[Code of Federal Regulations]

[Title 20, Volume 1]

[Revised as of April 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 20CFR226.10]



[Page 455-456]

 

                      TITLE 20--EMPLOYEES' BENEFITS

 

                  CHAPTER II--RAILROAD RETIREMENT BOARD

 

PART 226_COMPUTING EMPLOYEE, SPOUSE, AND DIVORCED SPOUSE ANNUITIES

--Table of Contents

 

                 Subpart B_Computing an Employee Annuity

 

Sec.  226.10  Employee tier I.





    Tier I of an employee annuity is an amount similar to the social 

security benefit the employee would receive based on combined railroad 

and social security earnings. The tier I benefit is computed as follows:

    (a) A tier I PIA is computed based on combined railroad and social 

security earnings, as shown in Sec.  225.11 of this chapter. This PIA is 

adjusted for any delayed retirement credits or cost-of-living increases, 

as shown in subparts D and E of part 225 of this chapter, and is reduced 

for receipt of a pension



[[Page 456]]



based upon non-covered service in accordance with section 215(a)(7) of 

the Social Security Act. The tier I of a disability annuity may also be 

adjusted for other benefits based on disability, as shown in Sec. Sec.  

226.70-226.74 of this part. Except in the case of an employee who 

retires at age 60 with 30 years of service, if the result is not a 

multiple of $1, it is rounded to the next lower multiple of $1. In the 

case of an employee who retires with an age reduced annuity based upon 

30 years of service (see Sec.  216.31 of this chapter) the tier I is not 

rounded until all reductions have been made.

    (b) If the employee is entitled to a reduced age annuity (see Sec.  

216.31 of this chapter), the rate from paragraph (a) of this section is 

multiplied by a fraction for each month the employee is under retirement 

age on the annuity beginning date. The result is subtracted from the 

rate in paragraph (a) of this section. At present the fraction is \5/9\ 

of 1% (or \1/180\). If the employee retires before age 62 with at least 

30 years of service, the employee is deemed age 62 for age reduction 

purposes and a 20% reduction is applied. This reduction remains in 

effect until the first full month throughout which the employee is age 

62, at which time the tier I is recomputed to reflect interim increases 

in the national wage levels and the age reduction factor is recomputed, 

if necessary, in accordance with this paragraph.

    (c) The amount from paragraph (a) or (b) of this section is reduced 

by the amount of any monthly benefit payable to the employee under title 

II of the Social Security Act, including any social security benefit 

payable under a totalization agreement between the Social Security 

Administration and another country. The social security benefit used to 

reduce the tier I may be an age or disability benefit on the employee's 

own earnings record, a benefit based on the earnings record of another 

person, or the total of two types of benefits. The amount of the social 

security benefit used to reduce tier I is before any deduction for 

excess earnings. It is after any reduction for other benefits based on 

disability. The result cannot be less than zero.

    (d) The tier I is subject to automatic annual increases as provided 

for in subpart E of part 225 of this chapter.



    Example: An employee born on November 3, 1919, becomes entitled to 

an age annuity effective October 1, 1982. Retirement age for individuals 

born in 1919 is age 65. He has less than 30 years of service. His tier I 

PIA Is $712.60, which is rounded down to $712. Since the employee is 25 

months under age 65 when his annuity begins, $712 is multiplied by \25/

180\ (\1/180\ for each month under age 65), to produce an age reduction 

of $98.89, and a tier I rate after age reduction of $613.11. The 

employee is also entitled to a social security benefit of $190 a month. 

The employee's final tier I rate is $423.11.