‘‘(A) 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 re-
ceived during any calendar year by such em-
ployee representatives for services rendered by
such employee representative.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the term ‘appli-
cable percentage’ means the percentage deter-
mined under section 3241 for such calendar
year.’’.
(c) RATE OF TAX ON EMPLOYEES.—Subsection (b)
of section 3201 of the Internal Revenue Code of 1986 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 em-
ployee.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means the percentage determined under section
3241 for such calendar year.’’.
(d) DETERMINATION OF RATE.—Chapter 22 of the
Internal Revenue Code of 1986 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 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(a)(2), and 3221(b), the applicable percent-
age for any calendar 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
1.0
31.1
4.9
1.0
1.5
28.1
4.9
1.5
2.0
25.1
4.9
2.0
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 ac-
count benefits ratio’ means, with respect to any cal-
endar 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 multiple of 0.1, such amount shall be in-
creased to the next highest multiple of 0.1.
‘‘(2) ACCOUNT
BENEFITS
RATIO.—For pur-
poses of this section, the term ‘account benefits
ratio’ means, with respect to any fiscal year, the
amount determined by the Railroad Retirement
Board by dividing the fair market value of the assets
in the Railroad Retirement Account as of the close
of such fiscal year by the total benefits and adminis-
trative expenses paid from the Railroad Retirement
Account 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 AMENDMENT.—The table of sub-
chapters for chapter 22 of the Internal Revenue Code of
1986 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, 2002.
SEC. 6. TRANSITION TO A PRIVATE RAILROAD PENSION
FUND.
(a) TRANSMISSION OF PROPOSAL.—The labor and
management members of the Railroad Retirement Board
shall transmit a plan by June 1, 2001, to the Secretary
of Labor for a multiemployer pension plan for individuals
who would otherwise be covered by the Railroad Retire-
ment Act of 1974.
(b) FUNDING OF PLAN.—If the plan described in
subsection (a) is certified by the Secretary of Labor by
October 1, 2001, as a bona fide plan—
(1) the Secretary of the Treasury shall make an
annual payment (on or before December 31, begin-
ning with 2001) from the Railroad Retirement Ac-
count to the fund relating to such plan in an amount
specified by the Secretary of Labor (on or before
December 1, beginning with 2001) as being the min-
imum amount necessary (taking into consideration
any funding deposited into such fund pursuant to
subsection (e)) to assure—
(A) full funding for all new entrants using
Employee Retirement Income Security Act
funding standards;
(B) full funding of all accruing pension ob-
ligations for benefits elected to be included in
the plan under subsection (d)(1) (if any) using
Employee Retirement Income Security Act
funding standards; and
(C) adequate funding to meet the on-going
pension payments for any Railroad Retirement
Act pension obligations that have been trans-
ferred to the plan under subsection (d)(2) (if
any); and
(2) notwithstanding any other provision of law,
the new entrants shall no longer be entitled to bene-
fits under the Railroad Retirement Act of 1974.
(c) CERTIFICATION REQUIREMENTS.—
(1) IN GENERAL.—For purposes of subsection
(b), to be certified by the Secretary of Labor as a
bona fide plan, the plan must
(A) provide a defined benefit pension plan
for all new entrants; and