[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: 20CFR226.91]



[Page 466]

 

                      TITLE 20--EMPLOYEES' BENEFITS

 

                  CHAPTER II--RAILROAD RETIREMENT BOARD

 

PART 226_COMPUTING EMPLOYEE, SPOUSE, AND DIVORCED SPOUSE ANNUITIES

--Table of Contents

 

   Subpart G_Recomputation To Include Additional Railroad Service and 

                              Compensation

 

Sec.  226.91  How an employee annuity rate is recomputed.



    (a) Tier I. A recomputation is made if any social security wages or 

railroad compensation for a year in which the employee returned to work 

are higher than the earnings for a year included in the previous 

computation of the tier I PIA, as shown in part 225 of this chapter. The 

higher earnings are used instead of the lower earnings for the earlier 

year to determine the average monthly wage or average indexed monthly 

earnings. Part 225 of this chapter describes how a PIA is recomputed.

    (b) Tier II. The additional service is added to the years of service 

previously used in computing the tier II rate. The additional 

compensation is used to recompute the average monthly compensation, if 

the compensation for a month in which the employee returned to railroad 

service is higher than the compensation for a month used in the previous 

computation of the average monthly compensation. The higher monthly 

compensation is used instead of the lower compensation for a previous 

month to determine the new average monthly compensation as shown in 

Sec.  226.62 of this part. The increased years of service and average 

monthly compensation are used in computing a new tier II rate, as shown 

in Sec.  226.11 of this part.



    Example: An employee receiving an annuity which began on January 1, 

1992, returns to railroad service for 10 months in 1992 and 2 months in 

1993. He stops work on February 20, 1993. He has earnings of $34,500.00 

in 1992 and $5,200.00 in 1993. His tier II rate effective January 1, 

1992, was based on 26 years (312 months) of service and an average 

monthly compensation of $2,995 ($179,700/60). The additional 12 months 

of service increases the year of service used in computing the tier II 

rate to 27 (312 months + 12 months = 324 months / 12 = 27). The 1992 

earnings of $34,500.00 are used instead of 1987 earnings of $32,700.00. 

The 1993 earnings are not used because they are lower than the earnings 

for previous months used in computing the average monthly compensation. 

The additional $1,800.00 in earnings increases the average monthly 

compensation to $3,025 ($179,100 + $1,800.00 = $181,500.00/60). The 

initial tier II amount is increased from $545.09 (26x$2,995x.007) to 

$571.73 (27x$3,025x.007), effective with the date of annuity 

reinstatement, March 1, 1993.