H. R. 10—4
1995, but who has not completed ten years of service, and the
spouse, divorced spouse, and survivors of such individual, shall
not be entitled to an annuity amount provided under section 3(a),
section 4(a), or section 4(f) of this Act unless the individual, or
the individual’s spouse, divorced spouse, or survivors, would be
entitled to a benefit under title II of the Social Security Act on
the basis of the individual’s employment record under both this
Act and title II of the Social Security Act.’’.
(e) COMPUTATION RULE FOR SPOUSES’ ANNUITIES.—Section 4(a)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)), as
amended by section 102 of this Act, is further amended by adding
at the end the following new subdivision:
‘‘(3) If a spouse entitled to an annuity under section
2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), or section 2(c)(2) of this Act or
a divorced spouse entitled to an annuity under section 2(c)(4) of
this Act on the basis of the employment record of an employee
who will have completed less than 10 years of service is entitled
to a benefit under section 202(a), section 202(b), or section 202(c)
of the Social Security Act which began to accrue before the annuity
under section 2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), section 2(c)(2), or
section 2(c)(4) of this Act, the annuity amount provided under
this subsection shall be computed as though the annuity under
this Act began to accrue on the later of (A) the date on which
the benefit under section 202(a), section 202(b), or section 202(c)
of the Social Security Act began or (B) the first date on which
the annuitant met the conditions for entitlement to an age reduced
annuity under this Act other than the conditions set forth in sections
2(e)(1) and 2(e)(2) of this Act and the requirement that an applica-
tion be filed.’’.
(f) APPLICATION DEEMING PROVISION.—Section 5(b) of the Rail-
road Retirement Act of 1974 (45 U.S.C. 231d(b)) is amended by
striking the second sentence and inserting the following new sen-
tence: ‘‘An application filed with the Board for an employee annuity,
spouse annuity, or divorced spouse annuity on the basis of the
employment record of an employee who will have completed less
than ten years of service shall be deemed to be an application
for any benefit to which such applicant may be entitled under
this Act or section 202(a), section 202(b), or section 202(c) of the
Social Security Act. An application filed with the Board for an
annuity on the basis of the employment record of an employee
who will have completed ten years of service shall, unless the
applicant specified otherwise, be deemed to be an application for
any benefit to which such applicant may be entitled under this
Act or title II of the Social Security Act.’’.
(g) CREDITING SERVICE UNDER THE SOCIAL SECURITY ACT.—
Section 18(2) of the Railroad Retirement Act of 1974 (45 U.S.C.
231q(2)) is amended—
(1) by inserting ‘‘(or less than five years of service, all
of which accrues after December 31, 1995)’’ after ‘‘ten years
of service’’ every place it appears; and
(2) by inserting ‘‘(or five or more years of service, all of
which accrues after December 31, 1995)’’ after ‘‘ten or more
years of service’’.
(h) AUTOMATIC BENEFIT ELIGIBILITY ADJUSTMENTS.—Section 19
of the Railroad Retirement Act of 1974 (45 U.S.C. 231r) is
amended—
H. R. 10—5
(1) by inserting ‘‘(or five or more years of service, all of
which accrues after December 31, 1995)’’ after ‘‘ten years of
service’’ in subsection (c); and
(2) by inserting ‘‘(or five or more years of service, all of
which accrues after December 31, 1995)’’ after ‘‘ten years of
service’’ in subsection (d)(2).
(i) CONFORMING AMENDMENTS.—
(1) Section 6(e)(1) of the Railroad Retirement Act of 1974
(45 U.S.C. 231e(1)) is amended by inserting ‘‘(or five or more
years of service, all of which accrues after December 31, 1995)’’
after ‘‘ten years of service’’.
(2) Section 7(b)(2)(A) of the Railroad Retirement Act of
1974 (45 U.S.C. 231f(b)(2)(A)) is amended by inserting ‘‘(or
five or more years of service, all of which accrues after
December 31, 1995)’’ after ‘‘ten years of service’’.
(3) Section 205(i) of the Social Security Act (42 U.S.C.
405(i)) is amended by inserting ‘‘(or five or more years of
service, all of which accrues after December 31, 1995)’’ after
‘‘ten years of service’’.
(4) Section 6(b)(2) of the Railroad Retirement Act of 1974
(45 U.S.C. 231e(b)(2)) is amended by inserting ‘‘(or five or
more years of service, all of which accrues after December
31, 1995)’’ after ‘‘ten years of service’’ the second place it
appears.
(j) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 2002.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(a) EMPLOYEE ANNUITIES.—
(1) IN GENERAL.—Section 3(f) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231b(f)) is amended—
(A) by striking subdivision (1); and
(B) by redesignating subdivisions (2) and (3) as subdivi-
sions (1) and (2), respectively.
(2) CONFORMING AMENDMENTS.—
(A) The first sentence of section 3(f)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231b(f)(1)), as redesig-
nated by paragraph (1)(B), is amended by striking ‘‘, with-
out regard to the provisions of subdivision (1) of this sub-
section,’’.
(B) Paragraphs (i) and (ii) of section 7(d)(2) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231f(d)(2)) are
each amended by striking ‘‘section 3(f)(3)’’ and inserting
‘‘section 3(f)(2)’’.
(b) SPOUSE AND SURVIVOR ANNUITIES.—Section 4 of the Rail-
road Retirement Act of 1974 (45 U.S.C. 231c) is amended by striking
subsection (c).
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 2002, and shall apply to annuity
amounts accruing for months after December 2001.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(a) ESTABLISHMENT
OF
NATIONAL
RAILROAD
RETIREMENT
INVESTMENT TRUST.—Section 15 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231n) is amended by inserting after subsection
(i) the following new subsection:
‘‘(j) NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST.—
H. R. 10—6
‘‘(1) ESTABLISHMENT.—The National Railroad Retirement
Investment Trust (hereinafter in this subsection referred to
as the ‘Trust’) is hereby established as a trust domiciled in
the District of Columbia and shall, to the extent not inconsistent
with this Act, be subject to the laws of the District of Columbia
applicable to such trusts. The Trust shall manage and invest
its assets in the manner set forth in this subsection.
‘‘(2) NOT A FEDERAL AGENCY OR INSTRUMENTALITY.—The
Trust is not a department, agency, or instrumentality of the
Government of the United States and shall not be subject
to title 31, United States Code.
‘‘(3) BOARD OF TRUSTEES.—
‘‘(A) GENERALLY.—
‘‘(i) MEMBERSHIP.—The Trust shall have a Board
of Trustees, consisting of 7 members. Three shall rep-
resent the interests of labor, 3 shall represent the
interests of management, and 1 shall be an inde-
pendent Trustee. The members of the Board of
Trustees shall not be considered officers or employees
of the Government of the United States.
‘‘(ii) SELECTION.—
‘‘(I) The 3 members representing the interests
of labor shall be selected by the joint recommenda-
tion of labor organizations, national in scope, orga-
nized in accordance with section 2 of the Railway
Labor Act, and representing at least 2⁄3 of all active
employees, represented by such national labor
organizations, covered under this Act.
‘‘(II) The 3 members representing the interests
of management shall be selected by the joint rec-
ommendation of carriers as defined in section 1
of the Railway Labor Act employing at least 2⁄3
of all active employees covered under this Act.
‘‘(III) The independent member shall be
selected by a majority of the other 6 members
of the Board of Trustees.
A member of the Board of Trustees may be removed
in the same manner and by the same constituency
that selected that member.
‘‘(iii) DISPUTE RESOLUTION.—In the event that the
parties specified in subclause (I), (II), or (III) of the
previous clause cannot agree on the selection of
Trustees within 60 days of the date of enactment or
60 days from any subsequent date that a position
of the Board of Trustees becomes vacant, an impartial
umpire to decide such dispute shall, on the petition
of a party to the dispute, be appointed by the District
Court of the United States for the District of Columbia.
‘‘(B) QUALIFICATIONS.—Members of the Board of
Trustees shall be appointed only from among persons who
have experience and expertise in the management of finan-
cial investments and pension plans. No member of the
Railroad Retirement Board shall be eligible to be a member
of the Board of Trustees.
‘‘(C) TERMS.—Except as provided in this subparagraph,
each member shall be appointed for a 3-year term. The
initial members appointed under this paragraph shall be
H. R. 10—7
divided into equal groups so nearly as may be, of which
one group will be appointed for a 1-year term, one for
a 2-year term, and one for a 3-year term. The Trustee
initially selected pursuant to clause (ii)(III) shall be
appointed to a 3-year term. A vacancy in the Board of
Trustees shall not affect the powers of the Board of
Trustees and shall be filled in the same manner as the
selection of the member whose departure caused the
vacancy. Upon the expiration of a term of a member of
the Board of Trustees, that member shall continue to serve
until a successor is appointed.
‘‘(4) POWERS OF THE BOARD OF TRUSTEES.—The Board of
Trustees shall—
‘‘(A) retain independent advisers to assist it in the
formulation and adoption of its investment guidelines;
‘‘(B) retain independent investment managers to invest
the assets of the Trust in a manner consistent with such
investment guidelines;
‘‘(C) invest assets in the Trust, pursuant to the policies
adopted in subparagraph (A);
‘‘(D) pay administrative expenses of the Trust from
the assets in the Trust; and
‘‘(E) transfer money to the disbursing agent or as other-
wise provided in section 7(b)(4), to pay benefits payable
under this Act from the assets of the Trust.
‘‘(5) REPORTING
REQUIREMENTS
AND
FIDUCIARY
STAND-
ARDS.—The following reporting requirements and fiduciary
standards shall apply with respect to the Trust:
‘‘(A) DUTIES OF THE BOARD OF TRUSTEES.—The Trust
and each member of the Board of Trustees shall discharge
their duties (including the voting of proxies) with respect
to the assets of the Trust solely in the interest of the
Railroad Retirement Board and through it, the participants
and beneficiaries of the programs funded under this Act—
‘‘(i) for the exclusive purpose of—
‘‘(I) providing benefits to participants and their
beneficiaries; and
‘‘(II) defraying reasonable expenses of admin-
istering the functions of the Trust;
‘‘(ii) with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise
of a like character and with like aims;
‘‘(iii) by diversifying investments so as to minimize
the risk of large losses and to avoid disproportionate
influence over a particular industry or firm, unless
under the circumstances it is clearly prudent not to
do so; and
‘‘(iv) in accordance with Trust governing docu-
ments and instruments insofar as such documents and
instruments are consistent with this Act.
‘‘(B) PROHIBITIONS WITH RESPECT TO MEMBERS OF THE
BOARD OF TRUSTEES.—No member of the Board of Trustees
shall—
‘‘(i) deal with the assets of the Trust in the trustee’s
own interest or for the trustee’s own account;
H. R. 10—8
‘‘(ii) in an individual or in any other capacity act
in any transaction involving the assets of the Trust
on behalf of a party (or represent a party) whose
interests are adverse to the interests of the Trust,
the Railroad Retirement Board, or the interests of
participants or beneficiaries; or
‘‘(iii) receive any consideration for the trustee’s
own personal account from any party dealing with
the assets of the Trust.
‘‘(C) EXCULPATORY PROVISIONS AND INSURANCE.—Any
provision in an agreement or instrument that purports
to relieve a trustee from responsibility or liability for any
responsibility, obligation, or duty under this Act shall be
void: Provided, however, That nothing shall preclude—
‘‘(i) the Trust from purchasing insurance for its
trustees or for itself to cover liability or losses occurring
by reason of the act or omission of a trustee, if such
insurance permits recourse by the insurer against the
trustee in the case of a breach of a fiduciary obligation
by such trustee;
‘‘(ii) a trustee from purchasing insurance to cover
liability under this section from and for his own
account; or
‘‘(iii) an employer or an employee organization from
purchasing insurance to cover potential liability of one
or more trustees with respect to their fiduciary respon-
sibilities, obligations, and duties under this section.
‘‘(D) BONDING.—Every trustee and every person who
handles funds or other property of the Trust (hereafter
in this subsection referred to as ‘Trust official’) shall be
bonded. Such bond shall provide protection to the Trust
against loss by reason of acts of fraud or dishonesty on
the part of any Trust official, directly or through the conniv-
ance of others, and shall be in accordance with the fol-
lowing:
‘‘(i) The amount of such bond shall be fixed at
the beginning of each fiscal year of the Trust by the
Railroad Retirement Board. Such amount shall not
be less than 10 percent of the amount of the funds
handled. In no case shall such bond be less than $1,000
nor more than $500,000, except that the Railroad
Retirement Board, after consideration of the record,
may prescribe an amount in excess of $500,000, subject
to the 10 per centum limitation of the preceding sen-
tence.
‘‘(ii) It shall be unlawful for any Trust official
to receive, handle, disburse, or otherwise exercise cus-
tody or control of any of the funds or other property
of the Trust without being bonded as required by this
subsection and it shall be unlawful for any Trust offi-
cial, or any other person having authority to direct
the performance of such functions, to permit such func-
tions, or any of them, to be performed by any Trust
official, with respect to whom the requirements of this
subsection have not been met.
‘‘(iii) It shall be unlawful for any person to procure
any bond required by this subsection from any surety
H. R. 10—9
or other company or through any agent or broker in
whose business operations such person has any control
or significant financial interest, direct or indirect.
‘‘(E) AUDIT AND REPORT.—
‘‘(i) The Trust shall annually engage an inde-
pendent qualified public accountant to audit the finan-
cial statements of the Trust.
‘‘(ii) The Trust shall submit an annual manage-
ment report to the Congress not later than 180 days
after the end of the Trust’s fiscal year. A management
report under this subsection shall include—
‘‘(I) a statement of financial position;
‘‘(II) a statement of operations;
‘‘(III) a statement of cash flows;
‘‘(IV) a statement on internal accounting and
administrative control systems;
‘‘(V) the report resulting from an audit of the
financial statements of the Trust conducted under
clause (i); and
‘‘(VI) any other comments and information nec-
essary to inform the Congress about the operations
and financial condition of the Trust.
‘‘(iii) The Trust shall provide the President, the
Railroad Retirement Board, and the Director of the
Office of Management and Budget a copy of the
management report when it is submitted to Congress.
‘‘(F) ENFORCEMENT.—The Railroad Retirement Board
may bring a civil action—
‘‘(i) to enjoin any act or practice by the Trust,
its Board of Trustees, or its employees or agents that
violates any provision of this Act; or
‘‘(ii) to obtain other appropriate relief to redress
such violations, or to enforce any provisions of this
Act.
‘‘(6) RULES AND ADMINISTRATIVE POWERS.—The Board of
Trustees shall have the authority to make rules to govern
its operations, employ professional staff, and contract with out-
side advisers, including the Railroad Retirement Board, to pro-
vide legal, accounting, investment advisory, or other services
necessary for the proper administration of this subsection. In
the case of contracts with investment advisory services, com-
pensation for such services may be on a fixed contract fee
basis or on such other terms and conditions as are customary
for such services.
‘‘(7) QUORUM.—Five members of the Board of Trustees
constitute a quorum to do business. Investment guidelines must
be adopted by a unanimous vote of the entire Board of Trustees.
All other decisions of the Board of Trustees shall be decided
by a majority vote of the quorum present. All decisions of
the Board of Trustees shall be entered upon the records of
the Board of Trustees.
‘‘(8) FUNDING.—The expenses of the Trust and the Board
of Trustees incurred under this subsection shall be paid from
the Trust.’’.
(b) CONFORMING
AND TECHNICAL AMENDMENTS GOVERNING
INVESTMENTS.—Section 15(e) of the Railroad Retirement Act of 1974
(45 U.S.C. 231n(e)) is amended—
H. R. 10—10
(1) in the first sentence, by striking ‘‘, the Dual Benefits
Payments Account’’ and all that follows through ‘‘may be made
only’’ in the second sentence and inserting ‘‘and the Dual Bene-
fits Payments Account as are not transferred to the National
Railroad Retirement Investment Trust as the Board may deter-
mine’’;
(2) by striking ‘‘the Second Liberty Bond Act, as amended’’
and inserting ‘‘chapter 31 of title 31’’; and
(3) by striking ‘‘the foregoing requirements’’ and inserting
‘‘the requirements of this subsection’’.
(c) MEANS OF FINANCING.—For all purposes of the Congres-
sional Budget Act of 1974, the Balanced Budget and Emergency
Deficit Control Act of 1985, and chapter 11 of title 31, United
States Code, and notwithstanding section 20 of the Office of
Management and Budget Circular No. A–11, the purchase or sale
of non-Federal assets (other than gains or losses from such trans-
actions) by the National Railroad Retirement Investment Trust
shall be treated as a means of financing.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the first day of the month that begins more
than 30 days after enactment.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.
(a) SOURCE
OF PAYMENTS.—Section 7(c)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231f(c)(1)) is amended by striking
‘‘payments of supplemental annuities under section 2(b) of this
Act shall be made from the Railroad Retirement Supplemental
Account, and’’.
(b) ELIMINATION OF ACCOUNT.—Section 15(c) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n(c)) is repealed.
(c) AMENDMENT TO RAILROAD RETIREMENT ACCOUNT.—Section
15(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n(a))
is amended by striking ‘‘, except those portions of the amounts
covered into the Treasury under sections 3211(b),’’ and all that
follows through the end of the subsection and inserting a period.
(d) TRANSFER.—
(1) DETERMINATION.—As soon as possible after December
31, 2001, the Railroad Retirement Board shall—
(A) determine the amount of funds in the Railroad
Retirement Supplemental Account under section 15(c) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231n(c))
as of the date of such determination; and
(B) direct the Secretary of the Treasury to transfer
such funds to the National Railroad Retirement Investment
Trust under section 15(j) of such Act (as added by section
105).
(2) TRANSFER BY THE SECRETARY OF THE TREASURY.—The
Secretary of the Treasury shall make the transfer described
in paragraph (1).
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—Subject to paragraph (2), the amendments
made by subsections (a), (b), and (c) shall take effect January
1, 2002.
(2) ACCOUNT IN EXISTENCE UNTIL TRANSFER MADE.—The
Railroad Retirement Supplemental Account under section 15(c)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231n(c))
H. R. 10—11
shall continue to exist until the date that the Secretary of
the Treasury makes the transfer described in subsection (d)(2).
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(a) RAILROAD RETIREMENT ACCOUNT.—Section 15 of the Rail-
road Retirement Act of 1974 (45 U.S.C. 231n) is amended by adding
after subsection (j) the following new subsection:
‘‘(k) TRANSFERS
TO
THE
TRUST.—The Board shall, upon
establishment of the National Railroad Retirement Investment
Trust and from time to time thereafter, direct the Secretary of
the Treasury to transfer, in such manner as will maximize the
investment returns to the Railroad Retirement system, that portion
of the Railroad Retirement Account that is not needed to pay
current administrative expenses of the Board to the National Rail-
road Retirement Investment Trust. The Secretary shall make that
transfer.’’.
(b) TRANSFERS FROM
THE NATIONAL RAILROAD RETIREMENT
INVESTMENT TRUST.—Section 15 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231n), as amended by subsection (a), is further
amended by adding after subsection (k) the following new sub-
section:
‘‘(l) NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST.—The
National Railroad Retirement Investment Trust shall from time
to time transfer to the disbursing agent described in section 7(b)(4)
or as otherwise directed by the Railroad Retirement Board pursuant
to section 7(b)(4), such amounts as may be necessary to pay benefits
under this Act (other than benefits paid from the Social Security
Equivalent Benefit Account or the Dual Benefit Payments
Account).’’.
(c) SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT.—
(1) TRANSFERS TO TRUST.—Section 15A(d)(2) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n–1(d)(2)) is amended
to read as follows:
‘‘(2) Upon establishment of the National Railroad Retirement
Investment Trust and from time to time thereafter, the Board
shall direct the Secretary of the Treasury to transfer, in such
manner as will maximize the investment returns to the Railroad
Retirement system, the balance of the Social Security Equivalent
Benefit Account not needed to pay current benefits and administra-
tive expenses required to be paid from that Account to the National
Railroad Retirement Investment Trust, and the Secretary shall
make that transfer. Any balance transferred under this paragraph
shall be used by the National Railroad Retirement Investment
Trust only to pay benefits under this Act or to purchase obligations
of the United States that are backed by the full faith and credit
of the United States pursuant to chapter 31 of title 31, United
States Code. The proceeds of sales of, and the interest income
from, such obligations shall be used by the Trust only to pay
benefits under this Act.’’.
(2) TRANSFERS TO DISBURSING AGENT.—Section 15A(c)(1)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(c)(1))
is amended by adding at the end the following new sentence:
‘‘The Secretary shall from time to time transfer to the dis-
bursing agent under section 7(b)(4) amounts necessary to pay
those benefits.’’.
H. R. 10—12
(3) CONFORMING
AMENDMENT.—Section 15A(d)(1) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(d)(1)) is
amended by striking the second and third sentences.
(d) DUAL BENEFITS PAYMENTS ACCOUNT.—Section 15(d)(1) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231n(d)(1)) is
amended by adding at the end the following new sentence: ‘‘The
Secretary of the Treasury shall from time to time transfer from
the Dual Benefits Payments Account to the disbursing agent under
section 7(b)(4) amounts necessary to pay benefits payable from
that Account.’’.
(e) CERTIFICATION BY THE BOARD AND PAYMENT.—Paragraph
(4) of section 7(b) of the Railroad Retirement Act of 1974 (45
U.S.C. 231f(b)(4)) is amended to read as follows:
‘‘(4)(A) The Railroad Retirement Board, after consultation with
the Board of Trustees of the National Railroad Retirement Invest-
ment Trust and the Secretary of the Treasury, shall enter into
an arrangement with a nongovernmental financial institution to
serve as disbursing agent for benefits payable under this Act who
shall disburse consolidated benefits under this Act to each recipient.
Pending the taking effect of that arrangement, benefits shall be
paid as under the law in effect prior to the enactment of the
Railroad Retirement and Survivors’ Improvement Act of 2001.
‘‘(B) The Board shall from time to time certify—
‘‘(i) to the Secretary of the Treasury the amounts required
to be transferred from the Social Security Equivalent Benefit
Account and the Dual Benefits Payments Account to the dis-
bursing agent to make payments of benefits and the Secretary
of the Treasury shall transfer those amounts;
‘‘(ii) to the Board of Trustees of the National Railroad
Retirement Investment Trust the amounts required to be trans-
ferred from the National Railroad Retirement Investment Trust
to the disbursing agent to make payments of benefits and
the Board of Trustees shall transfer those amounts; and
‘‘(iii) to the disbursing agent the name and address of
each individual entitled to receive a payment, the amount of
such payment, and the time at which the payment should
be made.’’.
(f) BENEFIT PAYMENTS.—Section 7(c)(1) of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231f(c)(1)) is amended—
(1) by striking ‘‘from the Railroad Retirement Account’’
and inserting ‘‘by the disbursing agent under subsection (b)(4)
from money transferred to it from the National Railroad Retire-
ment Investment Trust or the Social Security Equivalent Ben-
efit Account, as the case may be’’; and
(2) by inserting ‘‘by the disbursing agent under subsection
(b)(4) from money transferred to it’’ after ‘‘Public Law 93–
445 shall be made’’.
(g) TRANSITIONAL RULE FOR EXISTING OBLIGATION.—In making
transfers under sections 15(k) and 15A(d)(2) of the Railroad Retire-
ment Act of 1974, as amended by subsections (a) and (c), respec-
tively, the Railroad Retirement Board shall consult with the Sec-
retary of the Treasury to design an appropriate method to transfer
obligations held as of the date of enactment of this Act or to
convert such obligations to cash at the discretion of the Railroad
Retirement Board prior to transfer. The National Railroad Retire-
ment Investment Trust may hold to maturity any obligations so
H. R. 10—13
received or may redeem them prior to maturity, as the Trust deems
appropriate.
SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFICATIONS BY THE
RAILROAD RETIREMENT BOARD.
(a) PROJECTIONS.—Section 22(a)(1) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231u(a)(1)) is amended—
(1) by inserting after the first sentence the following new
sentence: ‘‘On or before May 1 of each year beginning in 2003,
the Railroad Retirement Board shall compute its projection
of the account benefits ratio and the average account benefits
ratio (as defined by section 3241(c) of the Internal Revenue
Code of 1986) for each of the next succeeding five fiscal years.’’;
and
(2) by striking ‘‘the projection prepared pursuant to the
preceding sentence’’ and inserting ‘‘the projections prepared
pursuant to the preceding two sentences’’.
(b) CERTIFICATIONS.—The Railroad Retirement Act of 1974 (45
U.S.C. 231 et seq.) is amended by adding at the end the following
new section:
‘‘COMPUTATION AND CERTIFICATION OF ACCOUNT BENEFIT RATIOS
‘‘SEC. 23. (a) INITIAL COMPUTATION AND CERTIFICATION.—On
or before November 1, 2003, the Railroad Retirement Board shall—
‘‘(1) compute the account benefits ratios for each of the
most recent 10 preceding fiscal years, and
‘‘(2) certify the account benefits ratios for each such fiscal
year to the Secretary of the Treasury.
‘‘(b) COMPUTATIONS AND CERTIFICATIONS AFTER 2003.—On or
before November 1 of each year after 2003, the Railroad Retirement
Board shall—
‘‘(1) compute the account benefits ratio for the fiscal year
ending in such year, and
‘‘(2) certify the account benefits ratio for such fiscal year
to the Secretary of the Treasury.
‘‘(c) DEFINITION.—As used in this section, the term ‘account
benefits ratio’ has the meaning given that term in section 3241(c)
of the Internal Revenue Code of 1986.’’.
TITLE II—AMENDMENTS TO THE
INTERNAL REVENUE CODE OF 1986
SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
Except as otherwise provided, whenever in this title an amend-
ment or repeal is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Internal
Revenue Code of 1986.
SEC. 202. EXEMPTION FROM TAX FOR NATIONAL RAILROAD RETIRE-
MENT INVESTMENT TRUST.
Subsection (c) of section 501 is amended by adding at the
end the following new paragraph:
‘‘(28) The National Railroad Retirement Investment Trust
established under section 15(j) of the Railroad Retirement Act
of 1974.’’.
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SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(a) REPEAL OF TAX ON EMPLOYEE REPRESENTATIVES.—Section
3211 is amended by striking subsection (b).
(b) REPEAL OF TAX ON EMPLOYERS.—Section 3221 is amended
by striking subsections (c) and (d) and by redesignating subsection
(e) as subsection (c).
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to calendar years beginning after December 31, 2001.
SEC. 204. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND EMPLOYEE
TIER 2 TAX RATE ADJUSTMENTS.
(a) RATE OF TAX ON EMPLOYERS.—Subsection (b) of section
3221 is amended to read as follows:
‘‘(b) TIER 2 TAX.—
‘‘(1) IN
GENERAL.—In addition to other taxes, there is
hereby imposed on every employer an excise tax, with respect
to having individuals in his employ, equal to the applicable
percentage of the compensation paid during any calendar year
by such employer for services rendered to such employer.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of paragraph
(1), the term ‘applicable percentage’ means—
‘‘(A) 15.6 percent in the case of compensation paid
during 2002,
‘‘(B) 14.2 percent in the case of compensation paid
during 2003, and
‘‘(C) in the case of compensation paid during any cal-
endar year after 2003, the percentage determined under
section 3241 for such calendar year.’’.
(b) RATE
OF TAX
ON EMPLOYEE REPRESENTATIVES.—Section
3211, as amended by section 203, is amended by striking subsection
(a) and inserting the following new subsections:
‘‘(a) TIER 1 TAX.—In addition to other taxes, there is hereby
imposed on the income of each employee representative a tax equal
to the applicable percentage of the compensation received during
any calendar year by such employee representative for services
rendered by such employee representative. For purposes of the
preceding sentence, the term ‘applicable percentage’ means the
percentage equal to the sum of the rates of tax in effect under
subsections (a) and (b) of section 3101 and subsections (a) and
(b) of section 3111 for the calendar year.
‘‘(b) TIER 2 TAX.—
‘‘(1) IN
GENERAL.—In addition to other taxes, there is
hereby imposed on the income of each employee representative
a tax equal to the applicable percentage of the compensation
received during any calendar year by such employee representa-
tives for services rendered by such employee representative.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of paragraph
(1), the term ‘applicable percentage’ means—
‘‘(A) 14.75 percent in the case of compensation received
during 2002,
‘‘(B) 14.20 percent in the case of compensation received
during 2003, and
‘‘(C) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.
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‘‘(c) CROSS REFERENCE.—
‘‘For application of different contribution bases with respect to
the taxes imposed by subsections (a) and (b), see section
3231(e)(2).’’.
(c) RATE
OF TAX
ON EMPLOYEES.—Subsection (b) of section
3201 is amended to read as follows:
‘‘(b) TIER 2 TAX.—
‘‘(1) IN
GENERAL.—In addition to other taxes, there is
hereby imposed on the income of each employee a tax equal
to the applicable percentage of the compensation received
during any calendar year by such employee for services ren-
dered by such employee.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of paragraph
(1), the term ‘applicable percentage’ means—
‘‘(A) 4.90 percent in the case of compensation received
during 2002 or 2003, and
‘‘(B) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.’’.
(d) DETERMINATION
OF RATE.—Chapter 22 is amended by
adding at the end the following new subchapter:
‘‘Subchapter E—Tier 2 Tax Rate Determination
‘‘Sec. 3241. Determination of tier 2 tax rate based on average account bene-
fits ratio.
‘‘SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED ON AVERAGE
ACCOUNT BENEFITS RATIO.
‘‘(a) IN GENERAL.—For purposes of sections 3201(b), 3211(b),
and 3221(b), the applicable percentage for any calendar year is
the percentage determined in accordance with the table in sub-
section (b).
‘‘(b) TAX RATE SCHEDULE.—
‘‘Average account benefits ratio
Applicable percent-
age for sections
3211(b) and 3221(b)
Applicable percent-
age for section
3201(b)
At least
But less than
2.5
22.1
4.9
2.5
3.0
18.1
4.9
3.0
3.5
15.1
4.9
3.5
4.0
14.1
4.9
4.0
6.1
13.1
4.9
6.1
6.5
12.6
4.4
6.5
7.0
12.1
3.9
7.0
7.5
11.6
3.4
7.5
8.0
11.1
2.9
8.0
8.5
10.1
1.9
8.5
9.0
9.1
0.9
9.0
8.2
‘‘(c) DEFINITIONS RELATED
TO DETERMINATION
OF RATES
OF
TAX.—
‘‘(1) AVERAGE ACCOUNT BENEFITS RATIO.—For purposes of
this section, the term ‘average account benefits ratio’ means,
with respect to any calendar year, the average determined
by the Secretary of the account benefits ratios for the 10 most
recent fiscal years ending before such calendar year. If the
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amount determined under the preceding sentence is not a mul-
tiple of 0.1, such amount shall be increased to the next highest
multiple of 0.1.
‘‘(2) ACCOUNT BENEFITS RATIO.—For purposes of this sec-
tion, the term ‘account benefits ratio’ means, with respect to
any fiscal year, the amount determined by the Railroad Retire-
ment Board by dividing the fair market value of the assets
in the Railroad Retirement Account and of the National Rail-
road Retirement Investment Trust (and for years before 2002,
the Social Security Equivalent Benefits Account) as of the close
of such fiscal year by the total benefits and administrative
expenses paid from the Railroad Retirement Account and the
National Railroad Retirement Investment Trust during such
fiscal year.
‘‘(d) NOTICE.—No later than December 1 of each calendar year,
the Secretary shall publish a notice in the Federal Register of
the rates of tax determined under this section which are applicable
for the following calendar year.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 24(d)(3)(A)(iii) is amended by striking ‘‘section
3211(a)(1)’’ and inserting ‘‘section 3211(a)’’.
(2) Section 72(r)(2)(B)(i) is amended by striking ‘‘3211(a)(2)’’
and inserting ‘‘3211(b)’’.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section 3231(e)
are amended by striking ‘‘3211(a)(1)’’ and inserting ‘‘3211(a)’’.
(4) Section 3231(e)(2)(B)(ii)(I) is amended by striking
‘‘3211(a)(2)’’ and inserting ‘‘3211(b)’’.
(5) The table of subchapters for chapter 22 is amended
by adding at the end the following new item:
‘‘Subchapter E. Tier 2 tax rate determination.’’.
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to calendar years beginning after December 31, 2001.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.