee PIA (PRIOR DIB O/M) - When an employee has been 

entitled to DIB/OM benefits that terminated more than 12 months before 

the current disability or age and service entitlement, the "eligibility" year of 

the current entitlement determines the computation to be used. However, 

the starting PIA #9 may not be less than the PIA #9 which was in effect in 

the month of termination of the previous DIB O/M.

NOTE: When an individual has been entitled to a DIB O/M that terminated 

within 12 months of the current DIB O/M or age and service O/M, the 

previous PIA #9 computation applies.

The AIME family maximum formula explained in RCM 8.11.86 is used to 

determine the maximum for a DIB guarantee PIA, regardless of the 

method used to compute the PIA being used as the DIB guarantee PIA. A 

prior savings clause could increase the family maximum in some cases. 

However, where first entitlement to the DIB O/M is after 1978, the DIB 

O/M family maximum is limited under the 1980 SS Act Disability 

Amendments as explained in RCM 8.11.88.

8.3.41 Disability Freeze Requirement for DIB O/M

A. Determination of Disability Freeze Period - A disability freeze according to Social 

Security Act rules is required for all DIB O/M cases.

The period of disability is determined by the Disability Rating Section at RRB or 

SSA. If a disability period established at SSA conflicts with a disability period 

established at RRB in an O/M case, handle the case as follows:

1. SSA's DF onset date is earlier than RRB's DF onset date - If RRB 

previously determined that the EE was not disabled or insured as of SSA's 

DF onset date and denied an RRB disability annuity application, RRB's DF 

onset date must be used to determine O/M entitlement to compute PIA #9 

and PIA #11. Otherwise, use SSA's DF onset date (if based on a DIB 

insured status) to compute PIA #9 or PIA #11.
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2. SSA's DF onset date is later than RRB's DF onset date - Use RRB's DF 

onset date to determine O/M entitlement and to compute PIA #9 and PIA 

#11.

3. SSA denial of the DF but RRB granted a DF - Use RRB's DF onset date to 

determine O/M entitlement and to compute PIA #9 and PIA #11.

4. SSA Benefit Paid Without D/F but Joint RRB-SSA Freeze Established - 

Use RRB's DF onset date to determine O/M entitlement and to compute 

PIA #9 and PIA #11. In these cases, SSA is paying benefits based on 

wages, military service used as wages, or SEI only. RRB is paying 

benefits based on combined SS earnings and compensation with an offset 

for SS benefit entitlement.

B. Examiner Action When Disability Annuitant is Working - The disabled employee's 

regular employment may indicate an ability to engage in SGA and result in the 

termination of the disability freeze, and therefore, the DIB O/M. Refer to RCM 1.2

for procedure for handling these cases.

C. Effect of Disability Freeze on PIA Computation - The first month of the waiting 

period or the month of entitlement to the DIB O/M, if there is no waiting period, is 

used to determine the deemed retirement age under SS Act rules. Retirement 

age for women is 62. For a male wage earner born 1-2-13 or later, retirement 

age is 62. The AMW or AIME is computed as if the employee had attained age 

62 in the first month of his waiting period, or if there is no waiting period, in the 

first month (s)he is entitled to the DIB O/M. (The male wage earner born before 

1-2-13 is deemed to be age 65 in the first month of his waiting period or if there is 

no waiting period, in the first month he is entitled to the DIB O/M).

The period of disability under SS Act rule ends with the earlier of the actual 

attainment of age 65 or deemed attainment of age 65 (three years after deemed 

age 62). Any earnings after the first month of the waiting period or DIB O/M 

entitlement, if there is no waiting period, up to the earlier of the year of actual or 

deemed age 65 would be considered earnings within a period of disability.

Earnings that are compatible with the disability determination (see RCM 1.2) for 

the partial year in which the W/E attains or is deemed to attain age 65 or later 

years may be considered for a PIA recomputation. (See RCM 8.11.22 or RCM 

8.11.33 for detailed explanations).

NOTE: SSA does not convert a DIB to an RIB until the employee actually attains 

age 65. Similarly, a DIB O/M annuitant under the RR Act for the month preceding 

the month in which (s)he actually attained age 65 is deemed to have filed an 

application for an age and service annuity under paragraph (i) of the section 

2(a)(1) on the date on which (s)he attains age 65. The DIB O/M converts to an 

age and service O/M in that month.
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8.3.42 Comparison of Initial Computations of PIA #9 and PIA #11

A. 100% O/M Computation - PIA #9 for the 100% O/M is computed under current 

SS Act rules based on the employee's actual attainment of age 62 or entitlement 

to an actual disability freeze. Either the AMW PIA, AIME PIA, 1977 O.S. PIA, or 

SPC MIN PIA computation may apply. (The TRANS PIA may apply in age and 

service cases only.) The base years and benefit computation years for the AMW 

or AIME are determined as explained in RCM 8.11.12 and 8.11.13. 

The earnings used in the AMW computation or indexed for the AIME computation 

are subject to the yearly earnings maximums indicated in RCM 8.11.14. 

The initial PIA #9 for the DIB/OM may consider creditable SS earnings and 

compensation through the earlier of December 31 of the year of disability onset, 

or December 31 of the year preceding the effective date of the PIA. This PIA may 

be recomputed as explained in RCM 8.11.22 or RCM 8.11.33. 

The initial PIA #9 for the age and service O/M may consider creditable SS 

earnings and compensation through December 31 of the year preceding the 

effective date of the PIA. This PIA may be recomputed as explained in RCM 

8.11.22 or 8.11.33. 

Exception: The computation for the TRANS PIA or for 1977 Old Start PIA for 

eligibilities in 1979 or later cannot include earnings in the "eligibility year" or later 

years. 

PIA #9 is included in the PIA computations on Form G-90.

B. 110% Grandfather O/M Computation - The initial PIA #11 for the 110% 

Grandfather O/M is computed under SS Act rules in effect in 12-1974 based on 

the employee's actual attainment of age 62 or entitlement to a disability freeze. 

Either the 6-1974 "New Start" PIA, 6-1974 "Old Start" PIA, or SPC MIN PIA 

computation may apply.

The earnings used in the AMW computation are subject to the following yearly 

earnings maximums:

Year Maximum Total Earnings Per Year

1951-1954 $ 3,600

1955-1958 $ 4,200

1959-1965 $ 4,800

1966-1967 $ 6,600
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1968-1971 $ 7,800

1972 $ 9,000

1973 $10,000

1974 $13,200

After 1974, the yearly earnings maximum for PIA #11 is frozen at $13,200 total 

per year.

The 1937 Railroad Retirement Act rules established by the 1972 Technical 

Amendments are used to determine the earnings used in the computation of PIA 

#11 for the 110% Grandfather O/M guaranty of the 1974 Railroad Retirement 

Act: 

• The initial PIA #11 for the DIB O/M may consider creditable SS earnings and 

compensation through the earlier of December 31, of the year of disability 

onset; or December 31 of the year preceding the annuity beginning date. If 

the compensation only earned in the ABD Year prior to disability onset is 

higher than some other benefit computation year, the compensation in the 

ABD year is substituted for the earnings in the other benefit computation year 

in the initial PIA #11 Computation. 

• The initial PIA #11 for the age and service O/M may consider creditable SS 

earnings and compensation through December 31, of the year preceding the 

ABD year. If the compensation only earned in the ABD year is higher than 

some other benefit computation year, the compensation in the ABD year is 

substituted for the earnings in the other benefit computation year in the initial 

PIA #11 computation. 

Wages or self-employment income earned in or after the ABD year are not used 

to compute PIA #11. Therefore, a recomputation of PIA #11 is possible only if the 

employee returns to railroad service.

Prior to 1-1979, PIA #11 was included with the PIA computations on Form G-90. 

If PIA #11 is required 1-1979 or later, request a manual DP&A computation of 

this PIA on Form G-90a.

C. Comparison of 100% O/M and 110% Grandfather O/M - The benefit computation 

years under the 100% O/M and 110% O/M for the same wage record are 

illustrated in the example and chart in Appendix F.
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8.3.43 When Earnings after the 100% O/M Effective Date may Increase 

PIA #9

PIA #9 is subject to recomputation under current Social Security Act rules. Earnings in 

the year of the O/M effective date or later years may be sufficient to increase the AMW 

or AIME for PIA #9 if they are higher than the lowest earnings year (after indexing if 

AIME computation) in the benefit computation years. Refer to RCM 8.11.22 or RCM 

8.11.33 for a detailed explanation.

8.3.75 Definition of Family Monthly Maximum

The Social Security formula limits the amount of monthly benefits which may be paid for 

any month on any one wage record. This limited amount is called the family monthly 

maximum. If three or more individuals are included in the retirement O/M computation,

their benefits will be reduced for the family monthly maximum.

EXCEPTION: A divorced spouse annuitant's O/M benefits are not subject to reduction 

for the family monthly maximum.

The 1980 Social Security Disability Amendments established separate family maximum 

rules for DIB O/M cases when the disability onset is after 1978 and the DIB O/M 

effective date is 7-1-80 or later as explained in RCM 8.11.88 and 8.3.82. Prior to this, 

age and service and DIB O/M family maximum computations were the same.

The types of family monthly maximums are explained in this section.

8.3.76 Table Maximum Established for AMW PIA by SSA

The Table Maximum is written into the Social Security Act for wage earners who 

attained age 62 or have a disability onset date before 1-1-79. Since 1971 these table 

amounts have been increased with each amendment increase (see Appendix B for O/M 

entitlements before 1-1-71.) The automatic cost-of-living provisions in effect in 

December 1978 continue to apply in these cases. Refer to RCM 8.11 Appendices A and 

B for a summary of Table maximums.

8.3.77 Special Minimum PIA Family Monthly Maximum

The computation of the Special Minimum PIA Family Monthly Maximum is explained in 

RCM section 8.11.82. A summary of the SPC MIN PIA family monthly maximum 

amounts is found in RCM Chapter 8.11, Appendix C.

8.3.78 Benefit Conversion Savings Clause Family Monthly Maximum

Prior to the 1971 Social Security Act Amendments, the family monthly maximums were 

not always increased by the same percentage as the PIA's. In order to insure the full 

percentage increase to the total family group on the rolls in the month before the 
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amendment increase, the Benefit Conversion or Family Payment Savings Clause was 

applied. If the date of entitlement to the 1937 Act O/M computation is before 1-1-71, a 

savings clause could apply. (See Appendix B, Conversion Cases).

8.3.79 Basic Computation of the Family Maximum Benefit for the 

AIME, TRANS or 1977 Old Start PIA - 100% O/M Only

The 1977 SS Act Amendments established a four step formula to compute the Family 

Maximum Benefit (FMB) for wage earners who attain age 62 or have a disability onset 

date of 1-1-79 or later. The percentages in the Family Maximum Benefit formula are 

constant but the amounts, "bend points," in each step will be adjusted for each 

benchmark year. These bend points are explained in RCM 8.11.86. 

Tables summarizing the family maximum benefits for the Transitional and 1977 O.S. 

PIA's are included as appendices to RCM Chapter 8.11. 

The Social Security Disability Amendments of 1980 exclude disability cases with a DIB 

O/M effective date of 7-1-80 or later based on disability onset after 1978 from this family 

maximum provision as explained in RCM 8.11.88 and RCM 8.3.82. The formula 

continues to apply for age and service and survivor cases and for disability cases 

payable prior to 7-1-80 based on disability onset after 1978.

8.3.80 Computation of Auxiliary Shares Subject to the Family 

Maximum

A. Basic Computation of Auxiliary Shares - The auxiliary shares subject to the family 

maximum are the benefits payable for the spouse, minor child(ren), disabled 

child(ren) or full time students. The computation of the phase-out full time student 

benefit is explained in RCM 8.3.84. 

The divorced spouse annuitant's benefit is not subject to the family maximum. 

The benefits for the other auxiliaries are reduced for the maximum not taking into 

account the existence of the divorced spouse annuitant in the family group.

The basic auxiliary benefits in retirement cases are computed by deducting the 

employee benefit before DRC's or age reduction from the corresponding monthly 

maximum amount. The balance is the total net amount payable to all the 

auxiliaries (excluding a divorced spouse). Divide this amount by the number of 

auxiliary beneficiaries (excluding a divorced spouse). The result is each auxiliary 

share (except for the divorced spouse benefit).

NOTE: A single auxiliary's share (before rounding) cannot exceed 50% of PIA 

#9.

When computing the 110% O/M rate, the auxiliary shares should be rounded to 

the nearest cent only.
RCM 8.3

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When computing the auxiliary shares under the 100% O/M rate prior to 9-1981, if 

the result is not a multiple of $0.10, round to the next higher multiple of $0.10. 

Effective with a rate change or a change in the family group on 9-1-81 or later, 

when computing each auxiliary share under the 100% O/M if the result is not a 

multiple of $0.10, round to the lowest multiple of $0.10.

Effective with a rate, change or change in the family group on 9-1-81 or later, 

after determining the amount of the adjusted auxiliary share, if the result is not a 

multiple of $1.00, round the amount of the auxiliary share down to the next lower 

multiple of $1.00 (see Section 8.3.126).

EXCEPTION: Cases paid a June cost-of-living increase on a mechanical mass 

adjustment were not rounded down to the dollar since each auxiliary's share is 

not in the Research record. In these cases, the total family rate before 

proportionate shares are determined is rounded down to the dollar. (Examiners 

should not attempt to correct the mechanical rate merely to make it equal to the 

manual rate in these cases.)

Cost-of living increases are added to the family maximum amounts as explained 

in RCM 8.11.90 - 8.11.91. 

EXAMPLE 1: The family group consists of the employee (DOB 3-5-17), spouse 

and two dependent grandchildren. The AIME PIA on the O/M effective date of 3-

1-79 is $456.90. The AIME Family Maximum Benefit equals $799.70 ($757.78 + 

175% of $23.90). Subtracting the employee benefit from this amount ($799.70 - 

$456.90) leaves a balance of $342.80 which when divided between the three 

auxiliaries results in auxiliary benefits of $114.30 each.

A 9.9% cost-of-living increase is payable 6-1-79. The AIME PIA is increased to 

$502.20 and the Family Benefit is increased to $878.90. Subtracting the 

employee benefit from this amount ($878.90 - $502.20) leaves a balance of 

$376.70 which when divided between the three auxiliaries results in auxiliary 

benefits of $125.60 each effective 6-1-79. Subsequent cost-of-living increases 

are added as applicable.

EXAMPLE 2: If the O/M effective date for the same family group had been 9-1-

79, the AIME PIA would have been initially computed with a 9.9% COL increase 

resulting in an AIME PIA of $502.20 effective 9-1-79. The initial AIME PIA Family 

Maximum Benefit is $878.90 ($757.78 + 175% of $69.20 x 1.099). Subtracting 

the employee benefit from this amount ($878.90 - $502.20) leaves a balance of 

$376.70 which when divided between the three auxiliaries results in auxiliary 

benefits of $125.60 each effective 9-1-79. Subsequent cost-of-living increases 

are added as applicable.

EXAMPLE 3: The benchmark year is 1979. The family group consists of the 

female employee (DOB 5-6-17) and two full-time students. The employee files for 

benefits at age 62. The 1977 O.S. PIA on the O/M effective date of 5-1-79 is 
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RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 37 of 114

$246.30 with a Family Maximum Benefit of $389.40 ($345.00 + 272% of $16.30). 

Subtracting the employee benefit from this amount ($389.40 - $246.30) leaves a 

balance of $143.10 when divided between the two auxiliaries results in auxiliary 

benefits of $71.60 each.

A 9.9% COL increase is effective 6-1-79. The 1977 O.S. PIA would be $270.70 

effective 6-1-79 with a Family Maximum Benefit of $429.00 (345.00 + 272% of 

$16.30 rounded x 1.099). Subtracting the employee benefit from this amount 

($428.00 - $270.70) leaves a balance of $157.30 which when divided between 

the two auxiliaries results in auxiliary benefits of $78.70 each. Subsequent costof-living increases are added as applicable.

EXAMPLE 4: The benchmark year is 1980. The family group consists of the 

employee (DOB 7-5-18), spouse (DOB 9-28-18), and two dependent 

grandchildren. The employee files for benefits on 7-1-81 at age 63. The TRANS 

PIA on the O/M effective date of 7-1-81 is $692.60 and the Family Maximum 

Benefit is $1212.00.

Subtracting the employee benefit (before age reduction) from this amount 

$1212.00 - $692.60) leaves a balance of $519.40 which when divided between 

the three auxiliaries results in auxiliary benefits of $173.20 each (rounded) 

effective 7-1-81. Subsequent cost-of-living increases are added as applicable.

EXAMPLE 5: The family group consists of the employee (DOB 5-7-18), spouse 

and two full-time students under age 22. The AIME PIA on the O/M effective date 

of 5-1-80 is $573.90. The AIME family maximum benefit equals $1004.40 

($817.26 + 175% of $106.90). Subtracting the employee benefit before age 

reduction from this amount ($1004.40 - $573.90) leaves a balance of $430.50

which when divided between the three auxiliaries results in auxiliary benefits of 

$143.50 each. 

A 14.3% cost-of-living increase is effective 6-1-80. The AIME PIA increases to 

$656.00 effective 6-1-80 with a family maximum benefit of $1148.10. Subtracting

the employee benefit before age reduction from this amount ($1148.10 -

$656.00) leaves a balance of $492.10 which when divided between the three 

auxiliaries results in auxiliary benefits of $164.10 each. Subsequent cost-of-living 

increases are added as applicable.

EXAMPLE 6: If the O/M effective date for the same family group had been 9-1-

80, the AIME PIA would have been initially computed with the 14.3% increase 

resulting in an AIME PIA of $656.00 effective 9-1-80. The initial AIME PIA Family 

Maximum Benefit is $1148.10. Subtracting the employee benefit before age 

reduction from this amount ($1148.10 - $656.00) leaves a balance of $492.10 

which when divided, between the three auxiliaries results in auxiliary benefits of 

$164.10 each. Subsequent cost-of-living increases are added as applicable.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 38 of 114

EXAMPLE 7: In the above family group, a divorced wife (DOB 12-11-18) 

becomes entitled 10-1981. The AIME PIA after the 6-1981 COL is $729.50 with a 

family maximum benefit of $1276.70.

The auxiliary benefits in force are $182.40 (each). The divorced wife is paid a 

share of $364.70 before age reduction. The total O/M rate is $1641.40 before 

employee, spouse or divorced spouse age reductions. The family rate payable 

after rounding each share down to the dollar is $1639.00.

EXAMPLE 8: The family group consists of the age and service employee, 

spouse, minor child and phase-out FTS. The TRANS PIA effective 7-1981 is 

$752.00 and the family maximum benefit is $1316.50. The auxiliary benefits 

effective 7-1981 are $188.20 each.

Effective 11-1981, the minor child attains age 18 and is a non-phase-out FTS. 

The spouse share terminates. The 1981 SS Act rounding rules apply to the 

beneficiary shares. The auxiliary benefits effective 11-1981 are $282.20 each. 

The shares payable are rounded to $282.00 each.

Effective 9-1-82 the FTS phase-out computation applies to the family group (see 

Section 8.3.84).

B. Increase in Family Group - If the O/M computation is applicable and an additional 

auxiliary becomes entitled to benefits under the O/M formula, (excluding a 

divorced spouse or new entitlement due to amendments) the benefits payable to 

each previous auxiliary are reduced to provide a share to the new beneficiary. 

The auxiliary benefits are computed as explained in Section (A).

Benefits payable to a divorced spouse are never reduced for the family 

maximum. The benefits for the other auxiliaries are reduced for the maximum, 

not taking into account the existence of the divorced spouse in the family group.

NOTE: When amendments create a new category of entitled auxiliaries, a 

savings clause will usually be applied to the rates payable to the other auxiliaries.

EXAMPLE 1: The employee and FTS are receiving benefits under the DIB 100% 

O/M computation effective 6-1980. The 6-80 AIME PIA is $582.10 which has a 

family maximum of $1018.70. The employee's benefit of $582.10 and a student's 

benefit of $291.10 do not equal the maximum. When the spouse (DOB 8-10-11) 

files an application for a spouse annuity effective 8-1-81, the auxiliary shares in 

the O/M computation (in this case the O/M still applies) must be adjusted for the 

family maximum.

The 8-1-81 AIME PIA is $647.30 with a family maximum of $1132.80. After 

subtracting the employee's share ($1132.80 - $647.30) the remaining $485.50 is 

divided between the two auxiliaries. The spouse benefit adjusted for the family 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 39 of 114

maximum to $242.80 is also subject to a 36 month age reduction resulting in a

reduced spouse benefit of $182.10. The FTS benefit is adjusted to $242.80.

EXAMPLE 2: The employee, spouse and minor child are receiving benefits 

under the DIB O/M. The AIME PIA is $328.60 effective 10-1-81 and the family 

maximum benefit of $492.80 results in auxiliary shares of $82.10 each, rounded 

to $282.00 each. The employee attains age 62 and the divorced wife becomes 

entitled as of 12-1-81 with an auxiliary share of $164.30, rounded to $164.00. 

The total O/M rate effective 12-1-81 is $656.00 after dollar rounding.

C. Decrease in Family Group Under Monthly Maximum - If the number of persons 

included in the O/M computation decreases, the shares payable to two or more 

remaining auxiliaries (excluding a divorced spouse) are increased to provide 

equal shares (before any age reduction) subject to the family monthly maximum. 

The auxiliary benefits are computed as explained in section A.

A single auxiliary's share cannot exceed 50% of PIA #9. If the total benefits 

payable to the employee plus one auxiliary share of 50% of PIA #9 is less than 

the family maximum, the family maximum no longer applies.

NOTE: Benefits payable to a divorced spouse are never reduced for the family 

maximum and are not affected by a decrease in the number of other auxiliaries in 

the family group.

EXAMPLE 1: The employee (disability onset 2-17-79), spouse (DOB 7-19-21), 

minor child and FTS are entitled to DIB O/M benefits effective 8-1-79. The AIME 

PIA #9 effective 8-1-79 is $485.30 with a family maximum benefit of $828.10. 

The employee's benefit is $485.30. The spouse, minor child, and FTS are entitled 

to $114.30 each ($342.80 ÷ 3). The FTS ceases FTA on 1-19-80. The 

recomputed 100% O/M benefits for the spouse and minor child effective 2-1-80 

are $171.40 each ($342.80 ÷ 2).

The minor child attains 18 on 4-10-80 and is an FTS. The spouse benefit 

terminates. The FTS benefits under the O/M computation is $242.70 (50% x 

$485.30) effective 4-1-80.

This amount is increased for succeeding cost-of-living increases.

EXAMPLE 2: The employee's disability onset is 9-5-80 and is subject to the 

1980 Disability Amendments.

The DIB O/M effective 3-1-81 has a PIA #9 of $291.90 with an FMB of $433.40. 

After subtracting the employee's share of $291.90 the remaining $141.50 is 

equally divided between the spouse and minor child providing benefits of $70.80 

each.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 40 of 114

The child attains 18 in 5-1-81 and is an FTS. The spouse benefit terminated. The 

FTS share effective 5-1-81 is $141.50 since it is subject to reduction for the 

family maximum.

The benefits are increased for succeeding cost-of-living increases.

8.3.81 Combined Family Maximum

If a child included in the 100% O/M computation or 110% Grandfather O/M computation 

is also entitled to a benefit on another wage record, the combined family maximum may 

apply. Refer to RCM 8.3.115. 

8.3.82 Family Maximum Benefit For 1980 SS Amendment Disability 

Cases (DIB O/M MAX)

Prior to the 1980 Social Security Disability Amendments, the computation of the O/M 

family maximum and auxiliary benefits was the same for both age and service and 

disability cases (see RCM 8.3.75 - 8.3.81).

Under the 1980 Social Security Disability Amendments, the total family benefits 

(excluding a divorced spouse) of disability claimants whose first month of entitlement to 

the DIB O/M payment is July 1980 or later based on disability onset 1-1-78 or later are 

limited as explained in RCM 8.11.88. 

Tables of DIB O/M maximums can be found in the appendices of RCM Chapter 8.11. 

After the DIB O/M MAX is determined subsequent cost-of-living increases are applied to 

this family maximum amount.

The DIB O/M MAX may be combined with other maximums as explained in RCM 

8.3.115. 

The 1980 Social Security Disability Amendments did not change the method of 

distributing the maximum family benefit among the auxiliaries. However, in cases where 

the PIA is low enough, the DIB O/M MAX will equal the PIA. No auxiliary benefits will be 

payable in those cases.

The spouse auxiliary benefit is subject to age reduction as explained in RCM 8.3.86. 

The DIB O/M MAX is applicable for eligible family groups until the employee dies or

becomes entitled to an age and service O/M. At that time, the regular family maximum 

described in RCM 8.11.80 - 8.11.86 applies.

In the case of an employee who is entitled to either a reduced age and service O/M or 

the DIB O/M which begins July 1, 1980 or later, based on first eligibility after 1978, the 

possibility of electing the reduced age and service O/M must be explored to determine if 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 41 of 114

the RIB family monthly maximum would provide a higher monthly rate. If the RIB is 

elected, entitlement to the disability freeze is still applicable for Medicare purposes.

EXAMPLE 1: The DIB O/M MAX effective 9-1-80 is $836.30. The AIME PIA is $557.50. 

After subtracting the employee's share of $557.50, the amount of $278.80 is equally 

divided among the auxiliaries.

EXAMPLE 2: The DIB O/M MAX effective 7-1-80 equals the PIA of $161.50. Since the 

DIB O/M MAX equals the employee's share, no auxiliary benefits are payable.

EXAMPLE 3: Payments are based on the SPC MIN PIA of $245.70. The DIB O/M 8-1-

80 is $302.30. After deducting the employee's share of $245.70, the remaining $56.60 is 

equally divided among the auxiliaries.

8.3.83 Benefits Payable to a Non-Phase-Out Student

The non-phase-out student is entitled to the basic auxiliary share computed as 

explained in RCM 8.3.80(A). This benefit is based on the PIA #9 for each applicable 

effective date.

EXAMPLE: The PIA #9 is $771.70 eff. 9-1-82. The family group consists of the 

employee and a non-phase-out student. The employee's rate is $771.70 and the 

student's benefit is $385.80.

8.3.84 Benefits Payable to a Phase-Out Student

The computation of the benefit payable to a phase-out student is based on 50% of the 

6-1981 PIA #9. Benefits are not payable to phase-out students for the months of May, 

June, July or August of each year 1982 through 1985. Effective September 1, 1982 or 

later, the student is entitled to a percentage of this benefit as follows:

9-82-thru 4-83 75% (.75)

9-83 thru 4-84 50% (.50)

9-84 thru 4-85 25% (.25)

Effective 9-1-85, phase-out students can no longer be included in the O/M computation.

If the family maximum applies, additional computations are required as explained in 

RCM Chapter 8.6, Form G-354.3 Instructions.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 42 of 114

8.3.85 Age Reduction Applied to Employee or Spouse Benefit When 

Benefit First Payable Before 1-1-78

A. General - When the earliest possible effective date of the age and service O/M in 

a month in which the employee is under age 65, the employee's full PIA #9 or 

PIA #11 is subject to an age reduction. The reduction 1/180 for each month the 

employee is under age 65 is applied as the earliest date that the employee meets 

the requirements for an O/M computation. If the O/M computation does not apply 

until later (e.g., RR rate exceeds O/M rate until spouse attains age 62) the 

original 1/180 reduction must be applied to the employee's O/M rate. The O/M 

cannot be considered to become effective at a later date for the purpose of 

applying a lesser 1/180 reduction.

If the spouse (without a child in her care, if spouse is female) is included in either 

the age and service or DIB O/M in a month in which (s)he is under age 65, the 

spouse benefit is subject to an age reduction. However, if a wife receives a 

reduced O/M benefit and she later begins caring for a minor or disabled child of 

the employee, she is entitled to unreduced benefits for the months the child is in 

her care.

The age reduction factor may be adjusted when the beneficiary attains or is 

deemed to be age 65 (see RCM 8.3.87).

B. 100% O/M Computation

1. Employee Benefit Age Reduction - PIA #9 (plus DRC's effective 1-1979 or 

later is reduced by 1/180th per month for each calendar month the 

employee is under age 65 on the earliest possible effective date of the 

O/M computation. Use Table RI of the "Rainbow Book" to obtain the initial 

employee benefit after the age reduction.

Prior to 1-1978, increases to PIA #9 paid after the date of entitlement but 

before the beneficiary attained age 65 were also subject to an age 

reduction for the months the beneficiary was under age 65 as of the date 

of the increase. Use Table RI of the "Rainbow Book" to obtain the amount 

of the employee benefit increase after the age reduction.

When PIA #9 is increased 1-1-78 or later, regardless of the employee age, 

the age reduction established before 1-1-78 is increased by the same 

percentage the PIA is increased. To compute the age reduction increase 

when an amendment or cost-of-living increase is involved, multiply the 

current age reduction amount by the percentage the PIA #9 is increased. 

Prior to 9-1981, if the result is not a multiple of $.10, round to next lower 

multiple of $.10. Effective with rate changes 9-1981 or later, if the result is 

not a multiple of $.10, round it to the next higher multiple of $.10.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 43 of 114

To compute the age reduction increase for cases involving a recomputed 

PIA, divide the new PIA (NPIA) times the money amount of the reduction 

(MAR) by the old PIA (OPIA). The quotient is the increased money 

amount of reduction (IMAR). Prior to 9-1981, if the result is not a multiple 

of $.10, round to next lower multiple of $.10. Effective with rate changes 9-

1981 or later, if the result is not a multiple of $.10, round it to the next 

multiple of $.10.

- (NPIA x (MAR) = (IMAR)

(OPIA)

EXAMPLE: The employee's date of birth is 3-10-14. His O/M date of 

entitlement is 4-1-77. PIA #9 equals $300.40 as of 4-1-77. A 23 month age 

reduction of $38.30 applied to this PIA reduces the employee's benefit to 

$262.10. PIA #9 is increased to $318.20 effective 6-1-77. A 21 month age 

reduction is applied to the $17.80 PIA increase reducing it by $2.00 to 

$15.80. The employee's benefit effective 6-1-77 is $277.90 ($262.10 + 

$15.80) and the total age reduction effective 6-1-77 is $40.30.

Effective January 1978, due to a recomputation, PIA #9 increase to 

$320.20. His benefit payable effective January 1978 is computed as 

follows:

Step 1 - Determine the money amount of reduction in effect in the month 

before the increase and apply the formula to determine the increased 

money amount of reduction.

$320.20 x $40.30 = $40.50 (Rounded down to the dime)

$318.20

Step 2 - Subtract the increased money amount of reduction from the new 

PIA.

$320.20 - $40.50 = $279.70 (employee benefit 1-1-78)

Effective June 1, 1978, PIA #9 is increased to $341.10 due to 6.5% costof-living increase.

Step 1 - Determine the money amount of the reduction in effect in the 

month before the increase and multiply it by the percentage increase.

$40.50 x 1.065 = $43.10 (Rounded down to the dime)
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 44 of 114

Step 2 - Subtract the increased money amount of reduction from the new 

PIA.

$341.10 - $43.10 = $298.00 (employee benefit 6-1-78)

The age reduction is increased for all subsequent cost-of-living increases. 

Effective 6-1982, the new rounding rules apply (round up to the dime).

2. Spouse Benefit Age Reduction - The spouse benefit (50% times PIA #9 

adjusted for the family maximum if necessary) is reduced by 25/36 of 1% 

(1/144th) per month for each calendar month the spouse is under age 65 

on the date (s)he is included in the O/M.

Prior to 1-1-78, increases in the spouse benefit caused by an increase to 

PIA #9 paid after the date the spouse was included in the O/M but before 

the spouse attained age 65 were also subject to an age reduction for the 

months the spouse was under age 65 as of the date of the increase. 

An increase or decrease, prior to 1-1-78, in a spouse benefit due to a 

change in family composition is subject to age reduction from the original 

month of entitlement as if the current family composition has always been 

in effect.

When PIA #9 is increased 1-1978, or later, regardless of the spouse's age, 

the age reduction established before 1-1978 is increased by the same 

percentage the PIA is increased.

(a) Increase Due to Amendment or COL Increase - To compute the 

age reduction increase when an amendment or COL increase is 

involved, multiply the current age reduction amount by the 

percentage the PIA #9 is increased.

(b) Increase Due to Recomputed PIA or Change In Family Group - To 

compute the age reduction increase 1-1-78 or later for cases 

involving a recomputed PIA or change in family composition (fewer 

members entitled) divide the new unreduced spouse benefit 

(NUSB) times the money amount of the reduction (MAR) by the old 

unreduced spouse benefit (OUSB). The quotient is the adjusted 

money amount of reduction (AMAR).

(c) Decrease Due to Change in Family Group - To compute the age 

reduction decrease 1-1-78 or later for cases involving a change in 

family composition (more members entitled), divide the new 

unreduced spouse benefit (NUSB) times the money amount of the 

reduction (MAR) by the old unreduced spouse benefit (OUSB). The 

quotient is the adjusted amount of reduction (AMAR).

The following formula summarizes the computations in (b) and (c), above:
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 45 of 114

(NUSB x (MAR) = (AMAR)

(OUSB)

The result in (a) through (c), above is the adjusted amount of age 

reduction (AMAR). Prior to 9-1981, if the result is not a multiple of $.10, 

round to the next lower multiple of $.10. Effective with rate changes 9-

1981 or later, if the result is not a multiple of $.10, round it to the next 

higher multiple of $.10.

EXAMPLE 1: The spouse's date of birth is 4-7-14. The O/M date of 

entitlement is 2-1-77. PIA #9 is $297.80 and the spouse benefit before 

reduction equals $148.90. The 26 month age reduction reduces the 

spouse benefit to $122.10. The PIA is increased to $315.40 effective 6-1-

77 and the spouse benefit before reduction is $157.70. The increase in the 

spouse benefit is $8.80. The 22 month age reduction applied to the 

increase reduces it to $7.50. The spouse benefit effective 6-1-77 is 

$129.60 (122.10 + $7.50). The total age reduction effective 6-1-77 is 

$28.10 ($26.80 + $1.30).

Effective January 1978, due to a recomputation, PIA #9 increases to 

$320.20. The spouse benefit effective January 1978 is computed as 

follows:

Step 1 - Determine the money amount of reduction in effect in the month 

before the increase and apply the formula to determine the increased 

money amount of reduction.

$160.10 x $28.10 = $28.50 (rounded down to dime)

$157.70

Step 2 - Subtract the increased money amount of reduction from the new 

unreduced spouse benefit.

$160.10

-28.50

$131.60 = spouse benefit effective 1-1-78.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 46 of 114

Effective June 1, 1978, PIA #9 is increased by 6.5% to $341.10. The new 

unreduced spouse benefit is $170.60.

Step 1 - Determine the money amount of reduction in effect in the month 

before the increase and multiply it by the percentage increase.

$28.50 x 1.065 = $30.30 = (Rounded down to dime)

Step 2 - Subtract the increased money amount of reduction from the new 

unreduced spouse benefit.

$170.60 - $30.30 = $140.30 (spouse benefit 6-1-78)

The age reduction is increased for all subsequent cost-of-living increases. 

Effective 6-1982, the new rounding rules apply (round up to dime).

EXAMPLE 2: The spouse's date of birth is 3-9-13. The family group as of 

the O/M effective date of 9-1-76 consists of the employee, spouse and two 

full time students. PIA #9 effective 9-1-76 is $302.30 and the family 

maximum is $555.20. The spouse benefit before age reduction adjusted 

for the family maximum is $84.30.

The PIA is increased to $320.20 effective 6-1-77 with a family maximum of 

$588.00. The spouse benefit before age reduction is $89.30, but a nine 

month age reduction applied to the increase of $5.00 reduces it to $4.70. 

The spouse benefit effective 6-1-77 is $78.50 ($73.80 + $4.70).

One student ceases FTA on 8-25-77. The unreduced spouse benefit 

before age reduction is $133.90. The age reduction is recomputed from 

the O/M effective date. An 18 month age reduction applied to the spouse 

benefit of $126.50 reduces it to $110.70 and a nine month age reduction 

applied to the increase of $7.40 reduces it to $7.00. The spouse benefit 

effective 9-1-77 is $117.70 ($110.70 + $7.00). The spouse age reduction 

effective 9-1-77 is $16.20 ($15.80 + $.40).

Effective January 1978, due to a recomputation, PIA #9 increases to 

$324.80. The unreduced spouse benefit is $138.00. The spouse benefit 

effective January 1978 is computed as follows:

Step 1 - Determine the money amount of reduction in effect the month 

before the increase and apply the formula to determine the increased 

money amount of reduction.

$138.00 x $16.20 = $16.60 (rounded down to dime)

$133.90
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 47 of 114

Step 2 - Subtract the increased money amount of reduction from the new 

unreduced spouse benefit.

$138.00

-16.60

$121.40 = Spouse benefit effective 1-1-78.

Effective June 1, 1978, PIA #9 is increased by 6.5% to $346.00 with a 

family maximum of $639.90. The new unreduced spouse benefit is 

$147.00.

Step 1 - Determine the money amount of reduction in effect in the month 

before the increase and multiply it by the percentage increase.

$16.60 x 1.065 = $17.60 (Rounded down to dime)

Step 2 - Subtract the increased money amount of reduction from the new 

unreduced spouse benefit.

$147.00 - $17.60 = $129.40 (spouse benefit 6-1-78)

The age reduction is increased for all subsequent cost-of-living increases. 

Effective 6-1982, the new rounding rules apply (round up to the dime).

C. 110% Grandfather O/M Computation

1. Employee Benefit Age Reduction - PIA #11 is reduced by 1/180th per 

month for each calendar month the employee is under age 65 on the 

earliest possible effective date of the O/M computation. Round the 

reduction amount only to nearest cent. PIA #11 is not subject to 

recomputation (except for return to employer service) or a cost-of-living 

increase.

EXAMPLE: The employee's date of birth is 3-10-14. His O/M date of 

entitlement is 3-1-77. PIA #11 equals $252.90 as of 3-1-77. The 24 month 

age reduction of $33.72 applied to this PIA reduces the employee's benefit 

to $219.18 (before 10% family O/M guaranty).

2. Spouse Benefit Age Reduction - The spouse benefit (50% times PIA #11 

adjusted for the family maximum) is reduced by 1/144th (25/36 of 1%) for 

each calendar month the spouse is under age 65 on the date (s)he is 

included in the 110% Grandfather O/M computation. Increases to the 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 48 of 114

spouse benefit caused by a change in family composition are reduced for 

the number of months the spouse (without a child in her care, if spouse is 

female) is under age 65 on the date (s)he is included in the 110% 

Grandfather O/M computation. Round the reduction amount only to the 

nearest cent.

PIA #11 is not subject to recomputation (except when the employee 

returns to employer service) or a cost-of-living increase.

EXAMPLE: The spouse's date of birth is 3-9-13. The family group 

effective 9-1-76 consists of the employee, spouse and a full-time student. 

PIA #11 effective 9-1-76 is $276.30 and the family maximum is $516.50. 

The spouse benefit before age reduction adjusted for the family maximum 

is $120.10. The 18 month age reduction applied to the spouse benefit 

reduces it to $105.09. The student ceases full-time school attendance on 

6-15-77. The spouse benefit is increased to $138.15 effective 7-1-77 

because the family maximum no longer applies. However, an 18 month 

age reduction is applied to this amount, reducing it to $120.88 (before 

10% family O/M guaranty).

8.3.86 Age Reduction Applied to Employee or Spouse Benefit When 

Benefit First Payable after 12-31-77 or Divorced Spouse Benefit 

Payable after 9-3-81

A. General - When the earliest possible effective date of the age and service O/M is 

in a month in which the employee is under age 65, the employee's full PIA #9 or 

PIA #11 is subject to an age reduction. The reduction of 1/180 for each month 

the employee is under age 65 is applied as of the earliest date that the employee 

meets the requirements for an O/M computation. If the O/M computation does 

not apply until later (e.g., RR rate exceeds O/M rate until spouse attains 62), the 

original 1/180 reduction must be applied to the employee's O/M rate. The O/M 

cannot be considered to become effective at a later date for the purposes of 

applying a lesser 1/180 reduction.

If the female or male spouse (without a child in care) is included in the age and 

service or DIB O/M in the month in which (s)he is under age 65, the spouse 

benefit (50% of PIA #9 or PIA #11, adjusted for the family maximum) is subject to 

an age reduction of 1/144 for each month the spouse is under age 65 when first 

included in the O/M computation.

If a divorced spouse is included in the O/M in the month in which (s)he is under 

age 65, the divorced spouse benefit (50% of PIA #9) is subject to an age 

reduction of 1/144 for each month the divorced spouse is under age 65 when the 

divorced spouse is first included in the O/M computation.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 49 of 114

Prior to September 1981, the beneficiary was eligible for a reduced benefit on the 

first day of the month in which (s)he attained age 62. The largest possible age 

reduction in these cases is 36/180 (employee) or 36/144 (spouse).

After August 1981, the spouse or divorced spouse is eligible for a reduced 

benefit effective the first day of the month after the month in which her (his) 62nd 

birthday falls unless the birthday is the 1st or 2nd day of the month. In such case, 

the eligibility for the spouse or divorced spouse benefit is the first day of that 

month. If the beneficiary's DOB is later than the 1st or 2nd of the month, the 

largest possible age reduction is 35/180 (employee) or 35/144 (spouse or 

divorced spouse.)

The age reduction factor may be adjusted when the beneficiary attains or is 

deemed to be age 65 (see RCM 8.3.87).

B. 100% O/M Computation

1. Employee Benefit Age Reduction - PIA #9 (plus DRC's effective 1-1979 or 

later) is reduced by 1/180th (5/9 of 1%) per month for each calendar 

month the employee is under age 65 on the earliest possible effective date 

of the 100% O/M computation. The 1977 amendments to the Social 

Security Act provide that the original reduction factor (subject to 

adjustment at age 65 as explained in RCM 8.3.87) will be applied to all 

subsequent increases. 

Prior to 9-1981, if the result is not a multiple of $.10, round to the next 

lower multiple of $.10. Effective with rate changes 9-1981 or later, if the 

result is not a multiple of $.10, round to the next higher multiple of $.10.

EXAMPLE 1 - The employee's date of birth is 2-7-16. His 100% O/M date 

of entitlement is 2-1-78. PIA #9 equals $327.40 as of 2-1-78. The 36 

month age reduction applied to this PIA reduces the employee's benefit by 

$65.40 to $262.00. PIA #9 is increased to $348.70 effective 6-1-78. The 

36 month age reduction applied to this PIA reduces the employee's benefit 

by $69.70 to $279.00.

All subsequently increased PIA #9's are reduced by 36/180.

EXAMPLE 2 - The employee's date of birth is 11-7-19. His 100% O/M date 

of entitlement is 12-1-81. PIA #9 equals $729.60 as of 12-1-81. The 35 

month age reduction applied to this PIA reduces the employee's benefit by 

$141.90 to $587.70. PIA #9 is recomputed effective January 1, 1982 to

$732.10. The 35 month age reduction applied to this PIA reduces the 

employee's benefit by $142.40 to $589.70.

2. Spouse or Divorced Spouse Benefit Age Reduction - The spouse benefit 

(50% PIA #9 adjusted for the family maximum, if necessary,) is reduced 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 50 of 114

by 1/144th (25/36 of 1%) per month for each calendar month the spouse is 

under age 65 on the date (s)he is first included in the O/M and does not 

have a minor child of the employee in care.

A divorced spouse benefit (50% time PIA #9) is reduced by 1/144th (25/36 

of 1%) per month for each calendar month the divorced spouse is under 

age 65 on the date (s)he is first included in the O/M.

All subsequent increases to these benefits are also reduced by the same 

age reduction factor.

Prior to 9-1981, if the result is not a multiple of $.10, round to next lower

multiple of $.10. Effective with rate changes 9-1981 or later, if the result is 

not a multiple of $.10, round to next higher multiple of $.10.

EXAMPLE 1: The spouse's date of birth is 11-10-81. The family group 

effective 12-1-81 consists of the employee, spouse and a full time student. 

PIA #9 effective 12-1-81 is $711.20 and the family maximum is $1245.20. 

The 35 month age reduction applied to the spouse benefit of $267.00 

reduces it by $64.90 to $202.10. The student ceases full time school 

attendance on 3-10-82. The adjusted spouse benefit of $355.60 is subject 

to the 35 month age reduction which reduces it by $86.50 to $269.10 

effective 4-1-82.

EXAMPLE 2: PIA #9 is $849.70 effective 12-1-81. The divorced wife

(DOB 7-19-18) is entitled to O/M benefits effective 12-1-81 of $424.80 

before age reduction. The 19/144 age reduction of $56.10 reduces this 

benefit to $368.70.

The PIA is recomputed 1-1982 to $855.00. The increased divorced wife 

benefit of $427.50 is reduced by a 19/144 age reduction of $56.50 to 

$371.00.

C. 110% Grandfather O/M Computation

1. Employee Benefit Age Reduction - PIA #11 is reduced by 5/9 of 1% 

(1/180th) per month for each calendar month the employee is under age 

65 on the earliest possible effective date of the O/M computation (subject 

to adjustment at age 65 as explained in RCM 8.3.87). Round the reduction 

amount only to the nearest cent. PIA #11 is not subject to recomputation 

(except for return to employer service) or a cost-of-living increase.

EXAMPLE: The employee's date of birth is 4-10-16. His O/M date of 

entitlement is 4-1-78. PIA #11 equals $252.90. The 36 month age 

reduction applied to this PIA reduces the employee's benefit by $50.58 to 

$202.32 (before the 10% O/M guaranty.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 51 of 114

2. Spouse Benefit Age reduction - The spouse benefit (50% times PIA #11 

adjusted for the family maximum) is reduced by 25/36 of 1% (1/144th) for 

each calendar month the spouse is under age 65 on the date (s)he is 

included in the 110% Grandfather O/M computation. If the spouse share is 

increased due to a change in composition of the family group, the 

increased spouse benefit is reduced by the original reduction factor 

(subject to adjustment at age 65 as explained in RCM 8.3.87). Round the 

reduction amount only to the nearest cent.

PIA #11 is not subject to recomputation (except when the employee 

returns to employer service) or a cost-of-living increase.

EXAMPLE: The spouse's date of birth is 4-3-15. The family group 

effective 2-1-78 consists of the employee, spouse and a full-time student. 

PIA #11 effective 2-1-78 is $276.30 and the family maximum is $516.50. 

The unreduced spouse benefit adjusted for the family maximum is 

$120.10. The 26 month age reduction applied to the spouse benefit 

reduces it by $21.68 to $98.42. The student ceases full-time school 

attendance 7-5-78. The unreduced spouse benefit is adjusted to $138.15 

because the family maximum no longer applies. The 26 month age 

reduction applied to the increased spouse benefit reduces it by $24.94 to 

$113.21 effective 8-1-78 (before the 10% family O/M guaranty).

8.3.87 Adjustment of Age Reduction Factor in the Retirement Age and 

Service O/M Computation

A. Employee Benefit - If an age reduction was applied to the employee 100% or 

110% Grandfather O/M benefit and subsequently reduced employee O/M 

benefits are not payable for some months before the employee attains age 65 or 

becomes entitled to a DIB O/M, the age reduction must be adjusted to drop these 

months from the age reduction factor effective in the month in which the 

employee attains age 65 or becomes entitled to a DIB O/M. (If the disabled 

employee later recovers from the disability, refer the case to M&P.)

Months occurring before age 65 which are eliminated from the age reduction 

factor of the employee benefit at the earlier of attainment of age 65, the DIB O/M 

effective date or at the employee's death are:

• Months in which the retirement employee O/M benefit was completely or 

partially withheld due to excess earnings under the O/M formula. (In LPE 

(prior to 12-1-1988) or railroad service cases, the amount of earnings must 

result in a complete or partial work deduction under the Social Security 

formula to be eliminated from the age reduction factor); or,

• Months of DIB entitlement; or,

• Months after the employee's death.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 52 of 114

Months in which the employee was not paid the reduced age O/M benefit solely 

because the RR formula rate was higher (e.g., RR rates paid until spouse 

attained age 62) cannot be considered non-payment months. They are not 

dropped from the age factor when the employee attains age 65.

B. Spouse or Divorced Spouse Benefit - If an age reduction was applied to the 

spouse or divorced spouse 100% O/M or spouse 110% Grandfather O/M benefit 

and subsequently reduced spouse or divorced spouse benefits were not payable 

for some months before the spouse or divorced spouse attains age 65, the age 

reduction must be adjusted to drop these months from the age reduction factor 

effective in the month in which the spouse or divorced spouse attains age 65. 

Months occurring before age 65, which are eliminated from the age reduction 

factor at age 65 are:

• Months in which the spouse or divorced spouse O/M benefit was completely 

or partially withheld due to the employee's spouse's or divorced spouse's 

excess earnings under the O/M formula. (In LPE prior to 12-1-1988 or railroad

service cases, the amount of earnings must result in a complete or partial 

work deduction under the social security formula to be eliminated from the 

age reduction factor.); or,

• Months in which the spouse or divorced spouse O/M benefit was not payable 

because the employee's total disability ceased, or the disabled employee 

refused rehabilitation. (A divorced spouse is not entitled until the employee 

attains age 62.; or,

• Months in which a spouse had in care a minor or disabled child of the 

employee. (A divorced spouse is not entitled based on child in care.); or

• For monthly benefits payable after December 1977, months in a period of 

termination of the spouse benefit prior to attainment of age 65. (Refer 

divorced spouse cases with period of termination prior to attainment of age 65 

to M&P-A.)

Months in which the spouse or divorced spouse was not paid the reduced age 

O/M benefit solely because the RR formula rate was higher (e.g. RR Act benefit 

increase creates rate temporarily higher than O/M rate) cannot be considered 

non-payment months. They are not dropped from the age reduction factor when 

the spouse or divorced spouse attains age 65.

C. Beneficiary Attains Age 65 Before 1-1-78 - The original employee or spouse 

benefit is reduced for each month the beneficiary is under age 65 on the date 

(s)he is included in the O/M computation. Any subsequent increase prior to 

1-1-78 in the individual 100% O/M benefit computation caused by an increase to 

PIA #9 is reduced for the number of months the beneficiary is under age 65 on 

the effective date of the benefit increase.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 53 of 114

The non-payment months under the social security formula must be dropped 

from the individual's age reduction factor for each date break that includes these 

months.

EXAMPLE: The employee's date of birth is 2-10-12. His 100% O/M effective 

date is 9-1-75. The PIA of $296.70 is adjusted for the 17 month age reduction 

reducing the employee's benefit by $28.00 to $268.70. From 1-1-76 thru 

12-31-76, the employee earns $12,000.00 for the year with excess earnings in 

each month. This results in twelve permanent work deductions to the family O/M 

amount.

The employee stops working on 12-31-76. The annuity rate is recomputed to 

include the 6-76 cost-of-living adjustment. The PIA is adjusted to the 6-76 rate of 

$315.70. The eight month age reduction applied to the $19.00 increase reduces 

it by $.80 to $18.20. The employee's benefit effective 1-1-77 is $286.90. The total 

age reduction is $28.80.

Effective 2-1-77, the month in which the employee attained age 65, the age 

reduction factor for the O/M can be adjusted to exclude the 12 permanent work 

deduction months.

The PIA of $296.70 effective 1-1-76 is adjusted for 5 age reduction months 

reducing the employee's benefit by $8.20 to $288.50. The 6-76 increase is 

reduced by one age reduction month to $18.90. The employee's benefit effective 

2-1-77 is $307.40. The total age reduction is adjusted to $8.30 eff. 2-1-77.

D. Beneficiary Attains Age 65 After December 1977 - The total non-payment months

under the social security formula must be dropped from the total age reduction 

factor effective the month in which the beneficiary attains age 65.

1. Original Age Reduction Applied Before 1-1978 - If the original age 

reduction was applied before 1-1-78, compute the adjusted age reduction 

factor by multiplying the number of months for which a reduced age 

benefit was paid with non-payment months dropped (ARF) by the money 

amount of the current age reduction (MAR). Divide the result by the 

number of months in the original reduction factor (ORF). The quotient is 

the ARF'd money amount of reduction.

(ARF X (MAR) = ARF'd money amount of reduction.

ORF

In these cases, since the ARF is effective prior to 9-1981, if the result is 

not a multiple of $.10, round down to the next lower multiple of $.10. For 

any adjustment to the age reduction effective 9-1981 or later, if not a 

multiple of $.10 round up to the next higher multiple of $.10.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 54 of 114

EXAMPLE 1: The employee's date of birth is 6-10-13. His O/M date of 

entitlement is 9-1-77. PIA #9 equals $318.20. A nine month age reduction 

of $15.90 reduces the original employee benefit to $302.30 effective 

9-1-77. PIA #9 is increased by 6.5% to $338.90 effective 6-1-78. The age 

reduction amount before adjustment for the ARF is increased to $16.90 

due to the PIA increase.

$15.90 x 1.065 = $16.90 (Rounded down to the dime)

The employee's earnings of $12,000 in 1977 with earnings over the 

exempt amount in all months caused work deductions under the O/M 

formula for September - December 1977. The employee does not work 

after 1-1-78.

The age reduction factor is adjusted effective 6-1-78 as follows:

5 x $16.90 = $9.30(Rounded down to the dime)

9

EXAMPLE 2: The spouse's date of birth is 3-9-13. The O/M effective date 

is 9-1-76. PIA #9 effective 9-1-76 is $302.30 and effective 6-1-77 is 

$320.20. The unreduced spouse benefit effective 9-1-76 is $151.20 and 

effective 6-1-77 is $160.10.

The spouse has three permanent work deductions in 1976 and four 

permanent work deductions in 1977. She stopped working 1-1-78.

The age reduction in effect in 2-78 is $19.30. This amount is adjusted 

effective 3-1-78 as follows:

11 x $19.30 = $11.70 (ARF'd Money Amount of Reduction 

18 Rounded down to the dime)

2. Original Age Reduction Applied 1-1978 or Later - If the original age 

reduction was applied 1-1978 or later, simply deduct the non-payment 

months from the months used in the original age reduction factor.

For employee's, the PIA #9 is reduced by 1/180th (5/9 of 1%) for each 

month in the ARF'd age reduction factor.

For a spouse or divorced spouse, the O/M share is reduced by 1/144th 

(25/36 of 1%) for each month in the ARF'd age reduction factor.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 55 of 114

Prior to 9-1981, if the spouse age reduction is not a multiple of $.10, round 

down to the next lower multiple of $.10. Effective 9-1981 or later for 

spouses or 10-1981 or later for divorced spouses, if the age reduction is 

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

E. Manual Control For Adjustment - When a reduced employee O/M benefit is

withheld due to excess earnings for any month before the employee attains age 

65, set a (10-01) call-up for the first day of the year after the year in which the 

employee attains age 65.

When a reduced spouse or divorced spouse O/M benefit is not paid for any 

month before the spouse or divorced spouse attains age 65, set a (10-01) call-up 

for the first day of the year after the year in which the spouse or divorced spouse 

attains age 65.

8.3.88 Change in Age Reduced Benefit Amount after Adjustment of 

Age Reduction Factor

A. General - Prior to 1-1-78, the age reduction was not increased after the 

beneficiary attained age 65. Effective with benefits payable 1-1-78 or later, the 

ARF'd money amount of the age reduction is increased by the same percentage 

the PIA is increased.

B. Age Reduction in 100% O/M Effective Before 1-1-78

1. Employee Benefit - Determine the percentage increase as follows:

• To compute the age reduction increase when an amendment or cost-of-living 

increase is involved, multiply the ARF'd money amounts of the age reduction 

by the percentage PIA #9 is increased.

(AMAR) x (1 + COL%) = (IMAR)

• To compute the age reduction increase for cases involving a recomputed PIA 

#9, divide the new PIA (NPIA) times the adjusted money amount of reduction 

(AMAR) by the old PIA (OPIA).

(NPIA) x (AMAR) = (IMAR)

(OPIA)

The result is the increase money amount of the age reduction (IMAR). 

Prior to 9-1981, if this is not a multiple of $.10, round to next lower 

multiple of $.10. Effective with rate changes 9-1981 or later, if the 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 56 of 114

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

$.10.

EXAMPLE: The employee's date of birth is 5-4-13. The 100% O/M 

effective date is 10-1-77 and PIA #9 equals $368.90. The original 

seven month age reduction amount of $14.30 is adjusted effective 5-1-

78 to drop three permanent work deduction months. The ARF'd 

amount of the age reduction is $8.10.

PIA 9 is increased by 6.5% to $392.90 effective 6-1-78. The age 

reduction effective 6-1-78 is $8.10 x 1.065 = $8.60 (rounded down.) 

The employee benefit effective 6-1-78 is $384.30 ($392.90 - $8.60).

Subsequent COL increases are computed through 6-1981 (rounded 

down). The results are $9.40 effective 6-1979, $10.70 effective 6-1980, 

and $11.80 effective 6-1981. The 6-1982 age reduction amount is 

rounded up to the dime.

2. Spouse Benefit

Determine the percentage increase as follows:

• To compute the age reduction increase when an amendment or cost-of-living 

increase is involved, multiply the ARF'd money amount of the age reduction 

by the percentage the PIA #9 is increased.

(AMAR) x (1 + COL%) = (new AMAR)

• To compute the age reduction increase 1-1-78 or later for cases involving a 

recomputed PIA or change in family composition (fewer members entitled), 

divide the new unreduced spouse benefit (NUSB) times the ARF'd money 

amount of the reduction (AMAR) by the old unreduced spouse benefit 

(OUSB).

(NUSB) x (AMAR) = (new increased AMAR)

(OUSB)

• To compute the age reduction decrease 1-1-78 or later for cases involving a 

change in family composition (more members entitled), divide the new 

unreduced spouse benefit (NUSB) times the ARF'd money amount of the 

reduction (AMAR) by the old unreduced spouse benefit (OUSB).

(NUSB) x (AMAR) = (new decreased AMAR)
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 57 of 114

(OUSB)

The result is the new adjusted money amount of the age reduction 

(AMAR). Prior to 9-1981, if the result is not a multiple of $.10, round to 

next lower multiple of $.10. Effective with rate changes 9-1981 or later, 

if the result is not a multiple of $.10, round to next higher multiple of 

$.10.

EXAMPLE: The spouse's date of birth is 3-9-13. The O/M effective 

date is 9-1-76. The ARF'd money amount of reduction effective 3-1-78 

is $11.70.

The 6-1977 PIA of $320.20 is increased by 6.5% to $341.10 effective 

6-1-78. The new unreduced spouse benefit is $170.60.

The age reduction is increased by the same percentage as the PIA:

$11.70 x 1.065 = $12.40

Assume the PIA is recomputed to $346.00 effective 1-1-79. The new 

unreduced spouse benefit is $173.00 and the age reduction is 

increased as follows:

$173.00 x $12.40 = $12.50

$170.60

The spouse benefit effective 1-1-79 is $160.50 ($173.00 - $12.50).

Subsequent COL increases are computed through 6-1981 (rounded 

down). The results are $13.70 eff. 6-1979, $15.60 eff. 6-1980 and 

$17.30 eff. 6-1981. The 6-1982 age reduction amount is rounded up to 

the dime.

C. Age Reduction in 100% Effective 1-1-78 or Later

1. Employee Benefit - The increased PIA #9 is reduced by 1/180th (5/9 of 

1%) for each month in the ARF'd age reduction factor.

Prior to 9-1981, Table RI of SSA's Rainbow Book listed the rounded 

reduced PIA's based on the number of reduction months. Effective with 

rate changes 9-1981, the 1981 SS Act Amendment rounding rules apply. 

The age reduction amount, if not a multiple of $.10, is rounded up to the 

next higher multiple of $.10.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 58 of 114

EXAMPLE - The employee's DOB is 4-5-16. The age and service O/M 

effective date is 7-1-80. The PIA of $691.50 is reduce by $57.60 to 

$633.90 for the 15 months the employee is under age 65. The employee 

has 4 permanent work deductions in 1980. These months are dropped 

from the age reduction factor effective 4-1-81, resulting in an employee 

benefit reduced for 11 months by $42.20 to $649.30.

The PIA is increased to $769.00 effective 6-1-81 due to a cost-of-living 

increase. This PIA is reduced for the 11 months in the adjusted age 

reduction factor by $46.90. The reduced employee benefit effective 6-1-81

is $722.10.

The COL increased age reductions effective 6-1982 or later are rounded 

up to the dime under the 1981 SS Act amendments.

2. Spouse or Divorced Spouse Benefit - The spouse benefit (50% of PIA #9 

adjusted for the family maximum, if necessary) or divorced spouse benefit 

(50% of PIA #9) is reduced by 1/144th (25/36 of 1%) for each month in the 

ARF'd age reduction factor.

Prior to 9-1981, for spouse's, Table RII of SSA's Rainbow Book listed the 

rounded reduced PIA's based on the number of reduction months. 

Effective with rate changes 9-1981 for spouse's and for divorced spouse's 

included in O/M 10-1-81 or later, the 1981 SS Act Amendment rounding 

rules apply. The age reduction amount, if not a multiple of $.10, is rounded 

up to the next higher multiple of $.10.

EXAMPLE - The spouse (DOB 5-26-16) is included in the DIB O/M 

computation effective 7-1-80. The PIA effective 7-1-80 is $515.40 and the 

unreduced spouse benefit of $257.70 is reduced for the 10 months the 

spouse is under age 65 by $17.80 to $239.90. The spouse has one 

permanent work deduction in 1980. This month is dropped from the age 

reduction factor effective 5-1-81 resulting in a spouse benefit reduced for 9 

months by $16.10 to $241.60.

The PIA is increased to $573.20 effective 6-1-81 due to a cost-of-living 

increase. The unreduced spouse benefit of $286.60 is reduced for the 9 

months in the adjusted age reduction factor. The reduced spouse benefit 

effective 6-1-81 is reduced by $17.90.

The COL increased age reductions effective 6-1-82 or later are rounded 

up to the dime under the 1981 SS Act Amendments.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 59 of 114

8.3.89 Adjustment in 110% Grandfather O/M for Reduced Railroad 

Formula Annuity before O/M Effective Date

When the 110% Grandfather O/M first becomes applicable for a month after a month in 

which a reduced railroad formula annuity was paid, reduce the O/M rate as follows:

1. Apply the regular 110% Grandfather O/M age reduction to the employee or 

spouse benefit.

2. Reduce the 110% Grandfather family O/M rates for the "other benefits" being 

paid to the beneficiaries.

3. Multiply the amount of the railroad formula annuity before age reduction by a 

fraction, the numerator of which is equal to the number of months for which the 

railroad formula annuity was paid prior to the O/M effective date and the 

denominator is 180. If the railroad formula annuity had been paid at two different 

rates before the 110% Grandfather O/M effective date, the amount of the 

reduction would be determined by multiplying each railroad formula rate before 

age reduction by a fraction consisting of the number of months for which it was 

paid over 180.

When both the employee and spouse received reduced railroad formula 

annuities before the 110% Grandfather O/M effective date, the reduction for each 

is computed separately and added together.

4. The result from step three is subtracted from the total family 110% Grandfather 

O/M benefit. The result is rounded to the nearest cent.

5. If the 100% family O/M rate later exceeds the 110% grandfather O/M the red. RR 

before O/M reduction is carried forward and subtracted from the 100% family 

O/M rate. The result is not rounded.

NOTE: If a reduced RR formula rate is paid before the 100% O/M in a case 

where the 110% Grandfather did not apply, refer the case to M&P.

6. If the spouse is receiving a railroad spouse annuity, the total family O/M benefits 

reduced by the reduced RR adjustment amount are apportioned between the 

employee and spouse annuities. The individual rates should not again be 

rounded.

EXAMPLE 1: An employee age 62 with 25 years service receives an RR formula 

annuity which is reduced for age, for five months pending entitlement to a DIB 

O/M. The PIA #11 is $270.70. An FTS is also included in the family group. The 

railroad formula rate before age reduction would have been $352.91.

5/180 X $352.91 = $9.80
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 60 of 114

This amount subtracted from the 110% Grandfather O/M amount of $446.71, 

results in an O/M guaranty amount of $436.91.

Effective 6-1-76, the 100% family O/M rate of $466.80 exceeds the 110% 

Grandfather O/M. The amount of $9.80 is deducted from the 6-1-76 100% O/M 

rate.

When the student ceases FTA on 12-31-76, the case reverts back to the RR 

formula.

EXAMPLE 2: A spouse age 62 of an employee age 62 with 25 years of service 

receives an RR formula annuity effective 4-1-75, which is reduced for age for five 

months pending the employee's entitlement to a DIB O/M. PIA #11 is $270.70. 

The unreduced railroad formula rate would have been $126.52. The spouse will 

receive an age reduction under the O/M computation from the DIB O/M effective 

date plus the adjustment for the reduced railroad formula spouse annuity. An 

FTS is also included in the family group.

5/180 x $352.91 = $9.80 (ee red. amt).

5/180 x $126.52 = 3.51 (sp red. amt).

9.80 + 3.51 = 13.31 (total red. amt).

This amount subtracted from the 110% Grandfather amount of $527.01, results 

in an O/M guaranty (before proportioning) of $513.70.

When the FTS ceases FTA on 8-30-75, the case reverts back to the RR formula.

8.3.90 Adjustment for Reduced Age and Service Benefit under the 

Social Security Formula before DIB O/M Effective Date

A. Adjustment of Age Reduction Factor

If the employee received either a reduced social security retirement insurance 

benefit or a reduced retirement age and service O/M computation before the DIB 

O/M effective date, the DIB O/M employee benefit must be reduced by the 

amount the employee's PIA would be reduced if the employee attained 65 on the 

DIB O/M effective date. The following steps apply in determining the recalculated 

PIA and the reduced DIB:

1. Recalculate the PIA #9 or PIA #11 to take into account the period of 

disability.

2. Determine the age reduction for the employee's age and service O/M 

based on the recalculated PIA #9 or PIA #11 and actual attainment of age 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 61 of 114

65. The recalculated reduced O/M benefit is payable from the age and 

service O/M effective date.

3. Adjust the age reduction factor (ARF) for the employee's DIB O/M benefit 

based on the recalculated PIA and deemed attainment of age 65 on the 

DIB O/M effective date. Months after the DIB O/M effective date and 

months for which total or partial work deductions under the O/M formula, if 

any, were imposed are dropped from the age reduction factor.

EXAMPLE: The employee born 1-7-16 with 12 years service filed for an 

annuity in 1-78. The reduced retirement O/M employee benefit of $262.00 

based on a PIA #9 of $327.40 is paid effective 1-1-78. Later, he is 

determined to have been disabled 10-31-77 with DIB to begin 4-1-78. The 

recalculated PIA due to the D/F is $338.70. The recalculated employee 

benefit before the DIB O/M is $271.00 and the employee DIB O/M benefit 

is $333.10. The PIA #9 is increased to $360.80 effective 6-1-78.

Initial Reduced 

O/M Ben

Recalculated 

Reduced O/M

Reduced DIB 

O/M

PIA #9 327.40 338.70 338.70

RF 36 36 3

MOE 1-78 1-78 4-78

Employee Benefit 262.00 271.00 333.10

Age Reduction 65.40 67.70 5.60

B. Change in DIB Benefit Amount After Adjustment of Age Reduction Factor

Prior to 1-1-78, the age reduction was not increased after the beneficiary was 

deemed to attain age 65. Effective with benefits payable 1-1-78 or later, the 

ARF'd money amount of the age reduction is increased by the same percentage 

the PIA is increased. The initial date of entitlement to the DIB O/M determines 

the method used in subsequent increases to the age reduction.

1. DIB O/M Effective Before 1-1-78

To compute the age reduction increase when an amendment or cost-ofliving increase is involved, multiply the ARF'd money amount of age 

reduction by the percentage PIA #9 is increased. If the result is not a 

multiple of $.10, round it down to the next lowest multiple of $.10.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 62 of 114

EXAMPLE - The DIB O/M date of entitlement is 9-1-77. PIA #9 is $327.40 

effective 9-1-77 and increased by 6.5% to $348.70 effective 6-1-78.

A three month reduction applied to the 9-1-77 DIB O/M benefit resulted in 

ARF'd money amount of reduction of $5.40. This amount is increased 6-1-

78 as follows:

$5.40 x 1.065 - $5.70

To compute the age reduction increase for cases involving a recomputed 

PIA #9 after the disability period, divide the new PIA (NPIA) times the 

ARF'd money amount of reduction (MAR) by the old PIA (OPIA). The 

quotient is the increased money amount of reduction (IMAR). If the result 

is not a multiple of $.10, round to the next lower multiple of $.10.

(NPIA) x (MAR) = IMAR

(OPIA)

2. DIB O/M Effective 1-1-78 or Later

PIA #9 is reduced by 1/180th (5/9 of 1%) for each month in the ARF'd age 

reduction factor.

EXAMPLE - The employee born 9-12-15 is paid a reduced age and 

service O/M effective 9-1-77 pending approval of a DIB O/M. The disability 

freeze is effective 10-27-77 and the DIB O/M effective date is 4-1-78. The 

PIA of $361.90 is reduced to $347.90, by the seven months of prior RIB 

entitlement effective 4-1-78. Effective 6-1-78 the PIA was increased to 

$385.50 due to a cost-of-living increase. This PIA is reduced by same 

reduction factor of seven months.

8.3.91 Adjustment for Reduced Widow(er)'s Benefit before O/M 

Effective Date

If the employee received a reduced widow(er)'s benefit under the Social Security Act 

before the 100% O/M or 110% Grandfather O/M effective date, refer the case to the 

Methods and Procedures Section.

8.3.92 Age Reduction Effective 01-2000

A. General - Beginning in January 2000 full retirement age (FRA) gradually 

increases from age 65 to age 67. This change applies to annuitants born after 

1937.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 63 of 114

The increase in FRA affects regular annuity eligibility requirements; age 

reduction calculations; RIB limit calculations; worker’s compensation or public 

disability benefit termination; and attainment processing based on age 65.

The increase in FRA does not affect Medicare eligibility; supplemental annuity 

eligibility or calculation; or attainment processing based on age 16, 18 or 62.

B. Early and Full Retirement Age Defined - Section 216 (l) (2) of the Social Security 

Act defines early retirement as age 62 for old age, wife’s, or husband’s benefits. 

The new provisions do not affect the age for early retirement.

Full retirement age (FRA) will depend on the annuitant’s year of birth. For those 

born before 01-02-1938, FRA will remain age 65. For those born after 

01-01-1938, FRA will gradually rise from age 65 to age 67. 

C. Age Reduction - For employees born after 1937, the maximum percentage 

reduction will rise from 20% to 30%. The maximum number of age reduction 

months will rise from 36 to 60. For months 1 through 36, the reduction remains 

1/180 for each month. For months 37 through 60, the reductions is 1/240. 

AGE REDUCTION TABLES

TABLES TO DETERMINE AMOUNTS OF AGE REDUCTION FOR EMPLOYEE 

ANNUITANTS HAVING LESS THAN 30 YEARS OF SERVICE WHO ATTAIN 

AGE 62 ON 1/02/2000 OR LATER

Employee annuitants who attain age 62 on 1/02/2000 or later are subject to an 

increase in the age at which certain unreduced annuities can be paid. This is 

referred to as their Full Retirement Age (FRA).

The increased age reduction will apply to the tier 1 benefit and vested dual 

benefit for employees with less than 30 years of service. It will also apply to the 

tier 2 benefit of employees with less than 30 years of service who had no 

creditable railroad service prior to August 12, 1983.

The total age reduction factor equals 1/180 for each month of age reduction from 

1 month through 36 months, added to 1/240 for each month of age reduction 

from 37 months through 60 months, when applicable. NOTE: A person attains a 

given age the day before his or her birthday. Consequently, someone born on 

January 1 is considered to have been born on December 31 of the previous year.

EE YOB

Yr Att.

age 62

Ret age for 

unred. ann. 

(FRA)

Maximum 

No. Mos A/R

for this YOB

Maximum A/R 

for this YOB

1937 & earlier 1999 & earlier 65 yr 0 mo. 36 20.000%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 64 of 114

1938 2000 65 yr 2 mo. 38 20.833%

1939 2001 65 yr 4 mo. 40 21.667%

1940 2002 65 yr 6 mo. 42 22.500%

1941 2003 65 yr 8 mo. 44 23.333%

1942 2004 65 yr 10 mo. 46 24.167%

1943-54 2005-2016 66 yr 0 mo. 48 25.000%

1955 2017 66 yr 2 mo. 50 25.833%

1956 2018 66 yr 4 mo. 52 26.667%

1957 2019 66 yr 6 mo. 54 27.500%

1958 2020 66 yr 8 mo. 56 28.333%

1959 2021 66 yr 10 mo. 58 29.167%

1960 & later 2022 & later 67 yr 0 mo. 60 30.000%

Count the number of months the employee is under full retirement age (FRA) 

based on the employee's year of birth using the table above. Using the table 

below, determine the age reduction factor corresponding to the total number of 

months the EE is under his FRA.

No. mos.

A/R

Total A/R

factor

No. mos.

A/R

Total A/R

factor

60 30.000% 30 16.667%

59 29.583% 29 16.111%

58 29.167% 28 15.556%

57 28.750% 27 15.000%

56 28.333% 26 14.444%

55 27.917% 25 13.889%

54 27.500% 24 13.333%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 65 of 114

53 27.083% 23 12.778%

52 26.667% 22 12.222%

51 26.250% 21 11.667%

50 25.833% 20 11.111%

49 25.417% 19 10.556%

48 25.000% 18 10.000%

47 24.583% 17 9.444%

46 24.167% 16 8.889%

45 23.750% 15 8.333%

44 23.333% 14 7.778%

43 22.917% 13 7.222%

42 22.500% 12 6.667%

41 22.083% 11 6.111%

40 21.667% 10 5.556%

39 21.250% 9 5.000%

38 20.833% 8 4.444%

37 20.417% 7 3.889%

36 20.000% 6 3.333%

35 19.444% 5 2.778%

34 18.889% 4 2.222%

33 18.333% 3 1.667%

32 17.778% 2 1.111%

31 17.222% 1 0.556%

Example 1: An employee born 6/3/1942, has an ABD of 7/1/2004. The employee 

files for a reduced age 62 annuity. The employee will attain age 62 in 2004 and 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 66 of 114

be entitled to a full unreduced annuity at age 65, 10 months. The age reduction is 

calculated:

6/2007 - Age 65

4/2008 - Add 10 months

7/2004 - ABD

Number of months under FRA = 45 months.

The age reduction factor is 23.750%.

Example 2: An employee born 10/2/1940, files for a reduced age 62 annuity with 

an ABD of 12/1/2002. The employee will attain age 62 in 2002. A full retirement 

annuity (FRA) will be payable at age 65 years, 6 months. The age reduction is 

calculated:

10/2005 - Age 65

4/2006 - Add 6 months

12/2002 - ABD

Number of months under FRA = 40 months.

The age reduction factor is 21.667%.

Example 3: An employee born on 2/1/1939, files for a reduced age annuity. The 

ABD is 1/1/2004. The FRA is payable at 65 years, 4 months. The age reduction 

is calculated:

1/2004 - Age 65

5/2004 - Add 4 months

1/2004 - ABD

Number of months under FRA = 4 months.

The age reduction factor is 2.222%.

AGE REDUCTION TABLES

TABLES TO DETERMINE AMOUNTS OF AGE REDUCTION FOR EMPLOYEE 

AND SPOUSE ANNUITANTS RETIRING BEFORE AGE 62 WITH 30 YEARS 

OF SERVICE WHO ATTAIN AGE 62 ON 1/1/2000 OR LATER
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 67 of 114

A) Employee annuitants who attain age 62 on 1/1/2000 or later are subject to an 

increase in the age at which certain unreduced annuities can be paid. This is 

referred to as their Full Retirement Age (FRA).

Early retirement reductions for those retiring with 30 or more years of service 

apply to tier 1 benefits only.

Employees retiring at age 62 with 30 years of service ARE NOT subject to any 

age reduction.

The total age reduction factors are based on 1/180 for each month under 

retirement age up to 36 months, added to 1/240 for each month of age reduction 

from 37 months through 60 months, if applicable.

EE YOB

Tier 1 portion of

annuity is reduced

by this A/R %

Tier 1 portion of annuity is 

reduced by recalculated 

A/R % at age 62

Before 1938 20.000% 19.444%

1938 20.833%* 20.417%

1939 21.667%* 21.250%

1940 22.500% 22.083%

1941 23.333% 22.917%

1942 24.167% 23.750%

1943-1954 25.000% 24.583%

1955 25.833% 25.417%

1956 26.667% 26.250%

1957 27.500% 27.083%

1958 28.333% 27.917%

1959 29.167% 28.750%

1960 or later 30.000% 29.583%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 68 of 114

• If retirement is before the year 2000, only a 20% reduction is effective on the 

ABD, which will result in a slightly higher age reduction factor when the factor 

is recalculated at age 62.

Note: The recalculated age reduction factor at age 62 assumes the employee is 

NOT born on the second day of the month. If the employee is born on the second 

day of the month, the recalculated age reduction factor in the right-hand column 

will be the same as the pre-age 62 age reduction factor.

EXAMPLE: An employee born 7/5/41, has an ABD of 8/1/2001. The employee is 

filing for a reduced age 30/60 annuity. The tier 1 age reduction is 23.333%. When 

the employee turns age 62 (8/1/2003), the new age reduction will be 22.917%.

B) Spouse annuitants retiring before age 62 and the employee retires before age 62 

with 30 years of service:

• The spouse's tier 1 amount will be one-half of the employee's annuity 

beginning date tier 1 amount.

• The spouse annuity tier 1 amount will be recomputed at age 62 (but not 

before the employee attains age 62) as shown below:

Spouse DOB

Year Spouse Tier 1 

Amount Will Be 

Recomputed Is

Age 62 Recomputed 

Tier 1 Amount Will Be 

Reduced By

1937 or earlier 1999 25.000%

1938 2000 25.833%

1939 2001 26.667%

1940 2002 27.500%

1941 2003 28.333%

1942 2004 29.167%

1943-1954 2005-2016 30.000%

1955 2017 30.833%

1956 2018 31.667%

1957 2019 32.500%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 69 of 114

1958 2020 33.333%

1959 2021 34.167%

1960 or later 2022 or later 35.000%

The above table assumes the full 36/180 month age reduction before actual age 

65, as if the spouse was born on the second day of the month.

Retirement reductions for spouses or employees with 30 or more years of service 

only apply to tier 1 benefits and only if the employee retires before age 62.

EXAMPLE 1: An employee born on 3/4/42 files for a reduced 30/60 annuity. The 

ABD is 2/1/2003. The age reduction will be 24.167% on the employee's ABD. 

The spouse also files for a reduced 30/60 annuity with the same ABD. The 

spouse's DOB is 4/3/40. The spouse will receive 1/2 of the employee's age 

reduced tier 1. The employee's tier 1 is recalculated beginning 4/2004. The new 

age reduction factor for the employee will be 23.750%. The spouse's recalculated 

age reduction will be:

4/2005 - Age 65

10/2005 - Add 6 months

4/2004 - Recalc ABD

Number of months under FRA = 18 months.

The spouse's recalculated age reduction factor is 12.500%.

EXAMPLE 2: An employee born on 10/3/39 files for a reduced 30/60 annuity. 

The ABD is 11/1/99. The ABD age reduction is 20.000%. The spouse later files 

for a reduced age 30/60, with a DOB of 8/8/41. The ABD will be 9/1/2001. The 

spouse will receive 1/2 of the employee's age reduced tier 1 on the spouse's 

ABD. The employee's tier 1 will be recalculated on 11/1/2001. The new age 

reduction for the employee will be 21.250%. The spouse's tier 1 will be 

recalculated on 9/1/2003. The spouse's recalculated age reduction will be:

8/2006 - Spouse age 65

4/2007 - Add 8 months

9/2003 - Recalc ABD

Number of months under FRA = 43 months.

The spouse recalculation age reduction factor is 27.917%.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 70 of 114

AGE REDUCTION TABLES

TABLES TO DETERMINE AMOUNTS OF AGE REDUCTION FOR SPOUSES & 

DIVORCED SPOUSES ATTAINING AGE 62 ON 1/1/2000 OR LATER

Spouse/divorced spouse annuitants who attain age 62 on 1/1/2000 or later are 

subject to an increase in the age at which certain unreduced annuities can be 

paid. This is referred to as their Full Retirement Age (FRA).

The increased age reduction will apply to the tier 1 benefit with the maximum 

reduction gradually rising from 25% to 35% by the year 2022. The tier 2 reduction 

remains at 25% for a spouse if the employee had any railroad service before 

August 12, 1983.

The total age reduction factor equals 1/144 for each of the first 36 months under 

retirement age, added to 1/240 for each month of age reduction from 37 months 

through 60 months, if applicable.

SP YOB YR age 62

Age for 

unreduced 

annuity (FRA)

Max No. 

Mos. A/R for 

this YOB

Max A/R for 

this YOB

1937 or earlier 1999 & earlier 65 yrs 0 mo. 36 mo. 25.000%

1938 2000 65 yrs 2 mo. 38 mo. 25.833%

1939 2001 65 yrs 4 mo. 40 mo. 26.667%

1940 2002 65 yrs 6 mo. 42 mo. 27.500%

1941 2003 65 yrs 8 mo. 44 mo. 28.333%

1942 2004 65 yrs 10 mo. 46 mo. 29.167%

1943-54 2005-2016 66 yrs 0 mo. 48 mo. 30.000%

1955 2017 66 yrs 2 mo. 50 mo. 30.833%

1956 2018 66 yrs 4 mo. 52 mo. 31.667%

1957 2019 66 yrs 6 mo. 54 mo. 32.500%

1958 2020 66 yrs 8 mo. 56 mo. 33.333%

1959 2021 66 yrs 10 mo. 58 mo. 34.167%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 71 of 114

1960 & later 2022 & later 67 yrs 0 mo. 60 mo. 35.000%

Count the number of months the spouse/divorced spouse is under full retirement 

age (FRA) based on the spouse/divorced spouse's year of birth using the table 

above. Using the table below, determine the age reduction factor corresponding 

to the number of months the MA/XA is under his/her FRA.

TABLE OF AGE REDUCTION FACTORS FOR SPOUSES OF EMPLOYEES 

WITH LESS THAN 30 YEARS OF SERVICE AND DIVORCED SPOUSES 

ATTAINING AGE 62 ON 1/1/2000 OR LATER

NO. MOS. 

A/R

TOTAL A/R 

FACTOR

NO. MOS. 

A/R

TOTAL A/R 

FACTOR

60 35.000% 30 20.833%

59 34.583% 29 20.139%

58 34.167% 28 19.444%

57 33.750% 27 18.750%

56 33.333% 26 18.056%

55 32.917% 25 17.361%

54 32.500% 24 16.667%

53 32.083% 23 15.972%

52 31.667% 22 15.278%

51 31.250% 21 14.583%

50 30.833% 20 13.889%

49 30.417% 19 13.194%

48 30.000% 18 12.500%

47 29.583% 17 11.806%

46 29.167% 16 11.111%

45 28.750% 15 10.417%
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 72 of 114

44 28.333% 14 9.722%

43 27.917% 13 9.028%

42 27.500% 12 8.333%

41 27.083% 11 7.639%

40 26.667% 10 6.944%

39 26.250% 9 6.250%

38 25.833% 8 5.556%

37 25.417% 7 4.861%

36 25.000% 6 4.167%

35 24.306% 5 3.472%

34 23.611% 4 2.778%

33 22.917% 3 2.083%

32 22.222% 2 1.389%

31 21.528% 1 0.694%

EXAMPLE 1: A spouse born on 8/3/40 files for a reduced age 62 annuity. The 

ABD is 1/1/2004. An FRA is payable at age 65 years, 6 months. The age 

reduction will be calculated:

8/2005 - Age 65

2/2006 - Add 6 months

1/2004 - Recalc age 62 ABD

Number of months under FRA = 25 months.

The age reduction at age 62 is 17.361%.

EXAMPLE 2: A spouse files for a reduced age 62 annuity with an ABD of 

6/1/2022. Her DOB is 3/8/60. An FRA is payable at 67 years, 0 months. The age 

reduction will be calculated:

3/2025 - Age 65
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 73 of 114

3/2027 - Add 24 months

6/2022 - ABD

Number of months under FRA = 57 months.

The age reduction factor is 33.750%.

8.3.95 Delayed Retirement Credits

The delayed retirement credit provision of the 1972 Social Security Act Amendments 

provides a bonus which is added to the eligible employee's PIA based on creditable 

increment months.

The delayed retirement benefit or bonus provides an increase for the wage earner only. 

The PIA itself does not change. Therefore, the family maximum or auxiliary life benefits 

are not affected.

If the employee is dually entitled to an annuity under the retirement O/M formula and 

either an RR spouse O/M annuity or RR survivor benefit, the employee O/M benefit 

increased by the delayed retirement benefit (or bonus) is deducted from the spouse or 

survivor annuity. The employee's delayed retirement credits cannot be added to the 

spouse or survivor annuity being paid based on another wage record. 

The delayed retirement benefit or bonus can be added to the employee benefit based 

on an AMW, Trans, Old Start or AIME PIA only. It cannot be added to a benefit based 

on the Special Minimum PIA. If the amount of the AMW, Trans, Old Start or AIME PIA is 

less than the Special Minimum PIA before the addition of the delayed retirement benefit 

or bonus, the higher amount based on either the regular PIA plus the delayed retirement 

benefit or the SPC MIN PIA is payable to the employee. However, benefits for any 

auxiliaries will be determined under the maximum for the Special Minimum PIA.

8.3.96 Increment Months under the Social Security Act Prior to 1-1-79

For benefits payable prior to 1-1-79, an increment month is credited under the Social 

Security Act for each month for which a fully insured wage earner who has attained age 

65 (but has not attained age 72) is not paid an RIB because:

• His(her) first month of entitlement to the RIB is after the month in which (s)he 

attained age 65; or

• A full work deduction applies after the wage earner attains age 65.

An increment month can be credited only if the wage earner was not paid a reduced for 

age RIB. If the date of entitlement to the RIB is before the wage earner attained age 65 

and benefits were withheld due to excess earnings, resulting in an adjusted age 

reduction factor at age 65 or zero, the wage earner was not paid a reduced RIB.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 74 of 114

SSA converts an unreduced DIB to an unreduced RIB when the wage earner attains 

age 65. Such a person would be eligible for an increment month if the RIB is later 

withheld on account of work.

In dual entitlement cases, work deductions for a given month are applied against the 

total dual benefit in determining increment months and not just against the RIB portion 

of the monthly benefit amount. For example, if a total monthly benefit amount is $250, 

consisting of a $200 RIB and a $50 WIB, and in a given month a $220 work deduction 

applies, this month may not be counted as an increment even though the work 

deduction exceeded the total monthly RIB amount.

8.3.97 Increment Months under the Railroad Retirement Act Prior to 

1-1-79

A. Delayed Retirement Benefit Under 100% O/M - The delayed retirement benefit 

under the 1974 Railroad Retirement Act 100% O/M is computed under Social 

Security Act rules. For benefits payable prior to 1-1-79, an increment month is 

credited for each month for which an employee insured for the O/M who has 

attained age 65 (but has not attained age 72) is not paid an employee O/M 

benefit because:

• His(her) O/M effective date is after the month in which (s)he attained age 65; 

or 

• A full work deduction under the social security formula* applies after the 

employee attains age 65 even if the RR formula annuity is not subject to work 

deductions. However, if the O/M is not paid in a month solely because the RR 

formula is higher, a DRC is not creditable.

*NOTE: If the employee returns to LPE (prior to 12-1-1988) or railroad 

service after the ABD, his (her) earnings from such employment must be 

sufficient to cause one or more full work deduction month(s) under the social 

security work deduction formula to qualify for a delayed retirement benefit 

under the 100% O/M.

An increment month can be credited only if the employee was not paid a reduced 

for age employee O/M benefit under the 100% O/M or 110% Grandfather O/M 

formula. If the 100% O/M effective date is before the wage earner attained age 

65 and reduced age and service O/M benefits were withheld due to excess 

earnings, resulting in an adjusted O/M age reduction factor at age 65 of zero, the 

employee was not paid a reduced for age employee O/M benefit.

An employee who has been paid an unreduced DIB - O/M annuity is eligible for a 

delayed retirement credit if (s)he incurs full work deductions under the social 

security formula after (s)he attains age 65.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 75 of 114

In dual entitlement cases, work deductions under the social security formula for a 

given month are applied against the total months benefits payable to the 

employee under the Social Security Act and not just the employee O/M benefit. 

For example, the employee is entitled to a retirement employee O/M benefit of 

$200 and a retirement spouse O/M benefit on another wage record of $50 (after 

reduction for the employee benefit). In a given month, a work deduction of $220 

would not be sufficient to include that month as an increment month.

B. Delayed Retirement Bonus Under the 110% Grandfather O/M - The 1973 

Amendments to the 1937 Railroad Retirement Act limited the increment months 

to be used in computing the delayed retirement bonus in 110% Grandfather O/M 

cases to months in which the employee:

• Has actually attained age 65 (but has not attained age 72); and

• Is insured for the O/M; and

• Has not filed for an RR employee annuity.

Months after the ABD for which work deductions would have been applied under 

the social security formula were not counted.

8.3.98 Increment Months under the Social Security Act 1-1-79 or Later

For benefits payable 1-1-79 or later, regardless of the date of entitlement, an increment 

month is credited under the Social Security Act for each month for which a fully insured 

wage earner who has attained FRA but has not attained age 70 (age 72 prior to 

1/1/1984) is not paid an RIB because: 

• His(her) first month of entitlement to the RIB is after the month in which he 

attained FRA; or

• A full work deduction applies after the employee attains FRA, regardless of 

the first month of entitlement.

Increment months can be credited in reduced age cases. However, the increase due to 

these increment months cannot be paid before 1-1-79. The provisions for converting a 

DIB to an RIB and for crediting increment months in dual entitlement cases are the 

same as those stated in RCM 8.3.96. 

8.3.99 Increment Months under the Railroad Retirement Act 1-1-79 or 

Later

A. Delayed Retirement Benefit Under 100% O/M - The delayed retirement benefit 

under the 1974 Railroad Retirement Act 100% O/M is computed under Social 

Security Act Rules. An increment month is credited for each month for which an 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 76 of 114

employee insured for the O/M who has attained FRA, (but has not attained age 

70 (age 72 prior to 1/1/1984)) is not paid an employee O/M benefit because:

• his(her) O/M effective date is after the month in which (s)he attained FRA; or,

• a full work deduction under the social security formula applies after employee 

attains FRA, even if the RR formula annuity is not subject to work deductions, 

regardless of the O/M effective date. (However, if the O/M is not paid in a 

month solely because the RR formula is higher, a DRC is not creditable.)

An increment month can be credited in reduced age cases. However, the 

increase due to these increment months cannot be paid before 1-1-79.

The provisions for LPE, DIB - O/M cases and dual entitlement cases are the 

same as those stated in RCM 8.3.97. 

B. Delayed Retirement Bonus Under the 110% Grandfather O/M - The provisions 

stated in RCM 8.3.97 are still applicable. 

8.3.100 Effective Date of Increase

Generally, if the employee has attained FRA, an increment month earned in a specific 

year prior to the year of attainment of age 70, (age 72 prior to 1/1/1984) will be used to 

increase the benefit beginning with January 1 of the following year. Delayed retirement 

credits in the year in which age 70 (age 72 prior to 1/1/1984) is attained will be used to 

increase the benefit effective with the month in which age 70 (age 72 prior to 1/1/1984) 

is attained. The wage earner may not be credited with an increment month for the 

month (s)he attains age 70 (age 72 prior to 1/1/1984) or any later month.

However, the first DRC's payable in retirement O/M cases could not include months 

before 1-1971. If the employee benefit is not reduced for age, the DRC increase is 

effective no earlier than 1-1-73. If the employee benefit is reduced for age, the DRC 

increase is effective no earlier than 1-1-79.

EXAMPLE: The employee, born 9-1906, is awarded an unreduced 100% O/M annuity 

effective 10-1-75. Since he attained age 65 in 9-71 and was insured under the Social 

Security Act, he is credited with forty increment months before 1-1-75 and nine 

increment months for 1975. However, at the time his O/M annuity is initially awarded in 

10-1975, only the increments before 1-1-75 can be included in the O/M computation. 

His case must be coded for a call-up 1-1-76 to include the nine increments in 1975 to 

produce a total of 49 increments effective 1-1-76.

The employee incurs four full work deductions in 1976 which result in four additional 

delayed retirement credits effective 1-1-77 resulting in a total of 53 DRC's.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 77 of 114

The employee does not have excess earnings in 1977 but returns to work and incurs 

three full work deductions in 1978. The three DRC's are added effective 9-1-78, the 

month in which the employee attains age 72, to produce a total of 56 DRC's.

Additional DRC's cannot be credited after the employee attains age 72.

EXAMPLE 2: The employee born 7-10-12 is awarded a 100% O/M reduced age 

annuity effective 7-1-74. He attained age 65 in 1977 and had 3 increment months in that 

year. He has 4 increment months in 1978. Since his benefit was reduced for age, the 7 

increment months are credited effective 1-1-79.

8.3.101 Amount of Delayed Retirement Benefit (or Bonus)

A. Employee Attains Age 65 Before 1982 - The amount of the delayed retirement 

benefit under the 100% O/M is 1/12 of 1% of the current PIA #9 for each 

increment month acquired by the employee after (s)he attains age 65 # increase 

months/12 x .01 x PIA #9).

The delayed retirement bonus under the 110% Grandfather O/M is 1/12 of 1% of 

PIA #11 for each increment month acquired by the employee after (s)he attains 

age 65 # of increase months/12 x. 01 x PIA #11).

The number of increments months effective January 1 of any calendar year are 

added to increment months for prior years. The total of (the number of months/12 

x .01) is multiplied by the current PIA #9 in 100% O/M cases or to PIA #11 in 

110% Grandfather O/M cases to determine the amount of bonus.

Table DI of the Social Security Computation and Benefit Tables shows the 

amount of a delayed retirement credit combined with the PIA amount for benefits 

payable before 9-1981. Effective 9-1981 or later, the computation is subject to 

the rounding rules of the 1981 SS Act Amendments. If the result is not a multiple 

of $.10, it is rounded to the next lower multiple of $.10.

EXAMPLE: The employee acquires 5 increment months in 1980. His PIA 

effective 1-1-81 is $709.70. The amount of the 100% O/M delayed retirement 

benefit payable 1-1-81 is $3.00. (5/12 x .01 x $709.70 = $2.95 rounded up to next 

$.10.) 

In 1981 he acquires 8 more increment months. A recomputation and cost-ofliving increases his PIA #9 to $791.20. A total of 13 increment months are 

applied to this PIA. The 100% O/M delayed retirement benefit payable 1-1-82 is 

$8.50 (13/12 x .01 x $791.20 = $8.57 rounded down to next $.10.)

NOTE: If the amount of delayed retirement benefit or bonus in an O/M case is 

less than tolerance, do not recertify an annuity in force only to pay this increase. 

Instead, annotate the folder to show that the increase should be considered in 

the next adjustment.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 78 of 114

B. Employee Attains Age 65 In 1982 through 1989 - The amount of the delayed 

retirement benefit under the 100% O/M is 1/4 of 1% of the current PIA #9 for 

each increment month acquired by the employee after (s)he attains age 65. The 

earliest this increased amount can be paid is 1-1-83 (employees who attain age 

65 in 1982).

The number of increment months effective January 1 of any calendar year 1983 

or later are added to the increment months for prior years. The total accumulated 

increment months are applied to the current PIA #9 in 100% O/M cases to 

determine the amount of bonus #incr. mos./4 x .01 x PIA 9). If the result is not a 

multiple of $.10, it is rounded to the next lower multiple of $.10.

C. Employee Attains Age 65 1990 through 2002 - Beginning with 1991, the 

percentage by which the 100% O/M is increased for delayed retirement will 

change every other year. The increase depends on the year in which the 

employee attains age 65 and is found by multiplying the DRC percentage shown 

in FOM1 1015.5.1.B2 times the number of increment months times the current 

PIA 9.

D. Employee Attains FRA in 2003 or Later - – Beginning with 2003, the percentage 

by which the 100% O/M is increased for delayed retirement will change every 

other year until it tops off at 2/3 of 1% for employees born 1/2/1943 or later. The 

increase depends on the year in which the employee attains FRA and is found by 

multiplying the DRC percentage shown in FOM1 1015.5.1.B2 times the number 

of increment months times the current PIA #9.

8.3.102 Using the Appendix to Determine DRC Amounts

To compute the amount of the delayed retirement credit for the 100% O/M for 

employees who attain age 65 before 1982 or for the 110% Grandfather O/M using 

Appendix D in RCM 8.6, take the following actions:

A. 100% O/M Computation

Step 1: Determine the number of delayed retirement increment months.

Step 2: Find the decimal which corresponds to the number of increment months 

in Appendix D of RCM 8.6.

Step 3: Multiply the employee's PIA #9 by the decimal obtained from Step 2. 

Prior to 9-1981, if the result is not a multiple of $.10, round up to next higher 

multiple of $.10. Effective 9-1981 or later, if the result is not a multiple of $.10, 

round down to the next lower multiple of $.10. The result is the PIA #9 increased 

by the employee's DRC's in 100% O/M cases.

B. 110% Grandfather O/M Computation
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Step 1: Determine the number of delayed retirement increment months.

Step 2: Find the decimal which corresponds to the number of increment months 

in Appendix D of RCM 8.6. 

Step 3: Multiply the employee's PIA #11 by the decimal obtained from Step 2. 

Round the result to the nearest cent. The result is the PIA #11 increased by the 

employee's DRC's in 110% Grandfather O/M cases.

8.3.103 Automatic Cost-of-Living Increases for Employees who Attain 

Age 62 or Have Disability Onset Before 1-1-79

Under the 1974 Railroad Retirement Act, the 110% Grandfather O/M is not subject to 

cost-of-living increases. PIA #11 is always based on the 6-1974 AMW PIA Table.

The 100% O/M computation based on PIA #9 for an employee who attains age 62 or 

has disability onset before 1-1-79 is subject to cost-of-living increase under SSA rules:

A. Cost-of-Living Increase for PIA Based on AMW or Converted PIB - The 1972 

Amendments to the Social Security Act provide a general automatic cost-of-living 

increase in the PIA (based on the AMW "New Start" or converted PIB "Old Start") 

whenever the average consumer price index for a specific calendar quarter of the 

year exceeds the average consumer price index for a similar quarter in a prior 

year by 3%. The first automatic cost-of-living increase was effective 6-1-75. This 

provision still applies for employees who attained age 62 or became disabled

before 1-1-79.

The amount of the increased PIA's, Table Maximums and effective dates will 

continue to be calculated by SSA. Use the Social Security Computation and 

Benefit Tables to determine benefit amounts for these cases.

B. Cost-of-Living Increase For Special Minimum PIA - Effective June 1979, 

regardless of the O/M effective date, the SPC MIN PIA and family maximum is 

subject to automatic cost-of-living increases to be published by SSA based on an 

increase in the consumer price index. The revised SPC MIN PIA's and 

corresponding family maximums will be indicated in tables separate from the 

AMW PIA Tables.

8.3.104 Cost-of-Living Increases for Employees who Attain Age 62 or 

Have Disability Onset 1-1-79 or Later

Under the 1974 RRA, the 110% Grandfather O/M is not subject to cost-of-living 

increases. PIA #11 is always based on the 6-1974 AMW PIA Table.

The 100% O/M based on PIA #9 for an employee who attains age 62 or has disability 

onset 1-1-79 or later is subject to cost-of-living increases under SSA rules:
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A. Decoupling Provision of 1977 SS Act Amendments - Under the decoupling 

provisions of the 1977 Social Security Act Amendments, benefits, other than the 

SPC MIN PIA and corresponding auxiliary benefits, for wage earners who attain 

age 62 or become disabled 1-1-79 or later are not automatically increased for the 

cost-of-living. The initial PIA #9 is either derived from the 6-1978 PIA Table 

based on the AMW, "New Start", or converted PIB "Old Start", or is computed by 

applying the formula based on the year of eligibility to the amount of the AIME. A 

cost-of-living increase can be added to this PIA as follows:

1. 1977 Simplified "Old Start" Guarantee - The cost-of-living increase 

percentages beginning with the year of first eligibility are applied to the 6-

1978 PIA (converted from PIB). Eligibility does not have to exist prior to 

the June 1, general benefit increase for PIA to be subject to the cost-ofliving increase. As long as eligibility exists by December 31, of the 

calendar year, the PIA #9 can be increased by the cost-of-living 

percentage for that year. However, the increased amount is not payable 

until June 1 of that year.

EXAMPLE 1: The employee (DOB 5-27-21) has an O/M effective date of 

5-1-83. Assume the following general cost-of-living increases were 

possible: 5% - 6-1-79, 6.2% - 6-1-80, 7.5% - 6-1-81, 3.2% - 6-1-82 and 

5.9% - 6-1-83. In this case, the cost-of-living increases cannot begin until 

1983, the year of eligibility. The 6-1978 PIA #9 of $251.80 is payable on 

the O/M effective date. It is increased by 5.9% to $266.70 effective 6-1-83.

EXAMPLE 2: The employee whose disability onset date is 9-17-83 has an 

O/M effective date of 3-1-84. Assuming the same percentage increases as 

in sample 1, the 6-1-1978 PIA #9 of $251.80 is increased by 5.9% only 

payable on the O/M effective date. The resulting PIA #9 effective 3-1-84 is 

$266.70.

2. New Start Transitional Guarantee PIA - The cost-of-living percentages 

beginning with the year of first eligibility are applied to the 6-1978 PIA 

(based on AMW) similar to Section (A) above. Eligibility does not have to 

exist prior to the June 1 general benefit increase for the PIA to be subject 

to the cost-of-living increase. As long as eligibility exists by December 31, 

of the calendar year, the PIA #9 can be increased by the cost-of-living 

percentage for that year. However, the increased amount is not payable 

until June 1, of that year.

3. AIME PIA - In general, the "bend points" (portion of AIME to which the 

percentages are applied) are adjusted each year if the national average 

wages increase. The "bend points" which apply to the individual wage 

record, on the other hand, are established in the employee's year of 

eligibility and do not change. Once established, the AIME PIA is subject to 

percentage cost-of-living increases beginning June 1 of the year of 
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eligibility. Actual payments may not begin until the wage earner becomes 

entitled to benefits.

EXAMPLE: The employee (DOB 9-4-18) does not cease LPE until 8-31-

82. His year of eligibility is 1980. Therefore, the AIME PIA is computed 

based on the bend points for 1980. The AIME PIA would be increased by 

14.3% for 1980, 11.2% for 1981 and 7.4% for 1982. Payments would 

begin on the O/M effective date of 9-1-82. The employee is entitled to all 

subsequent cost-of-living percentage increases while the O/M is 

applicable.

4. Frozen Minimum PIA - The cost-of-living percentage increase is applicable 

beginning the earlier of:

1. The year in which at least a partial month's O/M benefit is paid; or,

2. The year in which the employee attains age 65.

This differs from the other PIA computations in which COL increases are 

based on the year of eligibility.

EXAMPLE: The employee (DOB 7-19-18) is eligible under the SS Act 

rules in 7-1980. He does not retire until 9-1982 and is paid for 9-1982 on. 

The Frozen Minimum PIA of $122.00 is not increased until the 7.4% 

increase payable in 1982. The resulting PIA #9 effective 9-1982 is 

$131.00 (rounded down).

In the case where the employee is entitled, terminates (e.g., LPE-prior to 

12-1-1988) and later becomes re-entitled, cost-of-living increases are 

applied to the Frozen Minimum PIA only for years in which the employee 

is actually paid for one or more months.

B. Cost-of Living Increase For Special Minimum PIA - The Special Minimum PIA is 

not "decoupled". Effective June 1979 the SPC MIN PIA and family maximum is 

subject to automatic cost-of-living increases to be published by SSA based on an 

increase in the consumer price index. The revised SPC MIN PIA's and 

corresponding family maximums are located in RCM Chapter 8.11, Appendix C.

The employee is entitled to the current SPC MIN PIA that corresponds to his 

years of coverage. The year of eligibility is not a factor.

8.3.105 Dual Benefit Reductions in Family Maximum Cases

Usually, the adjustment of 100% O/M benefits for the family maximum is computed 

before the offset for other railroad annuities or social security benefits. The reduction of 

a spouse or child 100% O/M benefit for "other benefits" payable does not, in itself, 

permit the 100% O/M benefits in the family group to be revised upwards.
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However, when determining the reduction for the family maximum under the 100% O/M 

computation, do not include the following beneficiaries in the family group:

• A spouse who is entitled to an SS benefit that equals or exceeds 1/2 of the 

employee's PIA #9 (the O/M share would be reduced to zero); or,

• A spouse whose eligibility for an SS benefit occurred before or at the time 

(s)he is eligible to be included in the O/M computation, if the family benefits 

are greater if (s)he is not included; or,

• A divorced spouse; or

• A child who is receiving a benefit at SSA on other than the RR employee's 

wage record that equals or exceeds 1/2 of PIA #9 (the child's O/M share 

would be reduced to zero); or,

• A child included in the computation of another RR annuity;

A combined family maximum, as shown in RCM 8.3.115, may be used in determining 

the O/M rate if a child is considered in the computation of two annuities on separate 

wage records.

8.3.106 Elimination of "Plugged Rates" in Retirement O/M 

Computation

Prior to the 1972 Railroad Retirement Act Amendments, a "plugged rate" was computed 

for the social security benefit offset when the month the beneficiary became entitled to a 

reduced Social Security Act benefit differed from the month the beneficiary was included 

in the Retirement O/M.

The 1972 amendments provided that only the actual amount of the social security 

benefits being paid can be used in the O/M computation offset for "other benefits." The 

offset for potential entitlement to a social security benefit and the need to use "plugged 

rates" was eliminated in Retirement O/M cases.

The provisions of these amendments were carried forward to the 1974 RRA O/M cases.

8.3.107 Social Security Benefit Payments on Railroad Employee's 

Wage Record

The total employee and auxiliary benefits included in the 100% O/M computation are 

reduced but not below zero, by the total amount of the SSA benefits based on the 

employee's wages only that are actually being paid under the Social Security Act to the 

members of the family group.

Where the maximum is involved, it has been the practice of the Board to develop and 

include only sufficient auxiliary beneficiaries to provide maximum benefits. However, if 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 83 of 114

the family (excluding a divorced spouse) is also entitled to SS benefits based on the 

employee's wages, the total amount of SS benefits to which the family is entitled is 

deducted from the Retirement O/M benefits even though some of the beneficiaries are 

not included in the Retirement O/M computation. (If the employee is receiving worker's 

compensation, refer to RCM 8.3.150 - 8.3.161.)If the divorced spouse is receiving SS 

benefits based on the employee's wages, those SS benefits are treated as "other 

benefits" and are subtracted from the divorced spouse's 100% O/M benefit (50% x PIA 

#9) since the divorced spouse benefit is not subject to the family maximum.

EXAMPLE - The family group consists of the disabled employee (DOB 8-2-21), female 

spouse, and a minor child in the spouse's care.

PIA #9 effective 8-1-78 is $348.70 with a family maximum of $647.50.

The family group is also entitled to social security benefits effective 8-1-78 on the 

employee's wage record as follows: employee $121.80, spouse $30.50 and child 

$30.50. The amount of $647.50 is reduced by the total social security benefits of 

$182.80, resulting in a 100% O/M guaranty rate of $464.70. If the total RR formula rate 

is less than $464.70, the 100% O/M formula will apply.

8.3.108 Social Security Benefit Payable to RR Employee under 

Someone Else's Wage Record

The employee 100% O/M benefit is reduced, but not below zero, by the actual amount 

of a social security benefit being paid to the employee based on someone else's wage 

record. (If a reduction for worker's compensation is involved, see RCM 8.3.161.)

EXAMPLE - The family group consists of the employee (DOB 1-5-16) and spouse (DOB 

4-2-14). The PIA #9 effective 5-1-78 is $402.70, resulting in an employee 100% O/M 

benefit after age reduction of $333.40. The employee is receiving social security 

benefits of $61.80 on the spouse's wage record effective 1-1-78. The employee benefit 

is reduced by the amount of the social security benefit ($333.40 - $61.80).

8.3.109 Social Security Benefit Payable to RR Spouse or Divorced 

Spouse on Other than RR Employee's Wage Record

The spouse 100% O/M benefit (after adjustment for the family maximum, if applicable) 

or divorced spouse benefit is reduced, but not below zero, by the actual amount of the 

social security benefit, regardless of whether entitlement to a reduced SS benefit is 

simultaneous with, before, or after O/M entitlement. (If a reduction for worker's 

compensation is involved, see RCM 8.3.161.)

Compute the spouse or divorced spouse retirement O/M benefit as follows:

Step 1 - Determine the spouse's full retirement O/M formula benefit (reduced for family 

maximum, if applicable) or the divorced spouse retirement O/M formula benefit.
RCM 8.3

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Step 2 - Reduce the result of Step 1 by the number of months the spouse or divorced 

spouse is under age 65, if any (see RCM 8.3.85 - 8.3.86).

Step 3 - Reduce the result of Step 2 by the actual amount of the SS benefit, if any.

EXAMPLE - The family group consists of the disabled employee, spouse (DOB 

6-10-19), and FTS. The O/M effective date is 6-1-79. The PIA #9 is $771.10 effective 

6-1-81 with a family maximum of $1349.60, resulting in an employee benefit of $771.10, 

reduced spouse benefit of $217.00 and FTS benefit of $289.30.

The spouse is also entitled to a RIB effective 6-1-81 of $155.90. The spouse 6-1-81 

O/M benefit is reduced by the 6-1-81 SS benefit amount to $61.10 ($217.00 - $155.90).

When the social security benefit equals or exceeds the spouse's 100% O/M benefit in a 

family maximum case, the benefits are recomputed as if the spouse were not a member 

of the family group.

When the PIA on which the divorced spouse's RIB/DIB SS benefit is based equals or 

exceeds the divorced spouse's 100% O/M benefit (50% of PIA #9) a divorced spouse 

annuity and O/M benefit is terminated.

8.3.110 Social Security Benefit Payable to Child(ren) on Other than RR 

Employee's Wage Record

The child's 100% O/M benefit is reduced, but not below zero, by the actual amount of a 

social security benefit being paid to the child based on a wage record other than the RR 

employee. (If a reduction for worker's compensation is involved, see RCM 8.3.161.)

When the social security benefit equals or exceeds the child's 100% O/M benefit in a 

family maximum case, the benefits are recomputed as if the child was not a member of 

the family group.

EXAMPLE - The family group consists of the disabled employee, spouse (DOB 5-6-31) 

and minor step-child. The PIA #9 effective 6-1-78 is $410.20 with a family maximum of 

$744.10, resulting in an employee benefit of $410.20, spouse benefit of $167.00 and 

child's benefit of $167.00.

The child is entitled to a social security benefit of $121.80 based on his deceased 

father's wage record. The child's O/M benefit is reduced by the amount of the social 

security benefit ($167.00 - $121.80).

8.3.111 Spouse or Divorced Spouse Entitled to a Public Service 

Pension

A reduction may apply if a non-dependent male spouse, a divorced spouse annuitant 

who was married to the employee for less than 20 years or, effective 7-1-83, any 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 85 of 114

spouse (male or female) included in the retirement O/M computation is entitled to a 

public service pension.

See RCM Chapter 1.3.180ff for a complete explanation of "public service pension" 

reductions.

8.3.112 Beneficiary Entitled to an Employee and a Spouse or Divorced 

Spouse Annuity

If the beneficiary is simultaneously entitled to both an employee annuity on his (her) 

own wage record and a spouse or divorced spouse annuity on another wage record, the 

total social security formula benefits payable based on both wage records must exceed 

the total railroad formula rates payable based on both wage records for the retirement 

O/M to apply in either case. Each annuity payable must be increased proportionately to 

the total amount or the additional amount that would be payable on both records under 

the Social Security formula.

For the steps used to determine whether the O/M applies in this situation, refer to 

Appendix G.

8.3.113 Beneficiary Entitled to an Employee and a Survivor Annuity

If the beneficiary is simultaneously entitled to both an employee annuity on his (her) 

own wage record and a railroad survivor annuity on another wage record, the retirement 

benefits may be paid under the higher of the Retirement O/M computation or the RR 

formula.

The Retirement employee O/M benefit is reduced for social security benefits as 

explained in RCM 8.3.107 and RCM 8.3.108. Indicate in the "Remarks" section of Form 

G-354.3 that the employee is also receiving an RR survivor annuity and include the 

survivor annuity claim number.

For an example of the O/M computation, refer to Appendix H. If the retirement O/M 

computation exceeds the RR formula rate, refer the case to M&P-A.

8.3.114 Employee, Spouse or Divorced Spouse Receiving Two or 

More "Other Benefits"

If the employee is receiving two or more social security benefits, the retirement O/M 

employee benefit is reduced by the combined amount of the social security benefits.

If the spouse or divorced spouse is receiving two or more "Other benefits" (e.g., two 

social security benefits or a social security benefit and a retirement O/M employee 

benefit on her (his) own wage record), the retirement O/M spouse or divorced spouse 

benefit is reduced by the combined amount of the "other benefits."
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 86 of 114

If a spouse or divorced spouse included in the retirement O/M computation is entitled to 

both a social security and a public service pension the retirement O/M spouse or 

divorced spouse benefit is reduced by the total of the full social security benefit amount 

plus the public service pension amount subject to offset (depending on when the public 

service pension entitlement began). See RCM Chapter 1.3.180ff for how to determine 

the amount of the public service pension that is subject to offset.

8.3.115 Child(ren) Entitled Under Two Railroad Earnings Record

A child can usually be included in the computation of benefits payable on only one RR 

earnings record. The dually entitled child(ren) should be paid on the RR earnings record 

with the higher PIA unless this would result in the family as a whole receiving less total 

monthly benefits (considering the RR formula rate in retirement cases).

When the family maximum is not involved in either case, test the child(ren)'s rates 

payable using 50% of the retirement O/M PIA #9 or 75% of the survivor PIA plus the 

survivor annuity Tier II.

When the family maximum is involved in either case, a series of comparisons is made 

when a child is entitled under two railroad earnings records to determine the account on 

which the dually entitled child(ren) should be paid:

(a) Compute the railroad formula rate payable in the retirement cases; and,

(b) On each wage record, compute each benefit amount (including Tier II, if survivor 

case) as though the dually entitled child(ren) were not included in the family 

group (without combining the PIA maximums), and,

(c) On each wage record, compute each benefit amount (including Tier II, if survivor 

case) with the dually entitled child(ren) included in the family group and the family 

maximums combined but not higher than the lesser of:

(1) the sum of the individual family maximums on each earnings records; or,

(2) for entitlements before 1-1-79, the current amount of the highest AMW PIA 

family maximum (e.g., 1216.90 effective 6-1-78); or,

(3) for entitlement 1-1-79 or later, 1.75 times the highest AIME PIA possible in 

the year based on AIME equal to 1/12 of the contribution and benefit 

based effective in that year. The cost-of-living percentage increase for the 

year can be added after June 1 of the calendar year.

Year Base

Assumed PIA 

as of Jan. 1 1.75 x PIA

1979 22,900 575.10 1006.50
RCM 8.3

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1980 25,900 612.60 1072.10

1981 29,700 660.10 1155.20

1982 32,400 774.40 1355.20

1983 35,700 853.30 1493.20

If the child is entitled on one wage record with an AMW PIA in effect in 

December 1978 and one wage record with an AIME PIA, the combined 

family maximum cannot exceed (3) above.

(d) Pay the combination that yields the highest monthly benefit:

(1) Include the dually entitled child(ren) with the combined family maximum on 

the one wage record; and,

(2) Exclude the dually entitled child(ren) from the other wage record and:

• in retirement cases, either pay the benefits computed under the O/M with the 

regular family maximum, if applicable, or computed under the RR formula; or,

• in survivor cases, pay benefits computed with the regular family maximum, if 

still applicable, plus Tier II.

EXCEPTIONS: If the living employee and dually entitled IPI child do not live in 

the same household, refer the case to M&P-A.

If the rate payable in the retirement O/M computation, due to the inclusion of an 

IPI child and application of the combined family maximum, exceeds the amount 

that the child would receive as a survivor annuitant, refer the case to M&P-A.

This determination is made from the ABD of the latest annuity. Once the correct 

earnings record under which to include the child is chosen, there is no eligibility 

for the child(ren) to be included under the other wage record, even during those 

months in which the higher benefit is not paid because of deduction events. It is 

immaterial that those events are not causes for deductions from the other wage 

record.

For examples of the O/M computation, refer to Appendix I.

8.3.116 Dual Entitlement Cases – 110% Grandfather O/M

The total SSA formula benefits are reduced for entitlement to social security benefits or 

other railroad retirement annuities as explained in RCM 8.3.105 - 8.3.115 except:

• The original family O/M rates are based on PIA #11; and,
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 88 of 114

• The social security rates are the SS rates that would have been payable 

under the 6-1974 PIA Table; and,

• The spouse's own railroad retirement annuity "other benefit" rates are the 

rates that would have been payable under the RR Act as computed in 12-

1974 before any adjustment for earnings after 12-1974; and,

• The amount of the O/M is equal to the DIFFERENCE between:

(1) the amount that would be payable under the SS Act to the employee, the wife or 

husband and children, if any, if the employee's compensation after 1936 were 

credited as "wages;" and,

(2) the amount payable under the SS Act on the basis of the employee's actual 

wages alone, plus 10% of the SS Act rate on the combined record after reduction 

for the maximum (if necessary) but before reduction for "other benefits."

NOTE: Under the 1937 RRA, the 110% O/M payable to beneficiaries entitled for 

months before 10-1966 was 110% of the DIFFERENCE between: 

(1) The amount that would be payable under the SS Act to the employee, the 

wife or husband, and the children, if any, if the employee's compensation 

after 1936 were credited as "wages," and

(2) The amount payable under the SS Act on the basis of the employee's 

actual wages alone.

8.3.117 De-Converting Social Security Benefits to 12-1974 Rates

SS benefit amounts to be used in the 110% Grandfather O/M computation are 

determined as follows:

(A) If the MBR shows a rate in effect on or after 6-1-74 but before 6-1-75 and the 

rate was not recomputed 1-1-75, use that rate; or,

(B) If the MBR shows that the SS benefit was not effective until 6-1-75 or later or 

includes a recomputation 1-1-75, figure the SS amount (without any 

recomputation effective 1-1-75 or later), using the following:

(1) DIB or Full Age RIB, Spouse Benefit - Deconvert the current AMW PIA to 

the 6-1974 PIA. If an RIB has been increased for SS DRC's, use Table DI 

in the Social Security Rainbow Book to deconvert the benefit increased for 

DRC's. (See example 1.)

(2) Reduced Age RIB, Spouse Benefit - Deconvert the current AMW PIA to 

the 6-1974 AMW PIA. Determine the number of months under age 65 on 

the SS DOE and apply the SS Act reduction. (For RIB, use Table RI in the 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 89 of 114

Social Security Rainbow Book. For spouse benefit, use Table RII.) (See 

example 2.)

(3) Reduced Age DIB (RIB to DIB Conversion) - Determine the number of 

months between the effective date of the reduced RIB and the effective 

date of the reduced DIB. Deconvert the current AMW PIA to the 6-1974 

AMW PIA and apply the SS Act reduction based on that number of 

months. (See example 3.)

EXAMPLES OF DECONVERSION

EXAMPLE 1 - Full Age RIB with DRC's

6-1975 AMW PIA = $200.70 6-1974 AMW PIA = $185.80

6-1975 AMW PIA + DRC's = 

$201.60

6-1974 AMW PIA + 5 DRC's = 

$186.60*

(Table DI shows it takes 5)

DRC's to increase $200.70

PIA to $201.60 benefit.)

EXAMPLE 2 - Reduced Age RIB

6-1975 AMW PIA = $216.20 6-1974 AMW PIA = $200.10

Reduction Mos. = 20 Reduction Mos. = 20

6-1975 Rate = $192.20 6-1974 Rate = $177.90*

EXAMPLE 3: Reduced Age DIB (RIB to DIB Conversion)

6-1975 AMW PIA = $255.80 6-1974 AMW PIA = $236.80

Mos. Pd. Reduced RIB = 4

6-1974 Benefit Rate = $231.60*

*Amounts to be used for 110% O/M computation.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 90 of 114

8.3.118 Deconverting Railroad Formula Annuities to 12-1974 Rates

To compute the railroad formula 12-1974 rate, de-convert the current AMW PIA #1 to 

the 6-1974 AMW PIA. Use this PIA as the "pass-thru" PIA to compute the 1937 RRA 

rates on Form G-353.

8.3.125 Rounding of O/M Benefits

Round the result of any step in the calculation of the 110% Grandfather O/M only to the 

nearest cent. The exact amount of any actuarial adjustment partial withholding, waiver 

or Medicare premium is subtracted from this amount.

8.3.126 Rounding of Beneficiary Shares under 100% O/M Computation

Prior to 9-1981, when the computed PIA or the individual benefit including a benefit 

adjusted for the family maximum (before reduction for "other" benefits) is not a multiple 

of $0.10, it is rounded to the next higher multiple of $0.10. The maximum limitation on 

family benefits may be exceeded to the extent required to round individual benefits to 

the $0.10 multiple.

The beneficiary O/M rate computations are subject to revised rounding procedures 

under the 1981 SS Act Amendments for rate changes effective 9-1981 or later. If the 

beneficiary's O/M share is not a multiple of $0.10, it is rounded to the next lower multiple 

of $0.10. After determining the amount of the beneficiary's share (amount after 

reduction for "other benefits"), if the result is not a multiple of $1.00, round the amount 

of the beneficiary share down to the next lower multiple of $1.00.

EXCEPTION: Cases paid a June COL increased on a mechanical mass adjustment 

were not rounded down to the dollar since each beneficiary share is not in the Research 

record. In these cases, the total family rate before proportionate shares are determined 

is rounded down to the dollar. (Examiners should not attempt to correct the mechanical 

rate merely to make it equal to the manual rate in the cases.)

The PIA and Family Maximum computations through 12-31-81 for employee's whose 

eligibility year is 1981 or earlier, if not a multiple of $.10, are rounded up to the next 

higher multiple of $.10. Recomputations effective Jan. 1, 1982 are rounded in the same 

manner. Effective with the June 1982 cost-of-living increase, if these PIA's are not a 

multiple of $.10, they are rounded down to the nearest multiple of $.10.

The PIA and Family Maximum computations for employee's whose eligibility year is 

1982 or later, if not a multiple of $.10, are rounded down to the nearest multiple of $.10.

The proportionate shares of the 100% O/M computed for an employee and spouse 

under the RR Act are rounded only to the nearest cent.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 91 of 114

8.3.127 Rounding Total 100% O/M Rate

Effective with rate changes 9-1981 or later the total 100% O/M rate, before 

proportionate share are determined is a multiple of $1.00 due to rounding of beneficiary 

shares. The exact amount of the actuarial adjustment is to be subtracted from the 

rounded 100% O/M rate, rounded (to nearest cent) proportionate share, or rounded (to 

nearest cent) 110% Grandfather O/M rate, whichever is applicable. The result of this 

subtraction is not rounded.

8.3.131 Waiver of Annuities

If the annuitant has waived part of the computed annuity rate, do not pay more than the 

amount specified by the annuitant on Form G-129 or written statement signed by the 

annuitant requesting a waiver.

Benefits waived by one member of the family group may not be added to the shares 

payable to other members in the family group.

8.3.135 Retirement O/M Work Deductions

The Social Security Act rules for work deductions based on the amount of earnings are 

applied to the employee age and service 100% O/M or 110% Grandfather O/M as if 

social security had jurisdiction of the case. A "work deduction insured status" under the 

RR Act is not required.

Although the Social Security Act applies work deductions in DIB cases only to an 

auxiliary beneficiary who has excess earnings, additional Railroad Retirement Act rules 

for work deductions in disability cases are applied to the DIB O/M if the employee has 

excess earnings.

The RRA also prohibits payment of an RR annuity to an annuitant in employer service. 

Therefore, an RR employee annuity is not payable under either the RR formula or O/M 

computation for any month in which the RR employee is in Employer service. A spouse 

can be included as an IPI in the O/M computation of the employee annuity for months in 

which (s)he is working in "Employer Service," provided the O/M computation was in 

force prior to the application of work deductions. The spouse IPI benefit is still subject to 

work deductions under the social security formula.

The O/M test is applied to the total RR formula and O/M computation monthly rates 

before application of work deductions.

• If the O/M computation is higher and there are no switching restrictions, the 

O/M is applicable. The case may revert back to the RR formula (subject to RR 

Act work deductions) on a month by month basis if this would result in higher 

benefits.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 92 of 114

• If the RR rate is higher, the RR formula is applicable. Work deductions under 

the RR formula do not allow a switch to the O/M computation.

A general explanation of the social security formula work deduction computation is 

given in this chapter. Detailed explanations of earnings subject to work deductions 

are included in RCM Chapter 5.7. 

8.3.136 Work Deductions Applied to Employee O/M Benefit Due to 

Wages or Self-Employment Earnings

A. Work Deductions For Age and Service O/M

1. Earnings Over Exempt Amount

If the employee is under full retirement age (age 70 prior to January 1, 

2000) or (age 72 prior to 1-1-83, a reduction the employee's earnings over 

the annual exempt amount set for the employee's age is applied to the 

employee and auxiliary benefits. Before 1-1-78, work deductions are not 

applied to any "non-work months." From 1-1-78 on, this exception applies 

only in the FIRST year the employee is both entitled to an annuity (either 

RR formula or O/M computation) and has a "non-work month." (A nonwork month is a month in which the employee neither earned more than 

the MONTHLY EARNINGS EXEMPT AMOUNT nor performed substantial 

services in self-employment.)

If an auxiliary also has excess earnings, refer to RCM 8.3.143. 

EXAMPLE: The family group consists of an age and service annuitant, 

spouse and a minor child in the spouse's care. PIA #9 is $354.80 effective 

1-1-2021 and $375.80 effective 12-1-2021.

The 2021 100% O/M rates payable before applying work deductions are 

as follows:

EE Spouse Child

1-1-21 354.80 146.00 146.00

12-1-21 375.80 154.60 154.60

The employee has earnings of $21,960 in 2021 with earnings over $1,580

in all months. The excess earnings of $1,500 cause the permanent 

deduction of the full family O/M rate for January and February 2021. The 

remaining $206.40 is withheld from the family's March 1, 2021 benefit.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 93 of 114

2. Penalty For Failure to Report Earnings (100% O/M Only)

If the employee fails to make a timely report of earnings and an 

overpayment results, the 100% O/M computation benefit may be subject 

to a penalty (see RCM 5.7). Benefits for a spouse or IPI child are not 

payable under the O/M when the employee O/M annuity is not payable. 

Payments may, however, revert to the RR formula (subject to RR Act work 

deductions) for the deducted penalty months

3. Non-Payment Months Due to Work Outside U.S

The employee's age and service 100% O/M or 110% Grandfather O/M 

annuity is subject to Social Security earnings restrictions. Prior to 5-1-83, if 

a person included in the O/M engages in work outside the U.S. in 

employment not covered by the SS Act, the 7 day work test would apply 

(see RCM 5.7). Effective 5-1-83 or later, if the employee engages in work 

outside the U.S. for more than 45 hours in a month, in employment not 

covered by the SS Act, work deductions may apply.

Prior to 9-1-84, auxiliary benefits for a spouse or IPI child of the employee 

are subject to the 7 day work test applied to the employee's earnings. 

Effective 9-1-84 or later auxiliary benefits are withheld on the same basis 

as the employee's benefit (45 hour a month test).

The case may revert to the railroad formula (subject to RR Act work 

deductions) for the Social Security Act non-payment months.

B. Work Deductions For DIB O/M

Under the Railroad Retirement Act, a disability annuity is withheld for any month 

in which:

• The annuitant is under full retirement age; and

• The annuitant is paid more than $200.00 in earnings from employment or SE 

of any kind.

Benefits for a spouse or IPI child are not payable when the employee annuity is 

not payable.

An adjustment may be payable at the end of the year when permanent work 

deductions are applied (see RCM 5.7.80).

The employee's regular employment may indicate an ability to engage in SGA 

and result in the termination of the disability freeze, and therefore, the DIB O/M. 

(See RCM 1.2.)
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 94 of 114

Although earnings deductions under the social security formula do not apply to 

the disabled employee, a working auxiliary in the DIB O/M computation other 

than a disabled child is subject to offset for their own earnings over the exempt 

amount set for their age.

8.3.137 Employee Annuitant in Railroad or LPE (Prior to 12-1-1988)

The employee's 100% or 110% O/M annuity is not payable for any month in which the 

employee renders railroad or LPE (prior to 12-1-1988) service. A spouse or child's 

benefit is not payable for any month in which the employee's benefit is not payable.

8.3.138 Earnings of a Disabled Child

A disabled child included in the family group for the retirement O/M computation is not 

subject to RR Act work deductions. However, the child's earnings may indicate that 

(s)he has recovered from his (her) disability. If a disabled child is employed, forward the 

case to the Disability Rating Section.

8.3.139 Relationship Of Spouse, Minor Child, Or FTS Work Deductions 

To Family Maximum

This section applies only to auxiliary benefits in the retirement O/M computations that 

are subject to the family maximum. This excludes a divorced spouse. (See Section 

8.3.140ff for rules that apply to a divorced spouse annuitant included in the O/M).

Under the Social Security Act rules the annual earnings test is applied to a spouse, child 

or FTS O/M share adjusted for the family maximum. However, the Social Security Act 

provides a temporary month by month recomputation of the shares payable under the 

family maximum when the full amount of a working spouse, minor child or FTS is 

withheld due to:

(1) 7-day or 45 hour work test because of an auxiliary's or survivor's work outside 

U.S.;

(2) In-care deductions;

(3) VR deductions because of a childhood disability beneficiary's refusal to accept 

VR;

(4) Deductions under the annual earnings test because of an auxiliary's or survivor's 

work;

(5) Penalty deductions against any beneficiary; and

(6) Unpaid maritime tax deductions.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 95 of 114

In both the retirement age and service O/M and DIB O/M, the remaining spouse, minor 

child or FTS shares for these fully deducted months are computed as if the working 

auxiliary were not included in the family group. However, each recomputed auxiliary 

share cannot exceed 50% of the employee's PIA #9 in 100% O/M computations or 50% 

of the employee's PIA #11 in 110% Grandfather O/M computations (adjusted for other 

benefits if applicable) and the total employee, spouse, minor child and FTS benefits 

cannot exceed the family maximum amount.

The non-working spouse, minor child or FTS O/M shares are also recomputed in the 

month in which the working spouse, minor child or FTS is entitled to a partial month 

benefit. The dollar amount of the benefits lost by the working auxiliary due to excess 

earnings is distributed amount the non-working auxiliaries. However, each recomputed 

auxiliary share cannot exceed 50% of the employee's PIA #9 in 100% O/M 

computations or 50% of the employee's PIA #11 in 110% Grandfather O/M 

computations (adjusted for other benefits, if applicable) and the total employee, spouse, 

minor child and FTS benefits cannot exceed the family maximum amount. See Example 

1, below.

Where excess earnings arising from the work of two or more auxiliaries are to be 

deducted from their benefits for the same month, each of their benefit rates is adjusted 

(for work deduction purposes) as if it were the only auxiliary benefit on the wage record 

subject to work deductions. See Example 2, below.

If a non-working spouse benefit is subject to an age reduction, apply the age reduction 

after the shares are adjusted to exclude a working auxiliary.

If a disability worker's compensation offset has been applied to the family O/M benefits, 

the benefits payable to the auxiliaries are reduced by the disability offset before work 

deductions are applied.

The deduction - before - reduction provision does not apply to deduction of premium 

payments for SMI coverage or for non-payment provisions not listed in this section.

EXAMPLE 1 - The family group consists of the disabled employee, spouse and the 

minor child in spouse's care. The PIA #9 effective 1-1-77 is $344.10 with a family 

maximum of $631.30 and effective 6-1-77 is $364.50 with a family maximum of $668.60

The 1977 100% O/M rates payable before applying work deductions are as follows:

EE Spouse Child

1-1-77 344.10 143.60 143.60

6-1-77 364.50 152.10 152.10
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 96 of 114

The spouse earned $3870.00 in 1977 and, therefore, has excess earnings of $435.00. 

Since the spouse benefit is fully deducted in the months of January through March 

1977, the child's benefit is increased to $172.10 (50% of PIA #9) for these months. 

Since the spouse is entitled to a partial payment of $139.40 for April 1977, the child's 

benefit for this month is increased to $147.80. The family group is entitled to the regular 

family maximum rates for the remaining months in 1977.

EXAMPLE 2 - The family group consists of the disabled employee, spouse, FTS and 

minor child in spouse's care. The PIA #9 effective 1-1-77 is $359.50 with a family 

maximum of $653.50 and effective 6-1-77 is $380.80 with a family maximum of 

$692.10.

The 1977 100% O/M rates payable before applying work deductions are as follows:

EE Spouse FTS Child

1-1-77 359.50 98.00 98.00 98.00

6-1-77 380.80 103.80 103.80 103.80

The spouse earned $3250.00 in 1977 and has excess earnings of 125.00. The FTS 

earned 3770.00 in 1977 and has excess earnings of $385.00. The rates payable after 

work deductions are as follows:

EE Spouse FTS Child

1-1-77 359.50 - - 179.80

2-1-77 359.50 71.00 - 179.80

3-1-77 359.50 147.00 - 147.00

4-1-77 359.50 143.50 7.00 143.50

5-1-77 359.50 98.00 98.00 98.00

The family group is entitled to the regular family maximum rates for the remaining 

months in 1977.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 97 of 114

8.3.140 Railroad Spouse or Divorced Spouse Annuitant has 

Compensation, Wages or Self-Employment Earnings over Exempt 

Amount

Under the Social Security formula, if the beneficiary is under full retirement age, (age 70 

prior to January 1, 2000), or age 72 prior to 1-1-83,, the railroad spouse benefit 

(adjusted for the family maximum, if applicable) or divorced spouse benefit computed 

under the 100% O/M computation or 110% Grandfather O/M computation is subject to a 

reduction of the spouse's or divorced spouse's compensation, wages or selfemployment earnings over the annual exempt amount set for her (his) age. Before 

1-1-78, work deductions are not applied to any months in which the annuitant neither 

earned more than the monthly exempt amount nor performed substantial services in 

self-employment. From 1-1-78 on, application of the monthly earnings test is based on 

more complicated rules as explained in RCM Chapter 5.7.

If the family benefits are subject to the O/M family maximum in the month(s) in which 

the spouse's O/M benefit is fully or partially deducted, refer to RCM 8.3.139. 

If the spouse or divorced spouse is in railroad or LPE(prior to 12-1-1988), refer to RCM 

8.3.141.

EXAMPLE - The family group receiving benefits under the 100% O/M computation 

consists of the disabled employee, RR spouse annuitant (DOB 9-12-14) and an FTS 

(DOB 1-10-58). The PIA #9 is $354.80 effective 1-1-77 with a family maximum of 

$646.70 and $375.80 effective 6-1-77 with a family maximum of $684.90. The 1977 

100% O/M rates payable before applying the spouse's work deductions are as follows:

EE SP FTS

1-1-77 354.80 113.60 146.00

6-1-77 357.80 120.60 154.60

The spouse earned wages of $4000 in 1977 and, therefore, has excess earnings of 

$500. Her O/M benefit is fully deducted for Jan. 1977 through April 1977. A partial 

payment of $68.00 is paid for May 1977. The full spouse benefit is payable for the 

remaining months in 1977.

The FTS benefit is adjusted to $177.40 for the months January 1977 through May 1977 

(see RCM 8.3.139).
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 98 of 114

8.3.141 Spouse or Divorced Spouse Annuitant in "Employer" or "Last 

Person" Service

The annuity rate cannot be switched from the RR formula to the O/M computation solely

to include a spouse or divorced spouse whose annuity is suspended because of railroad

or LPE (prior to 12-1-1988). However, if the O/M was in force prior to the application of 

work deductions, and the spouse is in railroad or LPE (prior to 12-1-1988), any spouse 

O/M benefit due after applying the social security formula earnings deduction described 

in RCM 8.3.140 may be included in the employee's O/M computation rate if this 

computation would yield a higher monthly rate than the RR formula rate.

NOTE: If the divorced spouse works in RR service or LPE (prior to12-1-1988) while the 

O/M formula is being paid, refer the case to P&S-RAC. 

If the family benefits are subject to the O/M family maximum in the month(s) in which 

the spouse's O/M benefit is fully or partially deducted, refer to RCM 8.3.139.

EXAMPLE 1: The family group receiving benefits under the 100% O/M computation 

consists of the age and service annuitant (DOB 7-5-58), an RR spouse annuitant (DOB 

9-12-1961) and an FTS (DOB 1-10-2003). The PIA #9 is $354.80 effective 1-1-2021

with a family maximum of $646.70 and $375.80 effective 12-1-2021 with a family 

maximum of $684.90.

The 2021 100% O/M rates payable before applying work deductions are as follows:

EE Spouse FTS

1-1-2021 354.80 113.60 146.00

6-1-2021 375.80 120.60 154.60

The spouse worked in railroad service January 1, 2021 through July 31, 2021 and 

earned compensation of $19,960.00. Her excess earnings are $500. The spouse benefit 

is fully deducted from January 1921 through April 2021because of the amount of the 

earnings.

Since the 100% O/M is currently in force, the partial spouse benefit of $68.00 for May 

2021 and the full monthly spouse benefits of $120.60 for June and July 2021 are 

included in the employee's O/M annuity because the spouse annuity is not payable. 

When the spouse ceases railroad service effective August 1, 2021, the O/M rate is 

again paid directly to her.

The FTS benefit is adjusted to $177.40 for the months January 2021 through May 2021

(see RCM 8.3.139). The FTS benefit is included in the employee O/M annuity rate 
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 99 of 114

January - July 2021. When the spouse annuity is payable August 2021, the FTS benefit 

is prorated between the employee and spouse annuities.

EXAMPLE 2: The family group consists of the RR employee annuitant (DOB 7-5-1958) 

and RR spouse annuitant (DOB 9-2-1961). Benefits are in force under the RR formula.

The spouse works part-time in LPE January 1, 2021 - July 31, 2021 and earns under 

$18,960.00. 

The O/M computation to include the spouse as an IPI in the employee annuity rate 

yields a 100% O/M rate that exceeds the RR formula rate. However, the O/M cannot be 

paid because of the restriction against switching from the RR to O/M formula rate.

8.3.142 Ineligible (IPI) Spouse, Minor Child, or FTS Included in O/M 

Computation Has Compensation, Wages or Self-Employment 

Earnings over Exempt Amount

Under the social security formula, the IPI spouse, minor child or FTS benefit included in 

the 100% O/M computation or 110% Grandfather O/M computation is subject to 

reduction of the auxiliary's own earnings over the annuity exempt amount set for his 

(her) age. Before 1-1-78, work deductions are not applied to the auxiliary's benefit for 

any month in which the annuitant neither earned more than the monthly exempt amount 

nor performed substantial services in self-employment. From 1-1-78 on, application of 

the monthly earnings test is based on more complicated rules as explained in RCM 5.7.

A disabled child is not subject to work deductions. However, his (her) regular 

employment may indicate that (s)he has recovered from his (her) disability. If a disabled 

child is employed, forward the case to the Disability Rating Section.

If the IPI spouse works in LPE(prior to 12-1-1988) or the spouse, minor child or FTS 

works in railroad service, the IPI benefit is still included in the employee's annuity 100% 

O/M computation after applying the SS formula work deductions to the amount of 

earnings.

NOTE: A divorced spouse cannot be included as an IPI in the retirement O/M 

computation.

If the family benefits are subject to the O/M family maximum in the months in which the 

auxiliary benefit is withheld, refer to RCM 8.3.139. 

EXAMPLE 1: The disabled employee (DOB 7-24-1970) has an ABD of 4-1-2020. The 

spouse (DOB 4-3-14) filed a "spouse election" effective 7-1-76. Benefits are payable 

under the 100% O/M.

The spouse works in regular employment and has wages of $4500.00 in 1977 with 

excess earnings in all months. The 1977 100% O/M rates payable before applying work 

deductions are as follows:
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 100 of 114

EE Spouse

1-1-77 354.80 136.80

6-1-77 375.80 145.70

A partial IPI spouse benefit of $79.70 is included in the employee's 100% O/M annuity 

computation for June 1977. The full IPI spouse benefit of $145.70 is included in the O/M 

computation for the remaining months in 1977.

EXAMPLE 2: If the spouse in EXAMPLE 1 had been working in employer service and 

earned compensation of $4500 in 1977 with excess earnings in all months, the 

computation of the IPI spouse benefit would be the same.

8.3.143 Both Age and Service Employee and Auxiliary are Subject to 

Work Deductions

A. Applying Employee's Work Deductions

If the employee is under full retirement age, (age 70 prior to January 1, 2000, or 

age 72 prior to 1-1-83), a reduction of the employee's earnings over the annual 

exempt amount set for the employee's age is applied to the employee and

auxiliary benefits. Before 1-1-78, work deductions are not applied to any month in 

which the annuitant neither earned more than the monthly exempt amount nor 

performed substantial services in self-employment. From 1-1-78 on, application 

of the monthly earnings test is based on more complicated rules as explained in 

RCM Chapter 5.7. 

The Social Security Act has a statutory formula (based on the proportion of the 

original shares payable before adjustment for the family maximum) which divides 

the total payment for the month in which the employee has a partial work 

deduction between all members of the family group at a ratio of 2/x for the 

employee to 1/x for each auxiliary (x = the number of persons in the family group 

plus 1). However, the auxiliaries cannot be paid more than 50% of PIA #9 in the 

100% O/M or 50% of PIA #11 in the 110% Grandfather O/M before adjustment 

for other benefits). An amount in excess of the auxiliary rates before work 

deductions is included in the employee's partial month.

This allocation is necessary in the retirement O/M computation only when an 

auxiliary has excess earnings that will be applied to his share of the employee's 

partial month payment.

EXAMPLE - The family group consists of the employee and FTS. PIA #9 equals 

$243.90 effective 1-1-77 and $258.30 effective 6-1-77. Under the 100% O/M 

computation, the employee's benefit is $243.90 effective 1-1-77 and $258.30
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 101 of 114

effective 6-1-77 and the FTS benefit is $122.00 effective 1-1-77 and $129.20 

effective 6-1-77. The employee earned $10,000 in 1977 earnings. Permanent 

work deductions are applied to both the employee and FTS benefit from January 

through September.

The formula applied to the October 1977 partial month benefit of $267.00 results 

in the employee benefit of $178.00 and FTS benefit of $89.00.

B. Applying Auxiliary's Work Deductions

If the spouse or divorced spouse is under full retirement age, (age 70 prior to 

January 1, 2000, or age 72 prior to 1-1-83, and has excess earnings or a child 

has excess earnings, a reduction of the auxiliary's earnings over the annual 

exempt amount set for his (her) age is applied only to his (her) O/M share. Before 

1-1-78, work deductions are not applied to any "non-work months." From 1-1-78 

on, application of the monthly earnings test is based on more complicated rules 

as explained in RCM Chapter 5.7.

If both the employee and auxiliary other than a divorced spouse (spouse or child) 

are subject to work deductions, the excess earnings of the auxiliary can be 

applied only to his (her) O/M share remaining after applying deductions for the 

employee's excess earnings. 

EXAMPLE - In the family group described in section (A):

The FTS earned $4500.00 in 1977. The auxiliary benefits remaining after 

applying the employee's W/D total $347.40 (October 1977 through December 

1977). Since this is less than the student's excess earnings ($750.00), the entire 

FTS accrual for 1977 must be withheld.

As explained in RCM 8.3.139, the family maximum may be adjusted when the 

auxiliary benefit, other than the divorced spouse benefit, is deducted.

The shares of the employee's partial month benefit that was distributed to the 

auxiliaries can also be adjusted by "excluding" the working auxiliary from the 

family group and redistributing the dollar amount of his (her) share of the partial 

payment among the non-working auxiliaries. However, the recomputed auxiliary 

shares cannot exceed 50% of the employee's PIA #9 in 100% O/M computations 

or 50% of the employee's PIA #11 in 110% Grandfather O/M computations 

(adjusted for "other benefits," if applicable). An amount in the excess of the total 

auxiliary rates before work deductions, is added to the employee's partial

payment.

If a non-working spouse benefit is subject to an age reduction, apply the age 

reduction after the shares are adjusted to exclude a working auxiliary.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 102 of 114

If a disability worker's compensation offset has been applied to the family O/M 

benefits, the benefits payable to the auxiliaries are reduced by the disability offset 

before work deductions are applied.

The earnings of the working auxiliary are charged against the dollar amount of 

his (her) share of the employee's partial month benefit (even though it is 

redistributed among the other auxiliaries) plus his (her) remaining auxiliary 

benefits due up to the lesser of the extent of the excess earnings or the extent of 

the auxiliary accrual for the year.

EXAMPLE - The family group consists of the employee (over 65), spouse and 

two minor children in the spouse's care. The PIA #9 effective 1-1-77 is $408.80 

with a family maximum of $716.20 and effective 6-1-77 is $433.00 with a family 

maximum of $758.50. The employee earned $4854.00 in 1977 and the spouse 

earned $3490.00 in 1977.

1. Benefits payable to the family group before application of work deductions 

are:

Eff 1/77 Eff 6/77

A $408.80 $433.00

B 102.50 108.50

C1 102.50 108.50

C2 102.50 108.50

$716.30 $758.50

2. Benefits payable for the W/D months after charging employee's excess 

earnings ($927.00).

1/77 2/77 3/77 4/77

A None $202.30 (2/5) $408.80 $408.80

B None 101.20 (1/5) 102.50 102.50

C1 None 101.20 (1/5) 102.50 102.50

C2 None 101.20 (1/5) 102.50 102.50
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 103 of 114

Total Payable $505.90 $716.30 $716.30

3. Benefits payable for the W/D months after charging B's excess earnings 

($245.00) against her benefit amount.

1/77 2/77 3/77 4/77

A None $202.30 (2/5) $408.80 $408.80

B None None None 61.20

C1 None 151.70 (3/10) 153.80 123.20

C2 None 151.70 (3/10) 153.80 123.20

Total Payable $505.70 $716.40 $716.40

8.3.150 Adjustment for Worker’s Comp, Black Lung Benefits or Other 

Disabilities

An annuity paid under the DIB O/M may be reduced for any month in which an 

employee is under age 62 and is entitled to State or Federal periodic worker's 

compensation benefits and/or certain types of "Black Lung Benefits" (BLB) which are 

considered to be Federal worker's compensation. This is intended to prevent an 

individual from receiving more benefits based on disability than he earned in wages 

prior to becoming disabled.

If the employee is receiving disability benefits under a Federal, State or local 

government program as explained in RCM Chapter 8.5, refer the case to P&S-RAC. 

The MEGACAP provisions of the 1981 SS Act Amendments may apply.

8.3.151 Definition of Worker's Compensation, Black Lung Benefits, 

and Megacap Benefits

Worker's Compensation, Black Lung Benefits, or Megacap benefits for offset purposes 

are explained in RCM Chapter 8.5.

8.3.152 When WC or Megacap Benefit Reduction is Applicable

The conditions for applying a worker's compensation or Megacap benefit reduction the 

DIB O/M depend on the disability onset date and the effective date of the DIB O/M.
RCM 8.3

RCM 8.3 Retirement O/M Computation Revised December 6, 2022 Page 104 of 114

A. Disability Onset Date Before March 2, 1981 - Offset will be applied to the DIB 

O/M and/or auxiliary benefits payable for a month only if all of the following 

conditions are met:

1. The month is after 12-1965 and before the disabled individual attains age 

62;

AND,

2. The period of disability involved began after 6-1965;

AND,

3. The month is the month following the month the Board received notice that 

the individual is entitled to worker's compensation or black lung benefits. 

The reduction cannot be made earlier than the month following the month 

in which the worker's compensation payments and/or BLB are reported to 

the Board.

AND,

4. The WC is paid under a state or federal plan that does not provide for 

reducing the WC benefit because of DIB entitlement. (See RCM 8.5 for a 

list of states that reduce their WC benefits.)

AND,

5. If the benefits are Black Lung Benefits, they are paid under Part C of Title 

IV of the Federal Coal Mine Health and Safety Act.

B. Disability Onset Date March 2, 1981 or Later - If DIB O/M benefits are payable 

before September 1, 1981 because a waiting period is not required, the 

conditions in section (A), above apply.

If benefits are first payable September 1, 1981 or later, the 1981 SS Act 

Amendments apply. Offset will be applied to the DIB O/M only if the following 

conditions are met:

1. The DIB O/M effective date is before the disabled individual attains age 65

if the individual attains age 65 before December 19, 2015; or

2. Effective December 19, 2015, the DIB O/M effective date is before the 

disabled individual attains full retirement age, if the individual attains age 

65 on December 19, 2015 or later; 

AND,
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2. If the benefits are Black Lung Benefits, they are paid under Part C of Title 

IV of the Federal Coal Mine Health and Safety Act.

The 1981 SS Amendments removed the notice provision so that offset can be 

imposed for any month in which an individual is entitled to both the DIB O/M and 

another disability benefit. (Formerly, offset could not be imposed until the month 

after the notice of receipt of worker's compensation was received.)

The 1981 amendments also removed the provision that excepted from offset 

cases where the state or federal plan reduces their benefit for a SSA DIB. Such 

"reverse offset" will continue to be allowed for states with such plans already in 

effect on February 18, 1981.

The Achieving a Better Life Experience (ABLE) Act was enacted December 19, 

2014. This legislation included a Title II provision that affects WC/PDB offset. 

The Able Act changed the age at which WC/PDB offset ends for disability 

beneficiaries from age 65 to Full Retirement Age (FRA). The effective date of the 

provision is December 19, 2015. This change applies to any individual whose 

Disability Insurance Benefit (DIB) is offset for WC/PDB and who attains age 65 

on December 19, 2015 (DOB of 12/20/1950) or later.

The reduction is applied after reductions for the family monthly maximum but 

before any deduction (e.g., "other benefits" or work deductions). Under SSA 

rules, if auxiliary benefits are paid, the reduction is applied proportionately, first 

against the auxiliary benefits and then against the DIB if the sum of the auxiliary 

benefits is less than the amount of the reduction. In DIB O/M cases, the reduction 

is applied to the total SSA formula rate before offset for "other benefits."

If a spouse or child is receiving worker's compensation, on his (her) own wage 

record refer the case to P&S-RAC. 

8.3.153 Developing Worker's Compensation or Megacap Benefit 

Information

See RCM Chapter 8.5 for developing Worker's Compensation and/or Megacap benefit 

information in DIB O/M cases.

8.3.154 Definition of Average Current Earnings

A. Effective 1-1973 - Effective 1-1973, the following formula is used for the 

determination of the average current earnings (ACE) used to determine the 

amount of the WC or Megacap reduction. The 1977 SS Act Amendments 

retained the use of the AMW instead of the AIME in cases with an "eligibility 

year" of 1979 or later in which a worker's compensation offset is required. The 

earnings are not indexed and are not subject to yearly earnings maximums. The 

ACE for the worker's compensation offset is the highest of the following:
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1. The worker's AMW on which PIA #9 is based (i.e., if PIA #9 is $587.80, 

the AMW would be 637);

OR,

2. The "high-5" AMW - The AMW based on his actual earnings (not subject 

to yearly earnings maximum) for the highest 5 consecutive years ("high5") after 1950;

OR,

3. The "high-1" AMW - The AMW based on the calendar year of highest 

actual earnings ("high-1") during the period consisting of the year of onset 

or disablement and the five preceding years (not subject to yearly 

earnings maximum).

This definition of the ACE applies to all WC or Megacap offset cases for DIB O/M 

payments beginning 1-1973. It also applies for making redetermination of WC in 

cases in which the offset was applied before 1-1973. (In such cases, substitute 

this ACE effective 1-1973 for that actually used in the earlier offset computation.)

B. Effective 2-1968 through 12-1972 - Effective 2-1968 through 12-1972, the ACE 

for the worker's compensation offset was the higher of:

1. The AMW on which the DIB is based;

OR,

2. The "high-5" AMW (see A.1, above).

This definition of ACE applies to all WC offset cases for DIB O/M payments 2-

1968 through 12-1972 and for making redeterminations for that period of WC for 

cases in which an offset was applied before 2-1968.

C. Before 2-1968 - Before 2-1968, the ACE for the worker's compensation offset 

was the higher of:

1. The AMW on which the DIB was based;

OR,

2. The AMW based on his posted earnings for the "highest-5" consecutive 

years after 1950.

Determine the "Average Current Earnings" as explained in RCM Chapter 8.5, but 

substituting PIA #9 for PIA #1.
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8.3.155 Computing Amount of Worker's Compensation or Megacap 

Reduction

A. Initial Determination of Reduction - The initial worker's compensation or Megacap 

reduction is equal to the difference between:

1. The total amount of benefits computed under the SS Act formula (PIA #9) 

including any auxiliary benefits plus the monthly worker's compensation or 

Megacap benefit. (If the employee is receiving more than one WC benefit 

(e.g., one black lung benefit) and one WC benefit, use the combined 

amounts of these benefits.);

AND,

2. The higher of:

• 80% of the disabled worker's average current earnings (ACE) before 

disablement;

OR,

• The sum of the DIB O/M and any auxiliary benefits before offset.

The result is rounded down to the nearest multiple of $.10.

The reduction is applied first against the auxiliary benefits and then against the 

DIB if the sum of the auxiliary benefits is less than the amount of the reduction. 

The amount of offset under the DIB O/M could result in a reduction in the O/M 

rate or a change to the RR Act formula rate.

EXAMPLE - The employee is receiving a monthly WC benefit of $75.00. The DIB 

O/M family rate is $1028.30. The total monthly benefit is $1103.30 ($75.00 + 

1028.30).

The ACE is $1081.00. The ACE times 80% equals $864.80. This amount is less 

than the DIB O/M family rate.

The reduction for worker's compensation is $75.00 ($1103.30 - $1028.30).

Once computed, the amount of the reduction is not increased. However, it may 

be recalculated as explained below.

B. Change in Family Composition - Even though the family maximum may not be 

involved in the original offset computation, the addition or subtraction of a 

beneficiary may cause the family benefit to become, or cease to be, the 

applicable limit for offset.
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When the family composition changes, the WC reduction is recomputed as if the 

new family composition had existed when the WC reduction was first applied. 

This adjusted reduction amount is effective on the first of the month in which the 

family composition changed. Cost-of-living increases are added from this point.

NOTE: The suspension of a phase-out student in May through August of a year 

is considered a change in the family composition. The WC reduction for those 

months is computed as if the phase-out student was not entitled when the WC 

reduction was first applied.

EXAMPLE - The employee reports on 12-7-79 that he is receiving monthly 

worker's compensation benefits of $200.00 with a month of entitlement of 8-1-79. 

The offset is effective 11-80 using 80% of the ACE ($826.40) as the applicable 

limit for offset.

An auxiliary is added 9-1-81. The total DIB and auxiliary benefits are recomputed 

as if this family composition had existed 1-1-80. The resulting family maximum 

rate of $840.20 exceeds 80% of the ACE and is used as the new applicable limit.

Once the WC reduction is computed the 6-1980 and 6-1981 cost-of-living 

increases are added to the DIB O/M rate. The adjusted WC reduction amount is 

not effective until 9-1-81, the month of the change of family composition.

C. Cost-of-Living Increases - Any increases in the retirement O/M rate due to costof-living, recomputation of the PIA, or a statutory PIA increase after the WC 

reduction is imposed, is not subject to offset. The increase is simply added to the 

amount, if any, that is payable.

EXAMPLE - PIA #9 is $706.80 effective 9-1979. The family O/M rate of $1236.90 

is reduced for WC by $300.00 to $936.90. The PIA #9 increases to $807.90 

effective 6-1980 with a family maximum of $1413.80. The difference ($1413.80 - 

$1236.90 = $176.90) is added to the benefits payable to the family group 

($936.390 + $176.90 = $1113.80).

8.3.156 Redetermination of the ACE

The law provides that the ACE for all cases subject to disability offset shall be 

recomputed in the second calendar year after the year in which offset was first imposed 

and each third year thereafter to take into account rises in national earnings levels. The 

new amount payable, if any, will be effective with the January following the year the 

redetermination is made.

NOTE: Offset must be continuous when determining eligibility for a triennial 

redetermination of the ACE.

The redetermination will be figured by increasing the ACE in keeping with rises in 

national earnings levels and recomputing the offset using this new ACE. The SSA Office 
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of the Actuary determines the applicable ratios annually. (see RCM 8.5 for how to 

redetermine the ACE.)

8.3.157 Change in Amount of Worker's Compensation or Megacap 

Benefit

If the amount of the employee's monthly WC or Megacap payment decreases, offset will 

be recomputed since the family could receive additional benefits as a result of the 

change. The higher benefits will be payable effective with the month of the benefit 

change.

If the amount of the employee's monthly WC or Megacap payment increases, the offset 

will be recomputed as of the date of the WC increase. However, all cost-of-living or 

statutory increases from the date of initial reduction for WC or Megacap are protected 

from offset.

EXAMPLE - The DIB O/M family rate effective 9-1-79 before WC reduction is $720.00. 

The WC benefit is $200 per month. The ACE is $925 (80% = $740.). The WC reduction 

is computed as follows:

$720.00 + $200.00 = $920.00 - $740.00 = $180.00. The 9-1-79 DIB O/M rate is $540. 

($720 - $180)

The DIB O/M rate before WC reduction increases by $103.00 to $823.00 effective 6-1-

80. Since the WC benefit did not change, the WC reduction remains $180.00. The rate 

after WC reduction is $823.00 - $180.00 = $643.00.

On 1-1981, the WC rate increases to $250 per month. The reduction is computed as 

follows:

$823.00 + $250 = $1073.00 - $823.00 = $250. The 1-1981 DIB O/M rate before 

considering the saved COL increase would be $823.00 - $250.00 = $573.00. However, 

the $103.00 COL increase is added to this amount, increasing the rate to $676.00 

($573.00 + $103.00).

8.3.158 Award Instructions

A. Apply Reduction - Complete the "REMARKS" and "OTHER BENEFIT" section of 

Form G-354.3 as explained in "SPECIAL SITUATIONS" of the G-354.3 

instructions in RCM 8.6.

B. Notify Annuitant - Notify the annuitant about the WC or Megacap adjustment by 

including in the award notice whichever of the following code paragraphs is 

appropriate:
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(1) Code paragraph 1762 when DIB O/M is reduced because of receipt of WC 

or Megacap benefits and the reduced rate exceeds the RR Act formula 

rate;

OR,

(2) Code paragraph 1762.1 when DIB O/M is reduced to RR Act Formula rate 

because of receipt of WC or Megacap benefits;

OR,

(3) Code paragraph 1762.2 when DIB O/M rate is increased or applied 

because the reduction for WC or Megacap benefits has ended.

C. Code For Call-Up - If offset has been applied, code the case for call-up for a 

redetermination of the ACE (see RCM 8.3.156). Enter a "49-01" call-up on Form 

G-662 for Dec. 1 of the year after the year the offset was first applied. Show the 

reason as "Redetermination of WC reduction."

If the employee did not attain age 62 or 65 (whichever applies) in the year the 

redetermination is made, code the case for call-up for another redetermination. 

Enter a "49-01" call-up on Form G-662 for Dec. 1 of the third calendar year 

following the redetermination year.

(See RCM Chapter 8.5 for redetermination.)

8.3.159 Effect Of Worker's Compensation or Megacap Benefits on 

Medicare Coverage

If the disabled employee is entitled to WC or Megacap benefits, he may be entitled to 

reimbursement for medical expenses based on this program. Refer cases in which the 

employee is also entitled to Medicare to the Retirement Medicare Section to notify the 

Part B carrier of the WC or Megacap benefit coverage.

8.3.160 Removing Worker's Compensation or Megacap Benefit 

Reduction

When the employee is no longer entitled to benefits that require a worker's 

compensation or Megacap benefit reduction, his entitlement to the WC or Megacap 

benefit ends, or if a WC reduction is still applicable to the DIB O/M when the employee 

attains age 62, 65 if he/she attains age 65 before December 19, 2015 or FRA if he/she

attains age 65 December 19, 2015 (DOB of 12/20/1950) or later, the WC reduction 

should be removed. The vouchered award with the new rate is the folder record of the 

adjustment.
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8.3.161 Social Security Benefit Reduced for Worker's Compensation, 

Black Lung or Megacap Benefits

The offset to the O/M computation depends upon the type of social security benefit that 

is being reduced for worker's compensation, black lung or Megacap benefits.

A. Employee's Benefit Reduced For Worker's Compensation or Megacap Benefits - 

The total family DIB O/M benefit after adjustment for the family maximum but 

before any deductions is reduced in any month in which the employee is under 

age 62 (or 65, if the 1981 SS Act Amendments apply, or FRA if age 65 is 

attained December 19, 2015 or later) and is entitled to State or Federal periodic 

worker's compensation or Megacap benefits.

If the employee is receiving a social security benefit at SSA that is reduced for 

worker's compensation or Megacap benefits the employee O/M benefit (after 

adjustment for W/C or Megacap benefits) is reduced by the actual amount of the 

social security benefit that is being paid (after W/C or Megacap reduction).

B. Spouse or Child's Social Security Benefit Reduced for Worker's Compensation or 

Megacap Benefits - When the beneficiary is entitled to a benefit under the Social 

Security Act on other than the RR employee's or their own wage record that is

reduced for worker's compensation or Megacap benefits, his (her) O/M benefit is 

reduced by the actual amount of the social security benefit that is being paid 

(after reduction).

If the social security benefits is a DIB on his (her) own wage record that is

reduced for worker's compensation or Megacap benefits refer the case to 

P&S-RAC. 

8.3.170 Assignment Cases

Prior to the passage of the Social Services amendments of 1974 (PL93-647) the 

employee could authorize the Board to pay part of his (her) total O/M computation 

annuity rate to another person by completing an "Assignment of Payment Statement." It 

was necessary for the person to be included in the O/M computation for the assignment 

to be made. Usually the amount authorized by the employee to be paid to the assignee 

was equal to the amount the employee O/M computation increased because of that 

person. However, the employee could designate an amount that was not necessarily 

attributable to the ineligible person.

The employee may request that this O/M assignment amount be increased or 

decreased at any time. It is not the Board's responsibility to solicit changes in the 

amount of the assignment whenever there is a cost-of-living increase or change in 

family group composition. The assignment amount should continue to be paid until the 

employee completes a new assignment or until the person can no longer be included in 

the O/M computation. However, if the RR formula exceeds the O/M formula but the 
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person for whom the assignment was made is still eligible to be included in the O/M, 

contact the employee to ask if there should be a change in the assignment.

Beginning with the passage of the Social Services Amendments of 1974 (PL93-647), 

assignments may also be made when the RR formula rate is payable, but only if a 

request is made because garnishment of the annuity, or a court order for alimony or 

child support is threatened. Assignments in O/M formula cases can still be made if 

requested by the employee, but the reason for the assignment should be ascertained 

since there may be a garnishment involved. If a new assignment or a change in the 

assignment amount is requested in either an O/M or RR formula case in which a 

garnishment exists, refer the case to the Office of General Counsel as shown in RCM 

10.2.45.

8.3.171 Award Form Entries

Where an employee assigns a share of the O/M to an IPI as explained in section 

8.3.170, show in the remarks block of the Form G-354.3, "O/M Assignment Case - IPI's 

share awarded on G-355."

Complete the Form G-355 as follows:

1. Complete the RRB claim number and/or Employee's SSA Number, Type of 

Award, Payment Summary; and,

2. Change the Payee Code in the Certification of Payment Section from "2" to "3" in 

red. Then complete the remaining items in this section; and,

3. Indicate the following in remarks: "Not a spouse award. Form prepared to award

IPI's share of O/M to person having custody."

4. Voucher the award.

8.3.172 Recovery of Overpayments

The annuity remains the employee's benefit, even if the employee assigns part of his 

annuity to someone else. If an overpayment is created due to an event affecting the IPI, 

the Board has the authority to either recover the entire overpayment from the employee, 

or recover part of the overpayment from the employee and the balance from the 

assignee. Consideration should be given to whose earnings caused an excess earnings 

overpayment, who benefited from the proceeds of the overpayment, or who is entitled to 

future RR benefits from which the overpayment can be recovered.

8.3.173 Garnishment of Retirement Annuities for Alimony or Child 

Support

A garnishment of the retirement annuity is based on a court order. It can be any amount 

and can be paid to a person who is not included in the O/M computation.
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The Office of General Counsel (OGC) handles all matters and makes all decisions 

related to the appropriateness and acceptability of legal notices of garnishment and the 

removal of those orders. The Reconsideration Unit in Operations implements the 

decision of the OGC in these cases including any subsequent annuity adjustment or 

COL increase payable in the employee's annuity rate. Any action that does not directly 

affect the annuity rate, or relate to, or cancel a garnishment (e.g., change of address) is 

handled in the regular adjudication units.