Railroad Retirement and Survivors' Improvement Act of 2001
PL 107-90 (H.R.10), enacted 12/21/2001

115 STAT. 878 
PUBLIC LAW 107-90—DEC. 21, 2001 
Public Law 107-90 
107th Congress 
Dec. 21, 2001 
[H.R. 10] 
Railroad 
Retirement and 
Survivors' 
Improvement Act 
of 2001. 
45 u s e 231t 
note. 
An Act 
To modernize the financing of the raiilroad retirement system and to provide 
enhanced benefits to employees and beneficiaries. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Railroad 
Retirement and Survivors' Improvement Act of 2001". 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows: 
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 National Railroad Retirement Investment Trust. 
Sec. 203. Repeal of supplemental annuity tax. 
Sec. 204. Employer, employee representative, and employee tier 2 tax rate adjust-
ments. 
TITLE I—AMENDMENTS TO RAILROAD 
RETIREMENT ACT OF 1974 
SEC. 101. EXPANSION OF WIDOWS AND WIDOWER'S BENEFITS. 
(a) IN GENERAL.—Section 4(g) of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231c(g)) is amended by adding at the end the 
following new subdivision: 
"(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 para-
graph (ii) of this subdivision, the unreduced annuity shall be 
increased to that initial minimum amount. For the purposes of 
this subdivision, the unreduced annuity is the annuity without 
regard to any deduction on account of work, without regard to 
£iny reduction for entitlement to an annuity under section 2(a)(1) 
of this Act, without regard to any reduction for entitlement to 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 879 
a benefit under title II of the Social Security Act, and without 
regard to any reduction for entitlement to a public service pension 
pursuant to section 202(e)(7), 202(f)(2), or 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 annuity 
computed at the time an annuity is awarded to that widow or 
widower, except that— 
"(A) in subsection (g)(l)(i) '100 per centum' shall be sub-
stituted for *50 per centum'; and 
"(B) in subsection (g)(2)(ii) '130 per centum' shall be sub-
stituted for *80 per centum' both places it appears. 
"(iii) If a widow or widower who was previously entitled to 
a widow's or widower's annuity under section 2(d)(l)(ii) of this 
Act becomes entitled to a widow's or widower's annuity under 
section 2(d)(l)(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)(l)(i) of this Act.". 
(b) EFFECTIVE DATE.— 
45 use 2
3
1
c 
(1) IN GENERAL.—The amendment made by this section 
^o^. 
;, 
shall take effect on the first day of the first month that begins Appiicabibty. 
? 
more than 30 days after enactment, and shall apply to annuity 
amounts accruing for months after the effective date in the 
case of annuities awarded— 
(A) on or after that date; and 
(B) before that date, but only if the annuity amount 
under section 4(g) of the Railroad Retirement Act of 1974 
(45 U.S.C. 231c(g)) was computed under such section, as 
amended by the Omnibus Budget Reconciliation Act of 
1981 (Public Law 97-35; 95 Stat. 357). 
(2) SPECIAL RULE FOR ANNUITIES AWARDED BEFORE THE 
EFFECTIVE DATE.—In applying the amendment made by this 
section to annuities awarded before the effective date, the cal-
culation of the initial minimum amount under new section 
4(g)(10)(ii) of the Railroad Retirement Act of 1974 (45 U.S.C. 
231c(g)(10)(ii)), as added by subsection (a), shall be made as 
of the date of the award of the widow's or widower's annuity. 
SEC. 
102. 
RETIREMENT 
AGE 
RESTORATION. 
^ 
(a) EMPLOYEE ANNUITIES.—Section 3(a)(2) of the Railroad 
Retirement Act of 1974 (45 U.S.C. 231b(a)(2)) is amended by 
inserting after "(2)" the following new sentence: "For purposes of 
this subsection, individuals entitled to an annuity under section 
2(a)(l)(ii) of this Act shall, except for the purposes 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(1) of the Social Security Act).". 
(b) SPOUSE AND SURVIVOR ANNUITIES.—Section 4(a)(2) of the 
Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)(2)) 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 annuity under 
section 2(c)(l)(ii)(B) of this Act". 
(c) CONFORMING REPEALS.—Sections 3(a)(3), 4(a)(3), and 4(a)(4) 
of the Railroad Retirement Act of 1974 (45 U.S.C. 231b(a)(3), 
23 lc(a)(3), and 231c(a)(4)) are repealed. 
(d) EFFECTIVE D A T E S . ^ 
45USC231C 
note. 
115 STAT. 880 
PUBLIC LAW 107-90—DEC. 21, 2001 
Applicability. 
(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, 2002. 
(2) EXCEPTION.—The amount of the annuity provided for 
a spouse under section 4(a) of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231c(a)) shall be computed under section 
4(a)(3) of such Act, as in effect on December 31, 2001, if the 
annuity amount provided under section 3(a) of such Act (45 
U.S.C. 231b(a)) for the individual on whose employment record 
the spouse annuity is based was computed under section 3(a)(3) 
of such Act, as in effect on December 31, 2001. 
SEC. 103. VESTING REQUIREMENT. 
(a) CERTAIN ANNUITIES FOR INDIVIDUALS.—Section 2(a) of the 
Railroad Retirement Act of 1974 (45 U.S.C. 231a(a)) is amended— 
(1) by inserting in subdivision (1) "(or, for purposes of 
paragraphs (i), (iii), and (v), five years of service, all of which 
accrues after December 31, 1995)" after "ten years of service"; 
and 
(2) by adding at the end the following new subdivision: 
"(4) An individual who is entitled to an annuity under para-
graph (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 annuity amoiint shall be 
reduced for early retirement in the same manner as if the individuEil 
were entitled to an annuity under section 2(a)(l)(iii).". 
(b) COMPUTATION RULE FOR INDIVIDUALS' ANNUITIES.—Section 
3(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231b(a)), 
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)(l)(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), section 
202(b), or section 202(c) of the Social Security Act which began 
to accrue before the annuity under section 2(a)(l)(i) or (iii) of this 
Act, the annuity amount provided such individual under this sub-
section, 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 date on which the individual first 
met the conditions for entitlement to an age reduced annuity under 
this Act other than the conditions set forth in sections 2(eXl) 
and 2(e)(2) of this Act and the requirement that an application 
be filed.". 
(c) SURVIVORS' ANNUITIES.—Section 2(d)(1) of the Railroad 
Retirement Act of 1974 (45 U.S.C. 231a(d)(l)) is amended by 
inserting "(or five years of service, all of which accrues after 
December 31, 1995)" sifter "ten years of service". 
(d) LIMITATION ON ANNUITY AMOUNTS.—Section 2 of the Rail-
road Retirement Act of 1974 (45 U.S.C. 231a) is amended by adding 
at the end the following new subsection: 
"(i) An individual entitled to an annuity under this section 
who has completed five years of service, all of which accrues after 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 881 
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)(l)(ii)(A), section 2(c)(l)(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)(l)(ii)(A), section 2(c)(l)(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 imder 
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. 
23 lq(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. 23Ir) is 
amended— 
115 STAT. 882 
PUBLIC LAW 107-90—DEC. 21, 2001 
(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(l)) 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)(2XA)) 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. 
42 use 405 note. 
(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)(l)), 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). 
Applicability. 
(c) EFFECTIVE DATE.—The amendments made by this section 
45 use 231b 
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. 23 In) is amended by inserting after subsection 
(i) the following new subsection: 
"(j) NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST.— 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 883 
"(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 % 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 % 
of all active employees covered under this Act. 
"(Ill) 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 
115 STAT. 884 
PUBLIC LAW 107-90—DEC. 21, 2001 
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 (iiXIII) 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 BOAED 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; 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 885 
"(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 ofiiciar) 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 
115 STAT. 886 
PUBLIC LAW 107-90—DEC. 21, 2001 
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. 
Deadline. 
"(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— 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 887 
(1) in the first sentence, by striking ", the Dual Benefits 
Pa3mients 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- 45USC23iii 
sional Budget Act of 1974, the Balanced Budget and Emergency ^ot^-
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 45USC23in 
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. 231fi;c)(l)) 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. 23ln(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.— 
45 use 23in 
(1) DETERMINATION.—^As soon as possible after December note. 
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.— 
45 use 23in 
(1) IN GENERAL.—Subject to paragraph (2), the amendments ^^o^-
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)) 
115 STAT. 888 
PUBLIC LAW 107-90—DEC. 21, 2001 
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. 23In) 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 'KIUST.—Section 15 of the Railroad Retirement Act 
of 1974 (45 U.S.C. 23 In), as amended by subsection (a), is further 
amended by adding after subsection (k) the following new sub-
section: 
"(1) 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. 23In-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)(l) 
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.". 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 889 
(3) CONFORMING AMENDMENT.—Section 15A(d)(l) of the 
Railroad Retirement Act of 1974 (45 U.S.C. 231n-l(d)(l)) 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)(l)) 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. 231fi: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— 
Certification. 
"(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. 231fi:c)(l)) 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 45 use 23in 
transfers under sections 15(k) and 15A(d)(2) of the Railroad Retire- J^ote. 
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 
115 STAT. 890 
PUBLIC LAW 107-90—DEC. 21, 2001 
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)(l)) 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 
45USC231V. 
"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. 
26 use 501. 
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.". 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 891 
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX. 
(a) REPEAL OF TAX ON EMPLOYEE REPRESENTATIVES.—Section 
3211 is amended by striking subsection (b). 
26 USC 3211. 
(b) REPEAL OF TAX ON EMPLOYERS.—Section 3221 is amended 
26 use 3221. 
by striking subsections (c) and (d) and by redesignating subsection 
(e) as subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by this section Applicability. 
shall apply to calendar years beginning after December 31, 2001. 26 USC 3211 
note. 
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. 
115 STAT. 892 
PUBLIC LAW 107-90—DEC. 21, 2001 
"(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 
26 use 3201. 
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.". 
26 use 3241. 
(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 
At least 
2.5 
3.0 
3.5 
4.0 
6.1 
6.5 
7.0 
7.5 
8.0 
8.5 
9.0 
account benefits ratio 
But less than 
2.5 
3.0 
3.5 
4.0 
6.1 
6.5 
7.0 
7.5 
8.0 
8.5 
9.0 
Applicable percent-
age for sections 
3211(b) and 3221(b) 
22.1 
18.1 
15.1 
14.1 
13.1 
12.6 
12.1 
11.6 
I L l 
10.1 
9.1 
8.2 
Applicable percent-
age for section 
3201(b) 
4.9 
4.9 
4.9, 
4 9 
4.9 
4.4 
3.9 
3.4 
2.9 
L9 
0.9 
0 
"(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 
PUBLIC LAW 107-90—DEC. 21, 2001 
115 STAT. 893 
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 26USC24 
' 
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 Applicability. 
shall apply to calendar years beginning after December 31, 2001. 26USC24note. 
Deadline. 
Federal Register, 
publication. 
26 u s e 72. 
26 u s e 3231. 
Approved December 21, 2001. 
LEGISLATIVE HISTORY—H.R. 10: 
H O U S E REPORTS: No. 107-51, Pt. 1 (Comm. on Ways and Means) and Ft. 2 
(Comm. on Education and the Workforce). 
CONGRESSIONAL RECORD, Vol. 147 (2001): 
May 2, considered and passed House. 
Nov. 29, Dec. 3-5, considered and passed Senate, amended. 
Dec. 11, House concurred in Senate amendments.