(1) DETERMINATION.—As soon as possible after
December 31, 2000, 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 Railroad Retirement
Investment Trust under section 15(j) of such Act
(as added by section 105).
(2) TRANSFER BY SECRETARY OF THE TREAS-
URY.—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, 2001.
(2) ACCOUNT
IN
EXISTENCE
UNTIL
TRANSFER
MADE.—The Railroad Retirement Supplemental Ac-
count under section 15(c) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231n(c)) 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 Railroad 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 Railroad Retirement Investment
Trust and from time to time thereafter, direct the Secretary
of the Treasury to transfer, in such manner as will maxi-
mize the investment returns to the Railroad Retirement sys-
tem, that portion of the Railroad Retirement Account that
is not needed to pay current administrative expenses of the
Board to the Railroad Retirement Investment Trust. The
Secretary shall make that transfer.’’.
(b) TRANSFERS FROM THE RAILROAD RETIREMENT
INVESTMENT TRUST.—Section 15 of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231n), as amended by sub-
section (a), is further amended by adding after subsection
(k) the following new subsection:
‘‘(l) RAILROAD RETIREMENT INVESTMENT TRUST.—
The 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 bene-
fits paid from the Social Security Equivalent Benefit Ac-
count or the Dual Benefit Payments Account).’’.
(c) SOCIAL SECURITY EQUIVALENT BENEFIT AC-
COUNT.—
(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 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 cur-
rent benefits and administrative expenses required to be
paid from that Account to the Railroad Retirement Invest-
ment Trust, and the Secretary shall make that transfer.
Any balance transferred under this paragraph shall be used
by the 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 inter-
est 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 disbursing agent
under section 7(b)(4) amounts necessary to pay those
benefits.’’.
(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 sec-
ond 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 Ac-
count 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 con-
sultation with the Board of Trustees of the Railroad Retire-
ment Investment Trust and the Secretary of the Treasury,
shall enter into an arrangement with a nongovernmental
financial institution to serve as disbursing agent for bene-
fits payable under this Act who shall disburse consolidated
benefits under this Act to each recipient. Pending the taking
effect of that arrangement, the Railroad Retirement Board
shall make appropriate provision for the payment of bene-
fits due under this Act and otherwise payable through that
arrangement.
‘‘(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 disbursing agent to make
payments of benefits and the Secretary of the Treas-
ury shall transfer those amounts;
‘‘(ii) to the Board of Trustees of the Railroad Re-
tirement Investment Trust the amounts required to be
transferred from the 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 ad-
dress 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 Rail-
road Retirement 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 Railroad Retirement Investment Trust or the
Social Security Equivalent Benefit 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 OBLIGA-
TION.—In making transfers under sections 15(k) and
15A(d)(2) of the Railroad Retirement Act of 1974, as
amended by subsections (a) and (c), respectively, the Rail-
road Retirement Board shall consult with the Secretary 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 prior to transfer. The
Railroad Retirement Investment Trust may hold to matu-
rity any obligations so received or may redeem them prior
to maturity, as the Trust deems appropriate.
SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFI-
CATIONS 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 fol-
lowing new sentence: ‘‘On or before May 1 of each
year beginning in 2002, the Railroad Retirement
Board shall compute its projection of the account ben-
efits 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 fis-
cal years.’’; and
(2) by striking ‘‘the projection prepared pursu-
ant to the preceding sentence’’ and inserting ‘‘the pro-
jections prepared pursuant to the preceding two sen-
tences’’.
(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 CERTIFI-
CATION.—On or before November 1, 2002, the Railroad Re-
tirement 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.
‘‘(b) COMPUTATIONS
AND
CERTIFICATIONS
AFTER
2002.—On or before November 1 of each year after 2002,
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 amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the ref-
erence shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 202. EXEMPTION FROM TAX FOR RAILROAD RETIRE-
MENT INVESTMENT TRUST.
Subsection (c) of section 501 is amended by adding
at the end the following new paragraph:
‘‘(28) The Railroad Retirement Investment Trust
established under section 15(j) of the Railroad Retire-
ment Act of 1974.’’.
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(a) REPEAL OF TAX ON EMPLOYEE REPRESENTA-
TIVES.—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 redes-
ignating subsection (e) as subsection (c).
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to calendar years beginning after De-
cember 31, 2000.
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 compensa-
tion paid during 2001,
‘‘(B) 14.2 percent in the case of compensa-
tion paid during 2002, and
‘‘(C) in the case of compensation paid dur-
ing any calendar year after 2002, the percentage
determined under section 3241 for such calendar
year.’’.
(b) RATE
OF
TAX
ON
EMPLOYEE
REPRESENTA-
TIVES.—Section 3211, as amended by section 203, is
amended by striking subsection (a) and inserting the fol-
lowing new subsections:
‘‘(a) TIER 1 TAX.—In addition to other taxes, there
is hereby imposed on the income of each employee represent-
ative a tax equal to the applicable percentage of the com-
pensation received during any calendar year by such em-
ployee 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 sec-
tion 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 em-
ployee representative a tax equal to the applicable
percentage of the compensation received during any
calendar year by such employee representatives 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 compensa-
tion received during 2001,
‘‘(B) 14.20 percent in the case of compensa-
tion received during 2002, and
‘‘(C) in the case of compensation received
during any calendar year after 2002, the per-
centage determined under section 3241 for such
calendar year.
‘‘(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 em-
ployee a tax equal to the applicable percentage of the
compensation received during any calendar year by
such employee for services rendered by such employee.
‘‘(2) APPLICABLE
PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means—
‘‘(A) 4.90 percent in the case of compensa-
tion received during 2001 or 2002, and
‘‘(B) in the case of compensation received
during any calendar year after 2002, the per-
centage determined under section 3241 for such
calendar year.’’.
(d) DETERMINATION OF RATE.—Chapter 22 is amend-
ed 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 ac-
count benefits 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 cal-
endar year is the percentage determined in accordance with
the table in subsection (b).
‘‘(b) TAX RATE SCHEDULE.—
Average account benefits ratio
Applicable per-
centage for sec-
tions 3211(b) and
3221(b)
Applicable per-
centage 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 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 section, the term ‘account benefits ratio’
means, with respect to any fiscal year, the amount
determined by the Railroad Retirement Board by di-
viding the fair market value of the assets in the Rail-
road Retirement Account and of the Railroad Retire-
ment Investment Trust (and for years before 2001, 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 Re-
tirement Account and the Railroad Retirement In-
vestment Trust during such fiscal year.
‘‘(d) NOTICE.—Not later than December 1 of each cal-
endar year, the Secretary shall publish a notice in the Fed-
eral Register of the rates of tax determined under this sec-
tion which are applicable for the following calendar year.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 24(d)(3)(A)(iii) is amended by strik-
ing ‘‘section 3211(a)(1)’’ and inserting ‘‘section
3211(a)’’.
(2) Section 72(r)(2)(B)(i) is amended by striking
‘‘section 3211(a)(2)’’ and inserting ‘‘section 3211(b)’’.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of sec-
tion 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 De-
cember 31, 2000.
Calendar No. 924
106TH CONGRESS
2D SESSION
H. R. 4844
[Report No. 106–475]
AN ACT
To modernize the financing of the railroad retire-
ment system and to provide enhanced benefits to
employees and beneficiaries.
OCTOBER 3 (legislative day, SEPTEMBER 22), 2000
Reported with an amendment