SSR 70-11: SECTION 209(h). -- WAGES -- CASH REMUNERATION FOR AGRICULTURAL LABOR -- UNITED STATES SAVINGS BONDS, SERIES E

20 CFR 404.1027(i)

SSR 70-11

L performed agricultural services on a ranch for a number of years until

her employer's death in September 1966. She and her employer had agreed

that her wages would be $500 a year. In payment of her wages, the employer

at times purchased a United States Savings Bond, Series E, and gave it to

her. A statement signed by the president of the local bank listed 18

United States Savings Bonds, Series E, by number, issue date and

registration in L's possession.

A question has been raised whether the United States Savings Bonds

received by L from the employer, represent cash remuneration for

agricultural labor within the meaning of section 209(h) of the Social

Security Act and Regulations No. 4 of the Social Security Administration,

section 404.1027(i) (20 CFR 404.1027(i)), and thus creditable as wages for

social security benefit purposes.

Section 209(h) of the Social Security Act provides, as pertinent here,

that the term "wages" means remuneration paid after 1950 for employment

but does not include remuneration paid in any medium other than cash for

agricultural labor. Section 404.1027(i) of Regulations No. 4 reads in part

as follows: ". . . cash remuneration includes checks and other monetary

media of exchange."

The facts show that all the listed bonds were purchased for $375 each and

had a face value of $500 each, except four bonds issued in 1966 which were

purchased for $75 each and had a face value of $100 each. All but three of

the bonds were registered in L's name alone; two of the three were

registered in both L's name and that of her employer; the other bond was

registered in L's name payable on death to a named beneficiary.

nds were purchased for $375 each and

had a face value of $500 each, except four bonds issued in 1966 which were

purchased for $75 each and had a face value of $100 each. All but three of

the bonds were registered in L's name alone; two of the three were

registered in both L's name and that of her employer; the other bond was

registered in L's name payable on death to a named beneficiary.

Pursuant to applicable regulations of the Treasury Department (31 CFR

315.7) provision is made for three forms of Federal savings bond

registration -- single owner, co-ownership, and beneficiary payable on

death of owner. Thus, registration of the bonds in L's name alone made her

the single owner of such bonds. Registration of the two bonds in the name

of L's employer and herself made them co-owners as the bonds could have

been redeemed by either without the consent of the other, but since they

were in L's sole possession, only she could in fact have redeemed them. In

any event, on the death of her employer, L became sole owner. The bond

registered to L, payable on death to a named beneficiary, indicates that

she was the owner of the bond with the sole right to redeem it, and that

payment would have been made to the named beneficiary only after L's

death.

Treasury regulations further provide that payment of a Federal savings

bond will be made to the person entitled thereto upon the surrender of the

bond with an appropriate request for payment. Such payment will be made

without regard to any notice of adverse claims to a bond and no stoppage

will be entered against payment in accordance with the registration. A

Series E bond will be redeemed for 75 percent of its face value with

interest at any time on or after the first day of the second month after

the month of issue. [1]

of the

bond with an appropriate request for payment. Such payment will be made

without regard to any notice of adverse claims to a bond and no stoppage

will be entered against payment in accordance with the registration. A

Series E bond will be redeemed for 75 percent of its face value with

interest at any time on or after the first day of the second month after

the month of issue. [1]

Section 404.1027(i) of Regulations No. 4 cited, supra, defines cash

remuneration to include checks and other monetary media of exchange. It is

reasonable also to include within this concept United States Savings Bonds

which are redeemable in cash in full on request, even though after a

specified date.

Having determined that the U.S. Savings Bonds constitute cash

remuneration in the instant case, two related questions remain for

resolution, (1) bearing in mind that they are not instantly redeemable,

what is the date they may first be considered cash remuneration, and (2)

taking into consideration the difference between the face value of the

bond and its conversion value at any point short of redemption, how is the

amount of the wage payment to be figured.

L could not have redeemed any bond until the first day of the second

month following the month of issue. Therefore a bond given to her

constitutes cash remuneration for agricultural labor only on such first

day. Further, only 75 percent of the face value of each bond can be deemed

cash remuneration (regardless of any interest paid at redemption) since

that was the amount of cash L was able to receive when the bond was first

redeemable and consequently became cash remuneration to her.

issue. Therefore a bond given to her

constitutes cash remuneration for agricultural labor only on such first

day. Further, only 75 percent of the face value of each bond can be deemed

cash remuneration (regardless of any interest paid at redemption) since

that was the amount of cash L was able to receive when the bond was first

redeemable and consequently became cash remuneration to her.

Accordingly, it is held that United States Savings Bonds, Series E,

purchased by L's employer, who registered them in L's name either as

single owner, co-owner, or owner with a named beneficiary, and gave sole

possession of them to L for services rendered on the employer's ranch,

constitute cash remuneration for agricultural labor within the meaning of

section 209(h) of the Social Security Act and regulations promulgated

thereunder, and are thus creditable as her wages for employment.

[1] See in this regard 31 C.F.R.

315.35(a) and (b); also, 31 C.F.R. 315.55, 316.60, and 316.65; 316.10(a)

and (b) and Appendix Tables.