Computation of Survivor Annuities

RAILROAD RETIREMENT BOARD

20 CFR Parts 228 and 237

RIN: 3220-AA59

Computation of Survivor Annuities

AGENCY: Railroad Retirement Board.

ACTION: Final rule.

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SUMMARY: The Railroad Retirement Board amends its regulations by adding

a new part dealing with the computation of survivor annuities as

provided in the Railroad Retirement Act of 1974 (Act). This part

replaces part 237 of the Board's regulations, which is removed. The

Board's previous regulations regarding the computation of survivor

annuities were promulgated under the Railroad Retirement Act of 1937

and no longer reflect the computational provisions contained in the

Act.

EFFECTIVE DATE: March 30, 1995.

ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 North

Rush Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Assistant General

Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago,

Illinois 60611, telephone 312-751-4513, (FTS 312-386-4513), TTD 312-

751-4701, TTD (FTS 312-386-4701).

SUPPLEMENTARY INFORMATION: This regulation provides the rules for

computing the amount of a survivor annuity under the Railroad

Retirement Act of 1974. In general, the annuity consists of two

components or tiers. The first tier (tier I) is a social security level

benefit that is generally computed under social security rules based on

the employee's earnings under both the railroad retirement and the

social security systems. The second tier (tier II) is based solely on

the employee's railroad earnings and is a set percentage of the

employee's tier II annuity component.

The rule is divided into three subparts, A-C:

Subpart A is an introduction to the part. It provides a listing of

other relevant regulations, part 225, Primary Insurance Amount

Determinations, and part 216, Eligibility for an Annuity (Sec. 228.1)

and sets forth a general explanation of tier I and tier II annuity

components (Sec. 228.2).

Subpart B sets forth the computation of the tier I annuity

component. Section 228.10 describes the tier I of the widow(er)'s

annuity; Sec. 228.11, the tier I of widow(er) with a child in care;

Sec. 228.12, the tier I of child's annuity; and Sec. 228.13, the tier I

of a parent's annuity.

Section 228.14 describes when and how the tier I annuity component

is reduced for the family maximum, which is a provision in the Social

Security Act that limits the total monthly benefits to which

beneficiaries may be entitled.

Section 228.15 describes the age reduction applicable to the tier I

annuity component if the survivor begins to receive benefits prior to

the retirement age specified in the Social Security Act.

Section 228.16 describes the adjustment of the age reduction factor

when the widow(er) attains retirement age.

Section 228.17 describes how the widow(er)'s annuity is adjusted if

the employee died before he or she reached age 62.

Section 228.18 describes how the tier I is reduced due to receipt

of a public pension.

Section 228.19 describes how the tier I component is reduced due to

receipt of a social security benefit.

Sections 228.20-228.22 describe the reduction in a survivor annuity

due to receipt of other types of railroad retirement annuities.

Section 228.23 describes the order in which the above-described

reductions are made. Finally, Sec. 228.40 describes the cost-of-living

increases applicable to the tier I annuity component.

Subpart C describes the computation of the tier II annuity

component. Section 228.50 describes the tier II annuity component for

various types of survivor annuitants. It also describes the age

reduction applicable to the tier II annuity component.

Section 228.51 describes the reduction to the tier II annuity

component known as the takeback amount which was imposed by the 1983

amendments to the Railroad Retirement Act.

Section 228.52 describes the increase in the tier II annuity

component when a widow(er) is entitled to a railroad retirement annuity

which caused a reduction in the widow(er)'s tier I annuity component.

Section 228.53 describes the increase in the tier II annuity

component to insure that a widow(er)'s annuity is no less than the

spouse annuity the widow(er) was receiving before the employee died.

Finally, Sec. 228.60 describes the cost-of-living increase

applicable to the tier II annuity component.

The Board published this rule in proposed form on September 30,

1993 (58 FR 51024) inviting comment by November 1, 1993; no comments

were received.

The Board, with the concurrence of the Office of Management and

Budget, has determined that this is not a significant regulatory action

under Executive Order 12866; therefore, no regulatory impact analysis

is required. There are no information collections associated with this

rule.

List of Subjects in 20 CFR Part 228

Pensions, Railroad employees, Railroad retirement.

For the reasons set out in the preamble, chapter II of title 20 of

the Code of Federal Regulations is amended as follows:

1. Part 228, Computation of Survivor Annuities, is added to read as

follows:

PART 228--COMPUTATION OF SURVIVOR ANNUITIES

Subpart A--General

Sec.

228.1 Introduction.

228.2 Tier I and tier II annuity components.

Subpart B--The Tier I Annuity Component

228.10 Computation of the tier I annuity component for a widow(er),

disabled widow(er), remarried widow(er), and a surviving divorced

spouse.

228.11 Computation of the tier I annuity component of a widow(er)

with a child in care, remarried widow(er) with a child in care, or a

surviving divorced spouse with a child in care.

228.12 Computation of the tier I annuity component of a child's

insurance annuity.

228.13 Computation of the tier I annuity component of a parent's

insurance annuity.

228.14 Family maximum.

228.15 Reduction for age.

228.16 Adjustments in the age reduction factor

(ARF). [[Page 16369]]

228.17 Adjustments to the widow(er)'s, disabled widow(er)'s,

surviving divorced spouse's, and remarried widow(er)'s tier I

annuity amount.

228.18 Reduction for public pension.

228.19 Reduction for a social security benefit.

228.20 Reduction for an employee annuity.

228.21 Entitlement as a spouse or divorced spouse and as a

survivor.

228.22 Entitlement to more than one survivor annuity.

228.23 Priority of reductions.

228.40 Cost of living increase applicable to the tier I annuity

component.

Subpart C--The Tier II Annuity Component

228.50 Tier II annuity component for widow(er), child, or parent.

228.51 Takeback amount.

228.52 Restored amount.

228.53 Spouse minimum guarantee.

228.60 Cost of living increase.

Authority: 45 U.S.C. 231f.

PART 228--COMPUTATION OF SURVIVOR ANNUITIES

Subpart A--General

Sec. 228.1 Introduction.

(a) What does this part include? This part includes the computation

of a widow(er)'s, disabled widow(er)'s, remarried widow(er)'s,

surviving divorced spouse's, parent's, and child's insurance annuity

under the Railroad Retirement Act. This part describes the two annuity

components or tiers which are included in these annuities. The tier I

annuity component, which may be payable in all of the above annuities,

is described in subpart B of this part. Subpart C of this part

describes the tier II annuity component which is only applicable to the

widow(er)'s, disabled widow(er)'s, parent's, and child's annuity.

(b) Other relevant parts. (1) Part 225, Primary Insurance Amount

Determinations, describes the various types of primary insurance

amounts which form the basis of the computation of the tier I annuity

component described in this part.

(2) Part 216, Eligibility for an Annuity, describes the eligibility

requirements for receipt of the annuity computations described in this

part.

Sec. 228.2 Tier I and tier II annuity components.

(a) Tier I annuity component. The Tier I annuity component is

generally the amount that would have been payable under the Social

Security Act if all of the employee's earnings after 1936 under both

the railroad retirement system and the social security system had been

creditable under the Social Security Act.

(b) Tier II annuity component. The tier II annuity component is the

portion of the survivor's annuity which is based on an employee's

railroad earnings only. The tier II component of an annuity described

in this part is a specified percentage of the employee's actual or

anticipated tier II annuity component.

Subpart B--The Tier I Annuity Component

Sec. 228.10 Computation of the tier I annuity component for a

widow(er), disabled widow(er), remarried widow(er), and a surviving

divorced spouse.

The tier I annuity component for these beneficiaries is generally

based on the survivor tier I Primary Insurance Amount (PIA). The

survivor tier I PIA is determined in accordance with section 215 of the

Social Security Act using the deceased employee's combined railroad and

social security earnings after 1950 (or after 1936 if a higher PIA

would result) up to the maximum creditable amounts through the year of

the employee's death. See part 225 of this chapter. This amount may be

further adjusted for certain reductions or deductions as described in

Secs. 228.15-228.20 of this part and is subject to the family maximum.

See Sec. 228.14 of this part.

Sec. 228.11 Computation of the tier I annuity component of a widow(er)

with a child in care, remarried widow(er) with a child in care, or a

surviving divorced spouse with a child in care.

The tier I annuity component of a widow(er), remarried widow(er),

or a surviving divorced spouse with a child of the employee in his or

her care is 75 percent of the PIA computed under Sec. 228.10 of this

part. The amount may be adjusted for certain reductions and deductions

described in Secs. 228.15-228.20 of this part and is subject to the

family maximum. See Sec. 228.14 of this part.

Sec. 228.12 Computation of the tier I annuity component of a child's

insurance annuity.

The tier I annuity component of a child's insurance annuity is 75

percent of the PIA computed under Sec. 228.10 of this part. The amount

may be adjusted for the family maximum. See Sec. 228.14 of this part.

Sec. 228.13 Computation of the tier I annuity component of a parent's

insurance annuity.

The tier I annuity component of a parent's insurance annuity is

dependent on whether one or two parents are entitled.

(a) One parent entitled. A parent's tier I annuity component is

equal to 82\1/2\ percent of the PIA computed under Sec. 228.10 of this

part.

(b) More than one parent entitled. A parent's tier I annuity

component is equal to 75 percent of the PIA computed under Sec. 228.10

of this part.

(c) The amounts computed under paragraph (a) or (b) of this section

may be adjusted for the family maximum. See Sec. 228.14 of this part.

Sec. 228.14 Family maximum.

(a) Family maximum defined. Under the Social Security Act, the

amount of total monthly benefits that can be paid for any month on one

person's earnings record is limited. This limited amount is called the

family maximum. The family maximum is based on the survivor tier I PIA

(see part 225 of this chapter). Generally, if three or more persons are

entitled to benefits, their benefits will be adjusted for the family

maximum.

(b) Computation of the family maximum.--(1) The employee attains

age 62, has a period of disability or dies prior to 1979. The maximum

is the amount appearing in column V of the applicable table published

each year by the Secretary of Health and Human Services on the line on

which appears in column IV the primary insurance amount of the insured

individual whose compensation is the basis for the benefits payable.

Where the total of the survivor benefits exceeds the maximum, the total

tier I benefits for each month after 1964 are reduced to the amount

appearing in column V. Each survivor's benefit is proportionately

reduced, based on the percentage of the PIA used to compute the

survivor benefits. However, when any of the persons entitled to

benefits on the insured individual's compensation would, except for the

limitation described in Sec. 404.353(b) of title 20 (dealing with the

entitlement to more than one child's benefit), be entitled to a child's

annuity on the basis of the compensation of one or more other insured

individuals, the total benefits payable may not be reduced to less than

the smaller of--

(i) The sum of the maximum amounts of benefits payable on the basis

of the compensation of all such insured individuals, or

(ii) The last figure in column V of the applicable table published

each year by the Secretary of Health and Human Services. The

``applicable table'' refers to the table which is effective for the

month the benefit is payable.

(2) The employee attains age 62, has a period of disability or dies

in 1979. The maximum is computed as follows:

(i) 150 percent of the first $230 of the individual's primary

insurance amount, plus [[Page 16370]]

(ii) 272 percent of the primary insurance amount over $230 but not

over $332, plus

(iii) 134 percent of the primary insurance amount over $332 but not

over $433, plus

(iv) 175 percent of the primary insurance amount over $433.

If the total of this computation is not a multiple of $0.10, it

will be rounded to the next lower multiple of $0.10.

(3) The employee attains age 62, or has a period of disability or

dies after 1979. The maximum is computed as in paragraph (b)(2) of this

section. However, the dollar amounts shown there will be updated each

year after 1979 as average earnings rise. This updating is done by

first dividing the average of the total wages for the second year

before the individual dies or becomes eligible, by the average of the

total wages for 1977. The result of that computation is then multiplied

by each dollar amount in the formula in paragraph (b)(2) of this

section. Each updated dollar amount will be rounded to the nearer

dollar, if the amount is an exact multiple of $0.50 (but not of $1), it

will be rounded to the next higher $1. Before November 2 of each

calendar year after 1978, the Secretary of Health and Human Services

will publish in the Federal Register the formula and updated dollar

amounts to be used for determining the monthly maximum for the

following year.

(c) Special minimum PIA. Regardless of the method used to compute

the primary insurance amount, if the special minimum primary insurance

amount described in Sec. 404.261 to this title is higher, then the

family maximum will be based upon the special minimum primary insurance

amount.

Sec. 228.15 Reduction for age.

(a) Widow(er), surviving divorced spouse, or remarried widow(er).

The tier I annuity component is reduced 19/40 of 1 percent multiplied

by the number of months before the annuitant attains full retirement

age (presently age 65) effective with the annuity beginning date for

widow(ers) born before 1/2/40. (For widow(ers) born after 1/1/40, see

section 216(l) of the Social Security Act.)

(b) Disabled widow(er), disabled surviving divorced spouse, or

disabled remarried widow(er). The tier I annuity component is reduced

for a maximum of 60 months even though the annuity may begin at age 50.

Sec. 228.16 Adjustments in the age reduction factor (ARF).

Upon the attainment of retirement age, the previously-computed age

reduction factor is adjusted to remove those months for which a full

annuity was not paid even though the individual was entitled.

Sec. 228.17 Adjustments to the widow(er)'s, disabled widow(er)'s,

surviving divorced spouse's, and remarried widow(er)'s tier I annuity

amount.

(a) If the employee died before attaining age 62 and after 1978 and

the widow(er), disabled widow(er), remarried widow(er), or surviving

divorced spouse is first eligible after 1984, the Board will compute

the tier I annuity amount as if the employee had not died but had

reached age 62 in the second year after the indexing year (see

Sec. 225.2 of this chapter); provided, however, that if the employee

was entitled to a primary insurance amount based on average monthly

wages this section is not applicable. The indexing year is never

earlier than the second year before the year of the employee's death.

Except for this limitation it is the earlier of----

(1) The year the employee attained age 60, or would have attained

age 60 had the employee lived, and

(2) The second year before the year in which the widow(er),

remarried widow(er), or surviving divorced spouse becomes eligible for

such an annuity, has attained age 60, or is age 50-59 and disabled.

(b) The tier I annuity component is increased if the employee's

annuity was increased or would have been increased based on delayed

retirement credits (see Sec. 225.36 of this chapter).

(c) The tier I annuity component is reduced if the employee had

been entitled to an age reduced annuity, including an annuity based on

30 years of service, which is reduced for age because it began before

the employee attained age 62. In this instance, the widow(er)'s,

remarried widow(er)'s, or surviving divorced spouse's tier I annuity

component after applying any reduction for age is further reduced to

the larger of amount the employee would have received as a tier I

annuity component if still alive or 82\1/2\ percent of his or her

primary insurance amount.

Sec. 228.18 Reduction for public pension.

(a) The tier I annuity component of a widow(er), remarried

widow(er), surviving divorced spouse, or disabled widow(er) annuity, as

described in the preceding sections of this part, is reduced if the

survivor is in receipt of a public pension.

(b) When reduction is required. Unless the survivor annuitant meets

one of the exceptions in paragraph (d) of this section, the tier I

annuity component is reduced each month the survivor annuitant is

receiving a monthly pension from a Federal, State, or local government

agency (Government pension) for which he or she was employed in work

not covered by social security on the last day of such employment. For

purposes of this section, Federal government employees are not

considered to be covered by social security if they are covered for

Medicare but are not otherwise covered by social security, or if they

are covered under social security solely by an election to become

subject to the Federal Employees and Retirement System made after

December 31, 1987, and have not worked 60 months under that system.

(c) Payment in a lump sum. If the Government pension is not paid

monthly or is paid in a lump-sum payment, the Board will determine how

much the pension would be if it were paid monthly. If one of the

alternatives to a lump-sum payment is a life annuity, and the amount of

the monthly benefit for the life annuity can be determined, the

reduction will be based on that monthly benefit amount. Where the

period for the equivalent monthly pension benefit is not clear, it may

be necessary for the Board to determine the reduction period on an

individual case basis.

(d) Exceptions. The reduction does not apply:

(1) If the survivor is receiving a Government pension based on

employment for an interstate instrumentality; or

(2) If the survivor receives or is eligible to receive a Government

pension for one or more months in the period December 1977 through

November 1982 and he or she meets the requirements for social security

benefits that were applied in January 1977, assuming the employee's

earnings had been covered under that Act (even though he or she did not

actually claim such benefits or become entitled for such benefits until

a later month). The January 1977 requirements are, for a man, a one-

half support test (see paragraph (e) of this section), and, for a woman

claiming benefits as a surviving divorced spouse, marriage for at least

20 years to the insured worker. A person is considered eligible for a

Government pension for any month in which he or she meets all the

requirements for payment except that he or she is working or has not

applied; or

(3) If a survivor annuitant was receiving or eligible (as defined

in paragraph (d)(2) of this section) to receive a Government pension

for one or more months before July 1983, and he [[Page 16371]] or she

meets the one-half support test (see paragraph (e) of this section). If

a survivor annuitant meets the exception in this paragraph but he or

she does not meet the exception in paragraph (d)(2) of this section,

December 1982 is the earliest month for which the reduction will not

affect his benefits; or

(4) If a survivor annuitant was eligible for a Government pension

in a given month except for a requirement which delayed eligibility for

such pension until the month following the month in which all other

requirements were met, the Board will consider the annuitant to be

eligible in that given month for the purpose of meeting one of the

exceptions in paragraphs (d) (2) and (3) of this section. If an

annuitant meets an exception solely because of this paragraph, his or

her benefits will be unreduced for months after November 1984 only.

(e) The one-half support test. For a man to meet the January 1977

requirement as provided in the exception in paragraph (d)(2) of this

section and for a man or a woman to meet the exception in paragraph

(d)(3) of this section, he or she must meet a one-half support test.

One-half support is defined in part 222 of this chapter. One-half

support must be met at one of the following times:

(1) If the employee upon whose compensation the survivor annuity is

based had a period of disability which did not end before he or she

became entitled to an age and service or disability annuity, or died,

the survivor annuitant must have been receiving at least one-half

support from the employee--

(i) At the beginning of his or her period of disability; or

(ii) At the time he or she became entitled to an age and service or

disability annuity; or

(iii) At the time of his or her death.

(2) If the employee upon whose compensation the survivor annuity is

based did not have a period of disability at the time of his or her

entitlement or death, the survivor annuitant must have been receiving

at least one-half support from the employee--

(i) At the time he or she became entitled to an age and service

annuity or disability annuity; or

(ii) At the time of his or her death.

(f) Amount of reduction. (1) If a survivor annuitant becomes

eligible for a Government pension after June 1983, the Board will

reduce (but not below zero) the tier I annuity component by two-thirds

of the amount of the monthly pension. If the amount of the reduction is

not a multiple of 10 cents, it will be rounded to the next higher

multiple of 10 cents.

(2) If a survivor annuitant became eligible for a Government

pension before July 1983 and he or she did not meet one of the

exceptions in paragraph (d) of this section, the Board will reduce (but

not below zero) the tier I component by the full amount of the pension

for months before December 1984 and by two-thirds the amount of his or

her monthly pension for months after November 1984. If the amount of

the reduction is not a multiple of 10 cents, it will be rounded to the

next higher multiple of 10 cents.

(g) Reduction not applicable. This reduction is not applied to

claimants who both filed and were entitled to benefits prior to

December 1977.

Sec. 228.19 Reduction for a social security benefit.

The tier I annuity component is reduced for the amount of any

social security benefit to which the survivor annuitant is entitled.

Sec. 228.20 Reduction for an employee annuity.

(a) General. If an individual is entitled to an annuity as a

survivor, and is also entitled to an employee annuity, then the

survivor annuity must be reduced by the amount of the employee annuity.

However, this reduction does not apply (except as provided in paragraph

(b) of this section) if the survivor or the individual upon whose

earnings record the survivor annuity is based worked for a railroad

employer or as an employee representative before January 1, 1975.

(b) Tier I reduction. If an individual is entitled to an annuity as

a survivor, then the tier I component of the survivor annuity must be

reduced by the amount of the tier I component of the employee annuity

after reduction for age. Where the survivor is entitled to a tier II

component and either the survivor or the employee had railroad earnings

before 1975, a portion of this reduction may be restored in the

computation of the tier II component (see Sec. 228.52 of this part).

Sec. 228.21 Entitlement as a spouse or divorced spouse and as a

survivor.

If an individual is entitled to both a spouse or divorced spouse

and survivor annuity, only the larger annuity will be paid. However, if

the individual so chooses, he or she may receive the smaller annuity

rather than the larger annuity.

Sec. 228.22 Entitlement to more than one survivor annuity.

If an individual is entitled to more than one survivor annuity,

only the larger annuity will be paid. However, if the individual so

chooses, he or she may receive the smaller annuity rather than the

larger annuity.

Sec. 228.23 Priority of reductions.

The tier I component of the survivor annuity is first reduced by

the family maximum, if applicable, then any applicable age reduction,

then by any public pension offset, then by any social security benefit

payable, then by the tier I component of any employee annuity payable

to the survivor annuitant.

Sec. 228.40 Cost of living increase applicable to the tier I annuity

component.

The tier I annuity component of a survivor annuity is increased at

the same time and by the same percentage as the increase provided for

under section 215(i) of the Social Security Act. The amount of the

increase is published in the Federal Register annually. The cost-of-

living increase is payable beginning with the benefit for the month of

December of the year for which the increase is due. The increase is

paid in the January payment.

Subpart C--The Tier II Annuity Component

Sec. 228.50 Tier II annuity component widow(er), child, or parent.

(a) General. The tier II annuity component is an additional amount

payable to a widow(er), disabled widow(er), child, or parent, but not

to a surviving divorced spouse or remarried widow(er), and a parent as

provided in paragraph (b)(2) of this section, based on the railroad

employee's earnings in the railroad industry. Unlike the tier I annuity

component it is not reduced for any other social insurance benefit

except a railroad retirement annuity. See Secs. 228.20-228.23 of this

part.

(b) Amount of the tier II annuity component (1981 amendment).--(1)

Widow(er) or disabled widow(er). The amount of a widow(er)'s or

disabled widow(er)'s tier II annuity component is 50 percent of the

amount of the employee's tier II which would have been payable in the

month in which the widow became entitled had the employee been alive

and in receipt of an annuity under the Railroad Retirement Act at that

time.

(2) Parent. The amount of a parent's tier II annuity component is

35 percent of the amount of the employee's tier II annuity component

which would have been payable in the month in which the parent became

entitled had the employee been alive and in receipt of an annuity under

the Railroad Retirement Act at that time. However, if another

[[Page 16372]] survivor is entitled, or potentially entitled, to a tier

II annuity component, the parent tier II annuity component is zero.

(3) Child. The amount of each child's tier II annuity component is

15 percent of the employee's tier II annuity component which would have

been payable in the month in which the child became entitled had the

employee been alive and in receipt of an annuity under the Railroad

Retirement Act at that time.

(c) Minimum tier II survivor annuity components. If the total tier

II annuity components payable to survivors is less than 35 percent of

the employee's tier II annuity component which would have been payable

in the month the survivors became entitled had the employee been alive

and in receipt of an annuity under the Railroad Retirement Act at that

time, the individual tier II annuity components computed in paragraph

(b) of this section shall be increased proportionally so that the total

of all such tier II annuity components equals 35 percent of the

employee's tier II annuity component.

(d) Maximum tier II annuity components. If the total tier II

survivor annuity components payable to survivors exceeds 80 percent of

the employee's tier II annuity component which would have been payable

in the month the survivors became entitled had the employee been alive

and entitled to an annuity under the Railroad Retirement Act at that

time, the individual tier II annuity components computed in paragraph

(b) of this section shall be reduced proportionally so that the total

of all such tier II annuity components totals no more than 80 percent

of the employee's tier II annuity component.

(e) Age reduction. The tier II annuity component of a widow(er) or

disabled widow(er) is subject to reduction by the same age reduction

factor as is applicable to the tier I annuity component. See

Sec. 228.15 of this part.

Sec. 228.51 Takeback amount.

(a) The 1983 amendments to the Railroad Retirement Act provided

that a portion of the cost-of-living increases payable on the tier I

annuity component be offset from the amount of the tier II annuity.

This amount is the takeback amount. The amount of the takeback and its

application depends on the employee and survivor's annuity beginning

dates.

(b)(1) The tier II takeback amount for survivors whose annuity

beginning date is January 1, 1984 or later is usually the amount of the

employee's takeback amount. That amount is equal to 5 percent of the

employee's primary insurance amount, less all applicable reductions

(net tier I), on November 1, 1983. However, if the employee's annuity

was reduced for a social security benefit but the survivor's annuity is

not, the takeback amount is the amount the employee's annuity would

have been reduced for the takeback if the employee's annuity had not

been reduced for a social security benefit. If the employee's annuity

had not been tiered or was being paid under the overall minimum, the

Board will compute the amount of the tier II takeback that would have

been applicable to the employee's annuity.

(2) The tier II takeback amount for survivors whose annuity

beginning date is before January 1, 1984 is equal to 5 percent of the

survivor's net tier I annuity component, before deduction on account of

work, on November 1, 1983.

(3) The tier II takeback will be applied in accord with the above

paragraphs in any case where the employee died or retired before

January 1, 1984. If the employee died or retires after December 31,

1983, or the employee never retired and dies after December 31, 1993,

no takeback will be applied to the survivor's annuity.

(c) No takeback is applied if the survivor tier II annuity amount

before the takeback is applied is $10.00 or less and cost-of-living

increases have not increased the tier II annuity amount to more than

$10.00 (the takeback may never reduce the tier II to an amount less

than $10.00).

Sec. 228.52 Restored amount.

(a) General. A restored amount is added to the tier II annuity

component of a widow(er)'s annuity whose annuity is reduced for receipt

of an employee annuity under the Railroad Retirement Act provided

either the employee or the widow(er) had ten years of creditable

railroad service prior to January 1, 1975.

(b) Amount. The amount of the tier II restored amount for a

widow(er) is the difference between the amount payable as a widow(er)

under the Railroad Retirement Act of 1937 as increased by all annual

social security cost-of-living percentage increases from January 1,

1975, until the later of the annuity beginning date of either the

employee's annuity or the widow(er)'s annuity and the amount payable to

the widow(er) under the Railroad Retirement Act of 1974 under the rules

set forth in this part.

(c) Widower. In order to qualify for an annuity under the 1937 Act

and thus for a restored amount, a widower must have been dependent on

his spouse for at least 50 percent of his support in the year prior to

her death or at the time the spouse's annuity began.

Sec. 228.53 Spouse minimum guarantee.

The Railroad Retirement Act provides that a spouse should receive

no less as a widow(er) than he or she received as a spouse. However, if

the widow(er) becomes entitled to a social security benefit, thus

reducing his or her annuity, the spouse minimum guarantee is payable

only to the extent that it guarantees the amount that the widow(er)

would have received as a spouse had he or she been entitled to a social

security benefit in the month preceding the employee's death in an

amount equal to the amount of the social security benefit payable at

the time the widow(er) first became entitled to the social security

benefit.

Sec. 228.60 Cost-of-living increase.

The tier II annuity component of a survivor annuity under the

Railroad Retirement Act is increased by 32.5 percent of the percentage

increase under section 215(i) of the Social Security Act at the same

time that any such increase is payable. The amount of the increase is

published in the Federal Register annually. The cost-of-living is

payable beginning with the benefit payable for the month of December of

the year for which the increase is due. The increase is paid in the

January payment. In addition, in determining the amount of the tier II

component at the time the survivor annuity begins, all cost-of-living

increases that were applied or would have been applied after the

employee's annuity beginning date or death and prior to the surviving

annuity beginning date are taken into consideration.

PART 237--[REMOVED AND RESERVED]

2. Part 237 consisting of Secs. 237.101-237.108 is hereby removed

and reserved.

Dated: March 24, 1995.

By authority of the Board.

For the Board,

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 95-7778 Filed 3-29-95; 8:45 am]

BILLING CODE 7905-01-P