(f) APPLICATION DEEMING PROVISION.—Section 5(b)
of the Railroad Retirement Act of 1974 is amended by strik-
ing the second sentence and inserting the following: ‘‘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 com-
pleted 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 em-
ployment record of an employee who will have completed
ten years of service shall, unless the applicant specified oth-
erwise, 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 SECU-
RITY ACT.—Section 18(2) of the Railroad Retirement Act
of 1974 is amended—
(1) by inserting ‘‘or less than five years of serv-
ice, all of which accrues after December 31, 1995,’’
after ‘‘ten years of service’’ every place it occurs; 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
ADJUST-
MENTS.—Section 19 of Railroad Retirement Act of 1974 is
amended—
(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 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) of the Railroad Retirement
Act of 1974 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 is
amended by inserting ‘‘or five or more years of serv-
ice, all of which accrues after December 31, 1995,’’
after ‘‘ten years of service’’.
(j) EFFECTIVE DATE.—The amendments made by this
section shall take effect January 1, 2001.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(a) EMPLOYEE ANNUITIES.—Section 3(f) of the Rail-
road Retirement Act of 1974 is amended by striking para-
graph (1).
(b) SPOUSE AND SURVIVOR ANNUITIES.—Section 4 of
the Railroad Retirement Act of 1974 is amended by striking
subsection (c).
(c) EFFECTIVE DATE.—The amendments made by this
section shall be effective January 1, 2001, and shall apply
to annuity amounts accruing for months after December
2000.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(a) ESTABLISHMENT OF RAILROAD RETIREMENT IN-
VESTMENT TRUST.—Section 15 of the Railroad Retirement
Act of 1974 is amended by inserting after subsection (i)
the following:
‘‘(j) RAILROAD RETIREMENT INVESTMENT TRUST.—
‘‘(1) ESTABLISHMENT.—The Railroad Retire-
ment Investment Trust (hereinafter in this subsection
referred to as the ‘Trust’) is hereby established. The
Trust shall manage and invest the assets of the Rail-
road Retirement Trust Fund (hereinafter in this sec-
tion referred to as the ‘‘Fund’’, which is hereby estab-
lished as a trust organized in the District of Colum-
bia and shall, to the extent not inconsistent with this
Act, be subject to the laws of the District of Columbia
applicable to such trusts.
‘‘(2) NOT A FEDERAL AGENCY OR INSTRUMEN-
TALITY.—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.—The Trust shall have a
Board of Trustees, consisting of 7 members, each
appointed by a unanimous vote of the Railroad
Retirement Board. The Railroad Retirement
Board may remove any member so appointed by
unanimous vote. Of the 7 members, 3 shall rep-
resent the interests of labor, 3 shall represent the
interests of management, and 1 shall represent
the interests of the general public. The members
of the Board of Trustees shall not be considered
officers or employees of the Government of the
United States.
‘‘(B) QUALIFICATIONS.—Members of the
Board of Trustees shall be appointed only from
among persons who have experience and exper-
tise in the management of financial investments
and pension plans. No member of the Railroad
Retirement Board shall be eligible to be a mem-
ber 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 ap-
pointed under this paragraph shall be divided
into 3 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. 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 se-
lection 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 ap-
pointed.
‘‘(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 invest-
ment guidelines;
‘‘(B) retain independent investment man-
agers to invest the assets of the Fund in a man-
ner consistent with such investment guidelines;
‘‘(C) invest assets in the Fund, pursuant to
the policies adopted in subparagraph (A);
‘‘(D) pay administrative expenses of the
Fund and the Trust from the money in the
Fund; and
‘‘(E) transfer money to the disbursing agent
to pay benefits payable under this Act from
money in the Fund and administrative expenses
related to those benefits.
‘‘(5) REPORTING REQUIREMENTS AND FIDUCIARY
STANDARDS.—The following reporting requirements
and fiduciary standards shall apply with respect to
the Railroad Retirement Trust and the Railroad Re-
tirement Trust Fund (and the assets held in such
Trust Fund):
‘‘(A) DUTIES OF THE BOARD OF TRUST-
EES.—The Railroad Retirement Trust and each
member of the Board of Trustees shall discharge
their duties with respect to the assets of the Fund
solely in the interest of the Railroad Retirement
Board and through it, the participants and bene-
ficiaries of the programs funded under this
Act—
‘‘(i) for the exclusive purpose of—
‘‘(I) providing benefits to partici-
pants and their beneficiaries; and
‘‘(II) defraying reasonable ex-
penses of administering the functions
of the Trust;
‘‘(ii) with the care, skill, prudence, and
diligence under the circumstances then pre-
vailing that a prudent person acting in a
like capacity and familiar with such mat-
ters would use in the conduct of an enter-
prise of a like character and with like aims;
‘‘(iii) by diversifying investments so as
to minimize the risk of large losses, unless
under the circumstances it is clearly pru-
dent not to do so; and
‘‘(iv) in accordance with Trust gov-
erning documents and instruments insofar
as such documents and instruments are con-
sistent 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 Fund in
the trustee’s own interest or for the trustee’s
own account;
‘‘(ii) in an individual or in any other
capacity act in any transaction involving
the assets of the Fund on behalf of a party
(or represent a party) whose interests are
adverse to the interests of the Trust, the
Fund, 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 Fund.
‘‘(C) EXCULPATORY PROVISIONS AND INSUR-
ANCE.—Any provision in an agreement or in-
strument 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 insur-
ance for its trustees or for itself to cover li-
ability or losses occurring by reason of the
act or omission of a trustee, if such insur-
ance permits recourse by the insurer against
the trustee in the case of a breach of a fidu-
ciary obligation by such trustee;
‘‘(ii) a trustee from purchasing insur-
ance to cover liability under this section
from and for his own account; or
‘‘(iii) an employer or an employee or-
ganization from purchasing insurance to
cover potential liability of one or more
trustees with respect to their fiduciary re-
sponsibilities, obligations, and duties under
this section.
‘‘(D) BONDING.—Every trustee and every
person who handles funds or other property of
the Fund (hereafter in this subsection referred to
as ‘Trust official’) shall be bonded in accordance
with the following:
‘‘(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 han-
dled. In no case shall such bond be less than
$1,000 nor more than $500,000, except that
the Railroad Retirement Board, after con-
sideration of the record, may prescribe an
amount in excess of $500,000, subject to the
10 per centum limitation of the preceding
sentence.
‘‘(ii) It shall be unlawful for any Trust
official to receive, handle, disburse, or other-
wise exercise custody or control of any of
the funds or other property of the Fund
without being bonded as required by this
subsection and it shall be unlawful for any
Trust official, or any other person having
authority to direct the performance of such
functions, to permit such functions, or any
of them, to be performed by any Trust offi-
cial, with respect to whom the requirements
this subsection have not been met.
‘‘(iii) It shall be unlawful for any per-
son to procure any bond required by this
subsection from any surety or other com-
pany 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 independent qualified public accountant
to audit the financial statements of the
Fund.
‘‘(ii) The Trust shall submit an annual
management 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 posi-
tion;
‘‘(II) a statement of operations;
‘‘(III) a statement of cash flows;
‘‘(IV) a statement on internal ac-
counting and administrative control
systems;
‘‘(V) the report resulting from an
audit of the financial statements of the
Trust conducted under subparagraph
(E)(i); and
‘‘(VI) any other comments and in-
formation necessary to inform the Con-
gress about the operations and finan-
cial condition of the Trust and the
Fund.
‘‘(iii) The Trust shall provide the
President, the Railroad Retirement Board,
and the Director of the Office of Manage-
ment and Budget a copy of the management
report when it is submitted to Congress.
‘‘(F) ENFORCEMENT.—The Railroad Retire-
ment Board may bring a civil action—
‘‘(i) to enjoin any act or practice by
the Railroad Retirement Investment 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 profes-
sional staff, and contract with outside advisers to pro-
vide legal, accounting, investment advisory or other
services necessary for the proper administration of
this subsection. In the case of contracts with invest-
ment advisory services, compensation for such services
may be on a fixed contract fee basis or on such other
terms and conditions as are customary for such serv-
ices.
‘‘(7) QUORUM.—Five members of the Board of
Trustees constitute a quorum to do business. Invest-
ment 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.’’.
(b) CONFORMING AND TECHNICAL AMENDMENTS GOV-
ERNING INVESTMENTS.—Subsection 15(e) of the Railroad
Retirement Act of 1974 is amended—
(1) beginning 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 Benefits Pay-
ments Account as are not transferred to the 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) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
section.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY AC-
COUNT.
(a) SOURCE OF PAYMENTS.—Section 7(c)(1) of the
Railroad Retirement Act of 1974 is amended by striking
‘‘payments of supplemental annuities under section 2(b) of
this Act shall be made from the Railroad Retirement Sup-
plemental Account, and’’.
(b) ELIMINATION OF ACCOUNT.—Section 15(c) of the
Railroad Retirement Act of 1974 is repealed.
(c) IN GENERAL.—Section 15(a) of the Railroad Re-
tirement Act of 1974 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) EFFECTIVE DATE.—The amendments made by this
section shall take effect January 1, 2001, except that the
Railroad Retirement Supplemental Account shall continue
to exist until the transfer authorized by the following sen-
tence occurs. As soon as possible after December 31, 2000,
the Board shall determine the balance in the Railroad Re-
tirement Supplemental Account and shall direct the Sec-
retary of the Treasury to transfer such amount to the Rail-
road Retirement Trust Fund and the Secretary shall make
such transfer.
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(a) RAILROAD RETIREMENT ACCOUNT.—Section 15 of
the Railroad Retirement Act of 1974 is amended by adding
after subsection (j) the following:
‘‘(k) TRANSFERS TO THE FUND.—The Board shall,
upon establishment of the Railroad Retirement Trust Fund
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 Railroad Retirement Trust Fund. The Secretary shall
make that transfer.’’.
(b) RAILROAD RETIREMENT TRUST FUND.—Section
15 of the Railroad Retirement Act of 1974, as amended by
subsection (a), is further amended by adding after sub-
section (k) the following:
‘‘(l) RAILROAD
RETIREMENT
TRUST
FUND.—The
Railroad Retirement Trust shall from time to time transfer
to the disbursing agent described in 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 AC-
COUNT.—Section 15A(d)(2) of the Railroad Retirement Act
of 1974 is amended to read as follows:
‘‘(2) Upon establishment of the Railroad Retirement
Trust Fund 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 required to be paid from that Account to the
Railroad Retirement Trust Fund, and the Secretary shall
make that transfer. Any balance transferred under this
paragraph shall be used by the Railroad Retirement Trust
only to pay benefits under this Act or to purchase obliga-
tions 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 is
amended by adding at the end the following: ‘‘The
Secretary shall from time to time transfer to the dis-
bursing agent under section 7(b)(4) amounts nec-
essary to pay those benefits.’’.
(3) 
CONFORMING
AMENDMENT.—Section
15A(d)(1) of the Railroad Retirement Act of 1974 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 is amended
by adding at the end the following: ‘‘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 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 Trust and the Secretary of the Treasury, shall enter
into an arrangement with a nongovernmental financial in-
stitution to serve as disbursing agent for benefits payable
under this Act who shall disburse consolidated benefits
under this Act to each recipient.
‘‘(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 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 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 Trust Fund or the So-
cial 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 subsections (a) and (c),
the Board shall consult with the Secretary of the Treasury
to design an appropriate method to transfer obligations held
as of the date of enactment or to convert such obligations
to cash prior to transfer. The Railroad Retirement Trust
may hold to maturity any obligations so received or may
redeem them prior to maturity, as the Trust deems appro-
priate.
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 is amended—
(1) by adding the following sentence after the
first sentence: ‘‘On or before May 1 of each year be-
ginning in 2002, the Railroad Retirement Board
shall compute its projection of the account benefits
ratio and the average account benefits ratio (as de-
fined 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 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 is amended by adding at the end the following:
‘‘COMPUTATION AND CERTIFICATION OF ACCOUNT BENEFIT
RATIOS
‘‘SEC. 23. (a) On or before November 1, 2002, the Rail-
road 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.
‘‘(b) 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.
‘‘(c) DEFINITION.—As used in this section, the term
‘account benefit 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).
(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 thereof the following new sub-
chapter:
‘‘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.—No 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) is 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.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Railroad Retirement and Survivors’ Im-
provement Act of 2000’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
TITLE I—AMENDMENTS TO RAILROAD RETIREMENT ACT
OF 1974
Sec. 101. Expansion of widow’s and widower’s benefits.
Sec. 102. Retirement age restoration.
Sec. 103. Vesting requirement.
Sec. 104. Repeal of railroad retirement maximum.
Sec. 105. Investment of railroad retirement assets.
Sec. 106. Elimination of supplemental annuity account.
Sec. 107. Transfer authority revisions.
Sec. 108. Annual ratio projections and certifications by the
Railroad Retirement Board.
TITLE II—AMENDMENTS TO THE INTERNAL REVENUE
CODE OF 1986
Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Exemption from tax for Railroad Retirement Invest-
ment Trust.
Sec. 203. Repeal of supplemental annuity tax.
Sec. 204. Employer, employee representative, and employee
tier 2 tax rate adjustments.
TITLE III—REPEAL OF 4.3-CENT MOTOR FUEL EXCISE
TAXES ON RAILROADS AND INLAND WATERWAY TRANS-
PORTATION WHICH REMAIN IN GENERAL FUND
Sec. 301. Repeal of 4.3-cent motor fuel excise taxes on railroads
and inland waterway transportation which re-
main in general fund.
TITLE I—AMENDMENTS TO RAIL-
ROAD RETIREMENT ACT OF
1974
SEC. 101. EXPANSION OF WIDOW’S AND WIDOWER’S BENE-
FITS.
(a) IN GENERAL.—Section 4(g) of the Rail-
road Retirement Act of 1974 is amended by
adding at the end the following new subdivi-
sion:
‘‘(10)(i) If for any month the unreduced
annuity provided under this section for a
widow or widower is less than the widow’s or
widower’s initial minimum amount computed
pursuant to paragraph (ii) of this subdivision,
the unreduced annuity shall be increased to
that initial minimum amount. For the pur-
poses of this subdivision, the unreduced an-
nuity is the annuity without regard to any de-
duction on account of work, without regard to
any reduction for entitlement to an annuity
under section 2(a)(1) of this Act, without re-
gard to any reduction for entitlement to a
benefit under title II of the Social Security
Act, and without regard to any reduction for
entitlement to a public service pension pursu-
ant to sections 202(e)(7), 202(f)(2), or section
202(g)(4) of the Social Security Act.
‘‘(ii) For the purposes of this subdivision,
the widow or widower’s initial minimum
amount is the amount of the unreduced annu-
ity computed at the time an annuity is award-
ed to that widow or widower, except that—
‘‘(A) in subsection (g)(1)(i) ‘100 per
centum’ shall be substituted for ‘50 per
centum’; and
‘‘(B) in subsection (g)(2)(ii) ‘130 per
centum’ shall be substituted for ‘80 per
centum’ both places it appears.
‘‘(iii) If a widow or widower who was pre-
viously entitled to a widow’s or widower’s an-
nuity under section 2(d)(1)(ii) of this Act be-
comes entitled to a widow’s or widow’s annu-
ity under section 2(d)(1)(i) of this Act, a new
initial minimum amount shall be computed at
the time of award of the widow’s or widower’s
annuity under section 2(d)(1)(i) of this Act.’’.
(b) EFFECTIVE DATE.—
(1) 
GENERALLY.—The 
amendment
made by this section shall take effect
January 1, 2001 and shall apply to annu-
ity amounts accruing for months after
December 2000 in the case of annuities
awarded on or after that date and in the
case of annuities awarded before that
date if the annuity amount under section
4(g) of the Railroad Retirement Act was
computed under section 4(g), as amended
by Public Law 97–35.
(2) 
SPECIAL
RULE
FOR
ANNUITIES
AWARDED BEFORE JANUARY 1, 2001.—In ap-
plying the amendments made by this sec-
tion to annuities awarded before January
1, 2001, the calculation of the initial min-
imum 
amount 
under 
new 
section
4(g)(10)(ii) of the Act shall be made as of
the date of award of the widow’s or wid-
ower’s annuity.
SEC. 102. RETIREMENT AGE RESTORATION.
(a) EMPLOYEE ANNUITIES.—Section 3(a)(2)
of the Railroad Retirement Act of 1974 is
amended by inserting after ‘‘(2)’’ the fol-
lowing: ‘‘For purposes of this subsection, indi-
viduals entitled to an annuity under section
2(a)(1)(ii) of this Act shall, except for the pur-
poses of recomputations in accordance with
section 215(f) of the Social Security Act, be
deemed to have attained retirement age (as
defined by section 216(l) of the Social Security
Act).’’.
(b) SPOUSE AND SURVIVOR ANNUITIES.—Sec-
tion 4(a)(2) of the Railroad Retirement Act of
1974 is amended by striking ‘‘if an’’ and all
that follows through ‘‘section 2(c)(1) of this
Act’’ and inserting ‘‘a spouse entitled to an an-
nuity under section 2(c)(1)(ii)(B) of this Act’’.
(c) 
CONFORMING
REPEALS.—Sections
3(a)(3), 4(a)(3), and 4(a)(4) of the Railroad Re-
tirement Act are repealed.
(d) EFFECTIVE DATES.—
(1) GENERALLY.—Except as provided
in paragraph (2), the amendments made
by this section shall apply to annuities
that begin to accrue on or after January
1, 2001.
(2) EXCEPTION.—The amount of the an-
nuity provided for a spouse under section
4(a) shall be computed under section
4(a)(3), as in effect before the date of the
enactment of this section, if the annuity
amount provided under section 3(a) for
the individual on whose employment
record the spouse annuity is based was
computed under section 3(a)(3), as in ef-
fect before the date of the enactment of
this section.
SEC. 103. VESTING REQUIREMENT.
(a) CERTAIN ANNUITIES FOR INDIVIDUALS.—
Section 2(a) of the Railroad Retirement Act of
1974 is amended—
(1) by inserting in subdivision (1) ‘‘or,
for purposes of paragraphs (i), (iii), and
(v), five years of service, all of which ac-
crues after December 31, 1995,’’ after ‘‘ten
years of service’’, and
(2) by adding at the end the fol-
lowing:
‘‘(4) An individual who is entitled to an an-
nuity under paragraph (v) of subdivision (1),
but who does not have at least ten years of
service, shall, prior to the month in which the
individual attains age 62, be entitled only to
an annuity amount computed under section
3(a) of this Act (without regard to section
3(a)(2) of this Act) or section 3(f)(3) of this Act.
Upon attainment of age 62, such an individual
may also be entitled to an annuity amount
computed under section 3(b), but such annu-
ity amount shall be reduced for early retire-
ment in the same manner as if the individual
were entitled to an annuity under section
2(a)(1)(iii).’’.
(b) COMPUTATION RULE
FOR INDIVIDUALS’
ANNUITIES.—Section 3(a) of the Railroad Re-
tirement Act of 1974, as amended by section
102 of this Act, is further amended by adding
at the end the following new subdivision:
‘‘(3) If an individual entitled to an annuity
under section 2(a)(1)(i) or (iii) of this Act on
the basis of less than ten years of service is
entitled to a benefit under section 202(a), sec-
tion 202(b), or section 202(c) of the Social Se-
curity Act which began to accrue before the
annuity under section 2(a)(1)(i) or (iii) of this
Act, the annuity amount provided such indi-
vidual under this subsection, shall be com-
puted 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), sec-
tion 202(b), or section 202(c) of the Social Se-
curity Act began or (B) the date on which the
individual first met the conditions for entitle-
ment to an age reduced annuity under this
Act other than the conditions set forth in sec-
tions 2(e)(1) and 2(e)(2) of this Act and the re-
quirement that an application be filed.’’.
(c) SURVIVORS’ ANNUITIES.—Section 2(d)(1)
of the Railroad Retirement Act of 1974 is
amended by inserting ‘‘or five years of serv-
ice, all of which accrues after December 31,
1995,’’ after ‘‘ten years of service’’.
(d) LIMITATION ON ANNUITY AMOUNTS.—Sec-
tion 2 of the Railroad Retirement Act of 1974
is amended by adding at the end the fol-
lowing:
‘‘(i) An individual entitled to an annuity
under this section who has completed five
years of service, all of which accrues after
1995, but who has not completed ten years of
service, and the spouse, divorced spouse, and
survivors of such individual, shall not be enti-
tled 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 the Social Secu-
rity Act on the basis of the individual’s em-
ployment record under both the Railroad Re-
tirement Act and the Social Security Act.’’.
(e) COMPUTATION RULE FOR SPOUSES’ ANNU-
ITIES.—Section 4(a) of the Railroad Retire-
ment Act of 1974, 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 serv-
ice 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 be-
fore 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 pro-
vided under this subsection shall be com-
puted 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), sec-
tion 202(b), or section 202(c) of the Social Se-
curity Act began or (B) the first date on which
the annuitant met the conditions for entitle-
ment to an age reduced annuity under this
Act other than the conditions set forth in sec-
tions 2(e)(1) and 2(e)(2) of this Act and the re-
quirement that an application be filed.’’.
(f) APPLICATION DEEMING PROVISION.—Sec-
tion 5(b) of the Railroad Retirement Act of
1974 is amended by striking the second sen-
tence and inserting the following: ‘‘An appli-
cation 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 com-
pleted 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 com-
pleted 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 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 occurs; and
(2) by inserting ‘‘or five or more years
of service, all of which accrues after De-
cember 31, 1995,’’ after ‘‘ten or more years
of service’’.
(h) AUTOMATIC
BENEFIT
ELIGIBILITY
AD-
JUSTMENTS.—Section 19 of Railroad Retire-
ment Act of 1974 is amended—
(1) by inserting ‘‘or five or more years
of service, all of which accrues after De-
cember 31, 1995,’’ after ‘‘ten years of serv-
ice’’ in subsection (c); and
(2) by inserting ‘‘or five or more years
of service, all of which accrues after De-
cember 31, 1995,’’ after ‘‘ten years of serv-
ice’’ in subsection (d)(2).
(i) CONFORMING AMENDMENTS.—
(1) Section 6(e)(1) of the Railroad Re-
tirement Act of 1974 is amended by in-
serting ‘‘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) of the Railroad Re-
tirement Act of 1974 is amended by in-
serting ‘‘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 Secu-
rity Act is amended by inserting ‘‘or five
or more years of service, all of which ac-
crues after December 31, 1995,’’ after ‘‘ten
years of service’’.
(j) EFFECTIVE
DATE.—The amendments
made by this section shall take effect January
1, 2001.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(a) EMPLOYEE ANNUITIES.—Section 3(f) of
the Railroad Retirement Act of 1974 is amend-
ed by striking paragraph (1).
(b) SPOUSE AND SURVIVOR ANNUITIES.—Sec-
tion 4 of the Railroad Retirement Act of 1974
is amended by striking subsection (c).
(c) EFFECTIVE
DATE.—The amendments
made by this section shall be effective Janu-
ary 1, 2001, and shall apply to annuity
amounts accruing for months after December
2000.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(a) ESTABLISHMENT
OF RAILROAD RETIRE-
MENT INVESTMENT TRUST.—Section 15 of the
Railroad Retirement Act of 1974 is amended
by inserting after subsection (i) the following:
‘‘(j) RAILROAD
RETIREMENT
INVESTMENT
TRUST.—
‘‘(1) 
ESTABLISHMENT.—The 
Railroad
Retirement Investment Trust (hereinafter
in this subsection referred to as the
‘Trust’) is hereby established. The Trust
shall manage and invest the assets of the
Railroad Retirement Trust Fund (herein-
after in this section referred to as the
‘‘Fund’’, which is hereby established as a
trust organized in the District of Colum-
bia and shall, to the extent not incon-
sistent with this Act, be subject to the
laws of the District of Columbia applica-
ble to such trusts.
‘‘(2) NOT A FEDERAL AGENCY OR INSTRU-
MENTALITY.—The Trust is not a depart-
ment, 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.—The Trust shall
have a Board of Trustees, consisting
of 7 members, each appointed by a
unanimous vote of the Railroad Re-
tirement Board. The Railroad Retire-
ment Board may remove any member
so appointed by unanimous vote. Of
the 7 members, 3 shall represent the
interests of labor, 3 shall represent
the interests of management, and 1
shall represent the interests of the
general public. The members of the
Board of Trustees shall not be consid-
ered officers or employees of the Gov-
ernment of the United States.
‘‘(B) QUALIFICATIONS.—Members of
the Board of Trustees shall be ap-
pointed only from among persons
who have experience and expertise in
the management of financial invest-
ments 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 divided into 3
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. A va-
cancy 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 ap-
pointed.
‘‘(4) POWERS OF THE BOARD OF TRUST-
EES.—The Board of Trustees shall—
‘‘(A) retain independent advisers
to assist it in the formulation and
adoption of its investment guidelines;
‘‘(B) retain independent invest-
ment managers to invest the assets of
the Fund in a manner consistent with
such investment guidelines;
‘‘(C) invest assets in the Fund,
pursuant to the policies adopted in
subparagraph (A);
‘‘(D) pay administrative expenses
of the Fund and the Trust from the
money in the Fund; and
‘‘(E) transfer money to the dis-
bursing agent to pay benefits payable
under this Act from money in the
Fund and administrative expenses re-
lated to those benefits.
‘‘(5) REPORTING REQUIREMENTS AND FI-
DUCIARY
STANDARDS.—The following re-
porting 
requirements 
and 
fiduciary
standards shall apply with respect to the
Railroad Retirement Trust and the Rail-
road Retirement Trust Fund (and the as-
sets held in such Trust Fund):
‘‘(A) DUTIES
OF
THE
BOARD
OF
TRUSTEES.—The Railroad Retirement
Trust and each member of the Board
of Trustees shall discharge their du-
ties with respect to the assets of the
Fund solely in the interest of the
Railroad 
Retirement 
Board 
and
through it, the participants and bene-
ficiaries 
of 
the 
programs 
funded
under this Act—
‘‘(i) for the exclusive purpose
of—
‘‘(I) providing benefits to
participants and their bene-
ficiaries; and
‘‘(II) defraying reasonable
expenses of administering the
functions of the Trust;
‘‘(ii) with the care, skill, pru-
dence, 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 invest-
ments so as to minimize the risk
of large losses, unless under the
circumstances it is clearly pru-
dent not to do so; and
‘‘(iv) in accordance with Trust
governing documents and instru-
ments insofar as such documents
and instruments are consistent
with this Act.
‘‘(B) PROHIBITIONS
WITH
RESPECT
TO MEMBERS OF THE BOARD OF TRUST-
EES.—No member of the Board of
Trustees shall—
‘‘(i) deal with the assets of the
Fund in the trustee’s own interest
or for the trustee’s own account;
‘‘(ii) in an individual or in any
other capacity act in any trans-
action involving the assets of the
Fund on behalf of a party (or rep-
resent a party) whose interests
are adverse to the interests of the
Trust, the Fund, the Railroad Re-
tirement Board, or the interests
of participants or beneficiaries;
or
‘‘(iii) receive any consider-
ation for the trustee’s own per-
sonal account from any party
dealing with the assets of the
Fund.
‘‘(C) EXCULPATORY PROVISIONS AND
INSURANCE.—Any 
provision 
in 
an
agreement or instrument that pur-
ports to relieve a trustee from respon-
sibility or liability for any responsi-
bility, 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 in-
surance permits recourse by the
insurer against the trustee in the
case of a breach of a fiduciary ob-
ligation by such trustee;
‘‘(ii) 
a 
trustee 
from 
pur-
chasing insurance to cover liabil-
ity under this section from and
for his own account; or
‘‘(iii) an employer or an em-
ployee 
organization 
from 
pur-
chasing insurance to cover poten-
tial liability of one or more trust-
ees with respect to their fiduciary
responsibilities, obligations, and
duties under this section.
‘‘(D) BONDING.—Every trustee and
every person who handles funds or
other property of the Fund (hereafter
in this subsection referred to as
‘Trust official’) shall be bonded. Such
bonds shall provide protection to the
Fund against loss by reason of acts of
fraud or dishonesty on the part of
any Trust official, directly or through
the connivance of others, and shall be
in accordance with the following:
‘‘(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, ex-
cept 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 sentence.
‘‘(ii) It shall be unlawful for
any Trust official to receive, han-
dle, disburse, or otherwise exer-
cise custody or control of any of
the funds or other property of the
Fund without being bonded as re-
quired by this subsection and it
shall be unlawful for any Trust of-
ficial, or any other person having
authority to direct the perform-
ance of such functions, to permit
such functions, or any of them, to
be performed by any Trust offi-
cial, with respect to whom the re-
quirements 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 or other company or
through any agent or broker in
whose business operations such
person has any control or signifi-
cant financial interest, direct or
indirect.
‘‘(E) AUDIT AND REPORT.—
‘‘(i) The Trust shall annually
engage an independent qualified
public accountant to audit the fi-
nancial statements of the Fund.
‘‘(ii) The Trust shall submit an
annual management 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 finan-
cial position;
‘‘(II) a statement of oper-
ations;
‘‘(III) a statement of cash
flows;
‘‘(IV) a statement on inter-
nal accounting and adminis-
trative control systems;
‘‘(V) the report resulting
from an audit of the financial
statements of the Trust con-
ducted under subparagraph
(E)(i); and
‘‘(VI) any other comments
and information necessary to
inform the Congress about the
operations and financial con-
dition of the Trust and the
Fund.
‘‘(iii) The Trust shall provide
the President, the Railroad Re-
tirement 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 prac-
tice by the Railroad Retirement
Investment Trust, its Board of
Trustees 
or 
its 
employees 
or
agents that violates any provision
of this Act; or
‘‘(ii) to obtain other appro-
priate relief to redress such viola-
tions, or to enforce any provisions
of this Act.
‘‘(6) RULES
AND
ADMINISTRATIVE
POW-
ERS.—The Board of Trustees shall have
the authority to make rules to govern its
operations, employ professional staff, and
contract with outside advisers to provide
legal, accounting, investment advisory or
other services necessary for the proper
administration of this subsection. In the
case of contracts with investment advi-
sory services, compensation for such
services may be on a fixed contract fee
basis or on such other terms and condi-
tions 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 deci-
sions of the Board of Trustees shall be de-
cided 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.’’.
(b) CONFORMING
AND TECHNICAL AMEND-
MENTS GOVERNING INVESTMENTS.—Subsection
15(e) of the Railroad Retirement Act of 1974
is amended—
(1) beginning in the first sentence, by
striking ‘‘, the Dual Benefits Payments
Account’’ and all that follows through
‘‘may be made only’’ in the second sen-
tence and inserting ‘‘and the Dual Bene-
fits Payments Account as are not trans-
ferred to the Railroad Retirement Invest-
ment Trust as the Board may determine’’;
(2) by striking ‘‘the Second Liberty
Bond Act, as amended’’ and inserting
‘‘chapter 31 of title 31’’; and
(3) by striking ‘‘the foregoing require-
ments’’ and inserting ‘‘the requirements
of this subsection’’.
(c) EFFECTIVE
DATE.—The amendments
made by this section shall take effect on the
date of the enactment of this section.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY AC-
COUNT.
(a) SOURCE OF PAYMENTS.—Section 7(c)(1)
of the Railroad Retirement Act of 1974 is
amended by striking ‘‘payments of supple-
mental annuities under section 2(b) of this
Act shall be made from the Railroad Retire-
ment Supplemental Account, and’’.
(b) ELIMINATION
OF
ACCOUNT.—Section
15(c) of the Railroad Retirement Act of 1974
is repealed.
(c) IN GENERAL.—Section 15(a) of the Rail-
road Retirement Act of 1974 is amended by
striking ‘‘, except those portions of the
amounts covered into the Treasury under sec-
tions 3211(b),’’ and all that follows through
the end of the subsection and inserting a pe-
riod.
(d) EFFECTIVE
DATE.—The amendments
made by this section shall take effect January
1, 2001, except that the Railroad Retirement
Supplemental Account shall continue to exist
until the transfer authorized by the following
sentence occurs. As soon as possible after De-
cember 31, 2000, the Board shall determine
the balance in the Railroad Retirement Sup-
plemental Account and shall direct the Sec-
retary of the Treasury to transfer such
amount to the Railroad Retirement Trust
Fund and the Secretary shall make such
transfer.
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(a) RAILROAD RETIREMENT ACCOUNT.—Sec-
tion 15 of the Railroad Retirement Act of 1974
is amended by adding after subsection (j) the
following:
‘‘(k) TRANSFERS TO THE FUND.—The Board
shall, upon establishment of the Railroad Re-
tirement Trust Fund and from time to time
thereafter, direct the Secretary of the Treas-
ury to transfer, in such manner as will maxi-
mize the investment returns to the Railroad
Retirement system, that portion of the Rail-
road Retirement Account that is not needed
to pay current administrative expenses of the
Board to the Railroad Retirement Trust Fund.
The Secretary shall make that transfer.’’.
(b) RAILROAD RETIREMENT TRUST FUND.—
Section 15 of the Railroad Retirement Act of
1974, as amended by subsection (a), is further
amended by adding after subsection (k) the
following:
‘‘(l) RAILROAD RETIREMENT TRUST FUND.—
The Railroad Retirement Trust shall from
time to time transfer to the disbursing agent
described in 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.—Section 15A(d)(2) of the Railroad
Retirement Act of 1974 is amended to read as
follows:
‘‘(2) Upon establishment of the Railroad
Retirement Trust Fund and from time to time
thereafter, the Board shall direct the Sec-
retary of the Treasury to transfer, in such
manner as will maximize the investment re-
turns to the Railroad Retirement system, the
balance of the Social Security Equivalent
Benefit Account not needed to pay current
benefits required to be paid from that Ac-
count to the Railroad Retirement Trust Fund,
and the Secretary shall make that transfer.
Any balance transferred under this para-
graph shall be used by the Railroad Retire-
ment 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 chap-
ter 31 of title 31, United States Code. The pro-
ceeds 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 Retire-
ment Act of 1974 is amended by adding at
the end the following: ‘‘The Secretary
shall from time to time transfer to the
disbursing agent under section 7(b)(4)
amounts necessary to pay those bene-
fits.’’.
(3) CONFORMING AMENDMENT.—Section
15A(d)(1) of the Railroad Retirement Act
of 1974 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 is amended by adding at the end
the following: ‘‘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 nec-
essary to pay benefits payable from that Ac-
count.’’.
(e) CERTIFICATION BY THE BOARD AND PAY-
MENT.—Paragraph (4) of section 7(b) of the
Railroad Retirement Act of 1974 is amended
to read as follows:
‘‘(4)(A) The Railroad Retirement Board,
after consultation with the Board of Trustees
of the Railroad Retirement Trust and the Sec-
retary of the Treasury, shall enter into an ar-
rangement with a nongovernmental financial
institution to serve as disbursing agent for
benefits payable under this Act who shall dis-
burse consolidated benefits under this Act to
each recipient.
‘‘(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 Ben-
efit Account and the the Dual Benefits
‘‘(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 com-
pensation paid during any calendar year
by such employer for services rendered
to such employer.
‘‘(2) 
APPLICABLE
PERCENTAGE.—For
purposes of paragraph (1), the term ‘ap-
plicable percentage’ means—
‘‘(A) 15.6 percent in the case of
compensation paid during 2001,
‘‘(B) 14.2 percent in the case of
compensation paid during 2002, and
‘‘(C) in the case of compensation
paid during 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 following new subsections: