[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: 20CFR226.12] [Page 457] 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. 226.12 Employee vested dual benefit. (a) General. An employee vested dual benefit is payable, in addition to tiers I and II, to an employee who meets one of the following requirements: (1) Employee worked in the railroad industry in 1974. An employee who worked for a railroad in 1974 and retired after 1974 is considered vested if on December 31, 1974, he or she had both 10 years of railroad service and sufficient quarters of coverage under the Social Security Act to qualify for a social security benefit. An employee qualified on this basis is eligible for vested dual benefit amounts computed on his or her railroad and social security credits through December 31, 1974. (2) Employee who did not work for a railroad in 1974. An employee who did not work in the railroad industry in 1974, but who had 25 or more years of railroad service before 1975 or a current connection with the railroad industry on December 31, 1974, as defined in part 216 of this chapter, or a current connection when he or she retired, is also considered vested under the same conditions as an employee who had worked in the railroad industry in 1974. (3) An employee who completed 10 years or more years of railroad service (but less than 25) before 1975 but left the industry before 1975 and did not have a current connection on December 31, 1974 or when he or she retired. Such an employee is considered vested only if he or she had sufficient social security quarters of coverage to qualify for a social security retirement benefit as of the end of the year prior to 1975 in which he or she left the railroad industry. The vested dual benefit amount is based only on credits acquired through the last year of pre- 1975 railroad service instead of through December 31, 1974. (b) Computation. The employee vested dual benefit is computed as follows: (1) The combined earnings dual benefit PIA is subtracted from the total of the railroad earnings dual benefit PIA and the social security earnings dual benefit PIA (see part 225 of this chapter for an explanation of these PIA's). (2) The result from paragraph (b)(l) of this section is adjusted for any applicable cost-of-living increase, as shown in Sec. 226.13 of this part. (3) If the employee is entitled to a reduced age annuity (see Sec. 216.1 of this chapter), the rate from paragraph (b)(2) of this section is reduced in the same manner as the tier I as provided for in Sec. 226.10 of this part. In the case of an employee with 30 years of service who is entitled to an annuity reduced for age, the age reduction applies only to the tier I component; no age reduction applies to the vested dual benefit. (4) The vested dual benefit payable in a given year may also be reduced for insufficient funding as shown in part 233 of this chapter. Example: An employee born on November 3, 1919, becomes entitled to an annuity including a vested dual benefit on October 1, 1982. His combined earnings dual benefit PIA is $254.90, his railroad earnings dual benefit PIA is $93.80, and his social security earnings dual benefit PIA is $244.70. The vested dual benefit before cost-of-living increase is $83.60 ($93.80 + $244.70 -$254.90 = $83.60). A cost-of- living increase of $67.72 (81 percent of $83.60. See Sec. 226.13 of this part) results in a vested dual benefit of $151.32. Retirement age for a person born in 1919 is age 65. Since the employee is 25 months under age 65 when the annuity begins, $151.32 is multiplied by 25/180, to produce an age reduction of $21.02 and a vested dual benefit rate after age reduction of $130.30.