[Code of Federal Regulations]
[Title 20, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR226.91]

[Page 468]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
                  CHAPTER II--RAILROAD RETIREMENT BOARD
 
PART 226_COMPUTING EMPLOYEE, SPOUSE, AND DIVORCED SPOUSE ANNUITIES--Table of 
 
   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.