[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10 Enrolled Bill (ENR)]
H.R.10
One Hundred Seventh Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, two thousand and one
An Act
To modernize the financing of the railroad retirement system and to
provide
enhanced benefits to employees and beneficiaries.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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(a) Short Title.--This Act may be cited as the ``Railroad
Retirement and Survivors' Improvement Act of 2001''.
(b) Table of Contents.--The table of contents for this Act is as
follows:

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021643bfb3a6bbf5365acdefd74fe038f106a02b3ce1278ed2ea5f7aaca3388f

TITLE I

-AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974

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TITLE II

-AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

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(a) In General.--Section 4(g) of the Railroad Retirement Act of
1974 (45 U.S.C. 231c(g)) is amended by adding at the end the following
new subdivision:
``(10)(i) If for any month the unreduced annuity provided under
this section for a widow or widower is less than the widow's or
widower's initial minimum amount computed pursuant to paragraph (ii) of
this subdivision, the unreduced annuity shall be increased to that
initial minimum amount. For the purposes of this subdivision, the
unreduced annuity is the annuity without regard to any deduction on
account of work, without regard to any reduction for entitlement to an
annuity under section 2(a)(1) of this Act, without regard to any
reduction for entitlement to a benefit under title II of the Social
Security Act, and without regard to any reduction for entitlement to a
public service pension pursuant to section 202(e)(7), 202(f)(2), or
202(g)(4) of the Social Security Act.
``(ii) For the purposes of this subdivision, the widow or widower's
initial minimum amount is the amount of the unreduced annuity computed
at the time an annuity is awarded to that widow or widower, except
that--
``(A) in subsection (g)(1)(i) `100 per centum' shall be
substituted for `50 per centum'; and
``(B) in subsection (g)(2)(ii) `130 per centum' shall be
substituted for `80 per centum' both places it appears.
``(iii) If a widow or widower who was previously entitled to a
widow's or widower's annuity under section 2(d)(1)(ii) of this Act
becomes entitled to a widow's or widower's annuity under section
2(d)(1)(i) of this Act, a new initial minimum amount shall be computed
at the time of award of the widow's or widower's annuity under section
2(d)(1)(i) of this Act.''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall take
effect on the first day of the first month that begins more than 30
days after enactment, and shall apply to annuity amounts accruing
for months after the effective date in the case of annuities
awarded--
(A) on or after that date; and
(B) before that date, but only if the annuity amount under
section 4(g) of the Railroad Retirement Act of 1974 (45 U.S.C.
231c(g)) was computed under such section, as amended by the
Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35; 95
Stat. 357).
(2) Special rule for annuities awarded before the effective
date.--In applying the amendment made by this section to annuities
awarded before the effective date, the calculation of the initial
minimum amount under new section 4(g)(10)(ii) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231c(g)(10)(ii)), as added by
subsection (a), shall be made as of the date of the award of the
widow's or widower's annuity.

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(a) Employee Annuities.--Section 3(a)(2) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231b(a)(2)) is amended by inserting after
``(2)'' the following new sentence: ``For purposes of this subsection,
individuals entitled to an annuity under section 2(a)(1)(ii) of this
Act shall, except for the purposes of recomputations in accordance with
section 215(f) of the Social Security Act, be deemed to have attained
retirement age (as defined by section 216(l) of the Social Security
Act).''.
(b) Spouse and Survivor Annuities.--Section 4(a)(2) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231c(a)(2)) is amended by striking
``if an'' and all that follows through ``section 2(c)(1) of this Act''
and inserting ``a spouse entitled to an annuity under section
2(c)(1)(ii)(B) of this Act''.
(c) Conforming Repeals.--Sections 3(a)(3), 4(a)(3), and 4(a)(4) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231b(a)(3), 231c(a)(3),
and 231c(a)(4)) are repealed.
(d) Effective Dates.--
(1) Generally.--Except as provided in paragraph (2), the
amendments made by this section shall apply to annuities that begin
to accrue on or after January 1, 2002.
(2) Exception.--The amount of the annuity provided for a spouse
under section 4(a) of the Railroad Retirement Act of 1974 (45
U.S.C. 231c(a)) shall be computed under section 4(a)(3) of such
Act, as in effect on December 31, 2001, if the annuity amount
provided under section 3(a) of such Act (45 U.S.C. 231b(a)) for the
individual on whose employment record the spouse annuity is based
was computed under section 3(a)(3) of such Act, as in effect on
December 31, 2001.

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(a) Certain Annuities for Individuals.--Section 2(a) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231a(a)) is amended--
(1) by inserting in subdivision (1) ``(or, for purposes of
paragraphs (i), (iii), and (v), five years of service, all of which
accrues after December 31, 1995)'' after ``ten years of service'';
and
(2) by adding at the end the following new subdivision:
``(4) An individual who is entitled to an annuity under paragraph
(v) of subdivision (1), but who does not have at least ten years of
service, shall, prior to the month in which the individual attains age
62, be entitled only to an annuity amount computed under section 3(a)
of this Act (without regard to section 3(a)(2) of this Act) or section
3(f)(3) of this Act. Upon attainment of age 62, such an individual may
also be entitled to an annuity amount computed under section 3(b), but
such annuity amount shall be reduced for early retirement in the same
manner as if the individual were entitled to an annuity under section
2(a)(1)(iii).''.
(b) Computation Rule for Individuals' Annuities.--Section 3(a) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231b(a)), as amended by
section 102 of this Act, is further amended by adding at the end the
following new subdivision:
``(3) If an individual entitled to an annuity under section
2(a)(1)(i) or (iii) of this Act on the basis of less than ten years of
service is entitled to a benefit under section 202(a), section 202(b),
or section 202(c) of the Social Security Act which began to accrue
before the annuity under section 2(a)(1)(i) or (iii) of this Act, the
annuity amount provided such individual under this subsection, shall be
computed as though the annuity under this Act began to accrue on the
later of (A) the date on which the benefit under section 202(a),
section 202(b), or section 202(c) of the Social Security Act began, or
(B) the date on which the individual first met the conditions for
entitlement to an age reduced annuity under this Act other than the
conditions set forth in sections 2(e)(1) and 2(e)(2) of this Act and
the requirement that an application be filed.''.
(c) Survivors' Annuities.--Section 2(d)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231a(d)(1)) is amended by inserting
``(or five years of service, all of which accrues after December 31,
1995)'' after ``ten years of service''.
(d) Limitation on Annuity Amounts.--Section 2 of the Railroad
Retirement Act of 1974 (45 U.S.C. 231a) is amended by adding at the end
the following new subsection:
``(i) An individual entitled to an annuity under this section who
has completed five years of service, all of which accrues after 1995,
but who has not completed ten years of service, and the spouse,
divorced spouse, and survivors of such individual, shall not be
entitled to an annuity amount provided under section 3(a), section
4(a), or section 4(f) of this Act unless the individual, or the
individual's spouse, divorced spouse, or survivors, would be entitled
to a benefit under title II of the Social Security Act on the basis of
the individual's employment record under both this Act and title II of
the Social Security Act.''.
(e) Computation Rule for Spouses' Annuities.--Section 4(a) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)), as amended by
section 102 of this Act, is further amended by adding at the end the
following new subdivision:
``(3) If a spouse entitled to an annuity under section
2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), or section 2(c)(2) of this Act
or a divorced spouse entitled to an annuity under section 2(c)(4) of
this Act on the basis of the employment record of an employee who will
have completed less than 10 years of service is entitled to a benefit
under section 202(a), section 202(b), or section 202(c) of the Social
Security Act which began to accrue before the annuity under section
2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), section 2(c)(2), or section
2(c)(4) of this Act, the annuity amount provided under this subsection
shall be computed as though the annuity under this Act began to accrue
on the later of (A) the date on which the benefit under section 202(a),
section 202(b), or section 202(c) of the Social Security Act began or
(B) the first date on which the annuitant met the conditions for
entitlement to an age reduced annuity under this Act other than the
conditions set forth in sections 2(e)(1) and 2(e)(2) of this Act and
the requirement that an application be filed.''.
(f)  Application Deeming Provision.--Section 5(b) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231d(b)) is amended by striking the
second sentence and inserting the following new sentence: ``An
application filed with the Board for an employee annuity, spouse
annuity, or divorced spouse annuity on the basis of the employment
record of an employee who will have completed less than ten years of
service shall be deemed to be an application for any benefit to which
such applicant may be entitled under this Act or section 202(a),
section 202(b), or section 202(c) of the Social Security Act. An
application filed with the Board for an annuity on the basis of the
employment record of an employee who will have completed ten years of
service shall, unless the applicant specified otherwise, be deemed to
be an application for any benefit to which such applicant may be
entitled under this Act or title II of the Social Security Act.''.
(g) Crediting Service Under the Social Security Act.--Section 18(2)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231q(2)) is amended--
(1) by inserting ``(or less than five years of service, all of
which accrues after December 31, 1995)'' after ``ten years of
service'' every place it appears; and
(2) by inserting ``(or five or more years of service, all of
which accrues after December 31, 1995)'' after ``ten or more years
of service''.
(h) Automatic Benefit Eligibility Adjustments.--Section 19 of the
Railroad Retirement Act of 1974 (45 U.S.C. 231r) is amended--
(1) by inserting ``(or five or more years of service, all of
which accrues after December 31, 1995)'' after ``ten years of
service'' in subsection (c); and
(2) by inserting ``(or five or more years of service, all of
which accrues after December 31, 1995)'' after ``ten years of
service'' in subsection (d)(2).
(i) Conforming Amendments.--
(1) Section 6(e)(1) of the Railroad Retirement Act of 1974 (45
U.S.C. 231e(1)) is amended by inserting ``(or five or more years of
service, all of which accrues after December 31, 1995)'' after
``ten years of service''.
(2) Section 7(b)(2)(A) of the Railroad Retirement Act of 1974
(45 U.S.C. 231f(b)(2)(A)) is amended by inserting ``(or five or
more years of service, all of which accrues after December 31,
1995)'' after ``ten years of service''.
(3) Section 205(i) of the Social Security Act (42 U.S.C.
405(i)) is amended by inserting ``(or five or more years of
service, all of which accrues after December 31, 1995)'' after
``ten years of service''.
(4) Section 6(b)(2) of the Railroad Retirement Act of 1974 (45
U.S.C. 231e(b)(2)) is amended by inserting ``(or five or more years
of service, all of which accrues after December 31, 1995)'' after
``ten years of service'' the second place it appears.
(j) Effective Date.--The amendments made by this section shall take
effect on January 1, 2002.

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(a) Employee Annuities.--
(1) In general.--Section 3(f) of the Railroad Retirement Act of
1974 (45 U.S.C. 231b(f)) is amended--
(A) by striking subdivision (1); and
(B) by redesignating subdivisions (2) and (3) as
subdivisions (1) and (2), respectively.
(2) Conforming amendments.--
(A) The first sentence of section 3(f)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231b(f)(1)), as redesignated
by paragraph (1)(B), is amended by striking ``, without regard
to the provisions of subdivision (1) of this subsection,''.
(B) Paragraphs (i) and (ii) of section 7(d)(2) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231f(d)(2)) are each
amended by striking ``section 3(f)(3)'' and inserting ``section
3(f)(2)''.
(b) Spouse and Survivor Annuities.--Section 4 of the Railroad
Retirement Act of 1974 (45 U.S.C. 231c) is amended by striking
subsection (c).
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2002, and shall apply to annuity amounts accruing
for months after December 2001.

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(a) Establishment of National Railroad Retirement Investment
Trust.--Section 15 of the Railroad Retirement Act of 1974 (45 U.S.C.
231n) is amended by inserting after subsection (i) the following new
subsection:
``(j) National Railroad Retirement Investment Trust.--
``(1) Establishment.--The National Railroad Retirement
Investment Trust (hereinafter in this subsection referred to as the
`Trust') is hereby established as a trust domiciled in the District
of Columbia and shall, to the extent not inconsistent with this
Act, be subject to the laws of the District of Columbia applicable
to such trusts. The Trust shall manage and invest its assets in the
manner set forth in this subsection.
``(2) Not a federal agency or instrumentality.--The Trust is
not a department, agency, or instrumentality of the Government of
the United States and shall not be subject to title 31, United
States Code.
``(3) Board of trustees.--
``(A) Generally.--
``(i) Membership.--The Trust shall have a Board of
Trustees, consisting of 7 members. Three shall represent
the interests of labor, 3 shall represent the interests of
management, and 1 shall be an independent Trustee. The
members of the Board of Trustees shall not be considered
officers or employees of the Government of the United
States.
``(ii) Selection.--
``(I) The 3 members representing the interests of
labor shall be selected by the joint recommendation of
labor organizations, national in scope, organized in
accordance with section 2 of the Railway Labor Act, and
representing at least \2/3\ of all active employees,
represented by such national labor organizations,
covered under this Act.
``(II) The 3 members representing the interests of
management shall be selected by the joint
recommendation of carriers as defined in section 1 of
the Railway Labor Act employing at least \2/3\ of all
active employees covered under this Act.
``(III) The independent member shall be selected by
a majority of the other 6 members of the Board of
Trustees.
A member of the Board of Trustees may be removed in the
same manner and by the same constituency that selected that
member.
``(iii) Dispute resolution.--In the event that the
parties specified in subclause (I), (II), or (III) of the
previous clause cannot agree on the selection of Trustees
within 60 days of the date of enactment or 60 days from any
subsequent date that a position of the Board of Trustees
becomes vacant, an impartial umpire to decide such dispute
shall, on the petition of a party to the dispute, be
appointed by the District Court of the United States for
the District of Columbia.
``(B) Qualifications.--Members of the Board of Trustees
shall be appointed only from among persons who have experience
and expertise in the management of financial investments and
pension plans. No member of the Railroad Retirement Board shall
be eligible to be a member of the Board of Trustees.
``(C) Terms.--Except as provided in this subparagraph, each
member shall be appointed for a 3-year term. The initial
members appointed under this paragraph shall be divided into
equal groups so nearly as may be, of which one group will be
appointed for a 1-year term, one for a 2-year term, and one for
a 3-year term. The Trustee initially selected pursuant to
clause (ii)(III) shall be appointed to a 3-year term. A vacancy
in the Board of Trustees shall not affect the powers of the
Board of Trustees and shall be filled in the same manner as the
selection of the member whose departure caused the vacancy.
Upon the expiration of a term of a member of the Board of
Trustees, that member shall continue to serve until a successor
is appointed.
``(4) Powers of the board of trustees.--The Board of Trustees
shall--
``(A) retain independent advisers to assist it in the
formulation and adoption of its investment guidelines;
``(B) retain independent investment managers to invest the
assets of the Trust in a manner consistent with such investment
guidelines;
``(C) invest assets in the Trust, pursuant to the policies
adopted in subparagraph (A);
``(D) pay administrative expenses of the Trust from the
assets in the Trust; and
``(E) transfer money to the disbursing agent or as
otherwise provided in section 7(b)(4), to pay benefits payable
under this Act from the assets of the Trust.
``(5) Reporting requirements and fiduciary standards.--The
following reporting requirements and fiduciary standards shall
apply with respect to the Trust:
``(A) Duties of the board of trustees.--The Trust and each
member of the Board of Trustees shall discharge their duties
(including the voting of proxies) with respect to the assets of
the Trust solely in the interest of the Railroad Retirement
Board and through it, the participants and beneficiaries of the
programs funded under this Act--
``(i) for the exclusive purpose of--
``(I) providing benefits to participants and their
beneficiaries; and
``(II) defraying reasonable expenses of
administering the functions of the Trust;
``(ii) with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
``(iii) by diversifying investments so as to minimize
the risk of large losses and to avoid disproportionate
influence over a particular industry or firm, unless under
the circumstances it is clearly prudent not to do so; and
``(iv) in accordance with Trust governing documents and
instruments insofar as such documents and instruments are
consistent with this Act.
``(B) Prohibitions with respect to members of the board of
trustees.--No member of the Board of Trustees shall--
``(i) deal with the assets of the Trust in the
trustee's own interest or for the trustee's own account;
``(ii) in an individual or in any other capacity act in
any transaction involving the assets of the Trust on behalf
of a party (or represent a party) whose interests are
adverse to the interests of the Trust, the Railroad
Retirement Board, or the interests of participants or
beneficiaries; or
``(iii) receive any consideration for the trustee's own
personal account from any party dealing with the assets of
the Trust.
``(C) Exculpatory provisions and insurance.--Any provision
in an agreement or instrument that purports to relieve a
trustee from responsibility or liability for any
responsibility, obligation, or duty under this Act shall be
void: Provided, however, That nothing shall preclude--
``(i) the Trust from purchasing insurance for its
trustees or for itself to cover liability or losses
occurring by reason of the act or omission of a trustee, if
such insurance permits recourse by the insurer against the
trustee in the case of a breach of a fiduciary obligation
by such trustee;
``(ii) a trustee from purchasing insurance to cover
liability under this section from and for his own account;
or
``(iii) an employer or an employee organization from
purchasing insurance to cover potential liability of one or
more trustees with respect to their fiduciary
responsibilities, obligations, and duties under this
section.
``(D) Bonding.--Every trustee and every person who handles
funds or other property of the Trust (hereafter in this
subsection referred to as `Trust official') shall be bonded.
Such bond shall provide protection to the Trust against loss by
reason of acts of fraud or dishonesty on the part of any Trust
official, directly or through the connivance of others, and
shall be in accordance with the following:
``(i) The amount of such bond shall be fixed at the
beginning of each fiscal year of the Trust by the Railroad
Retirement Board. Such amount shall not be less than 10
percent of the amount of the funds handled. In no case
shall such bond be less than $1,000 nor more than $500,000,
except that the Railroad Retirement Board, after
consideration of the record, may prescribe an amount in
excess of $500,000, subject to the 10 per centum limitation
of the preceding sentence.
``(ii) It shall be unlawful for any Trust official to
receive, handle, disburse, or otherwise exercise custody or
control of any of the funds or other property of the Trust
without being bonded as required by this subsection and it
shall be unlawful for any Trust official, or any other
person having authority to direct the performance of such
functions, to permit such functions, or any of them, to be
performed by any Trust official, with respect to whom the
requirements of this subsection have not been met.
``(iii) It shall be unlawful for any person to procure
any bond required by this subsection from any surety or
other company or through any agent or broker in whose
business operations such person has any control or
significant financial interest, direct or indirect.
``(E) Audit and report.--
``(i) The Trust shall annually engage an independent
qualified public accountant to audit the financial
statements of the Trust.
``(ii) The Trust shall submit an annual management
report to the Congress not later than 180 days after the
end of the Trust's fiscal year. A management report under
this subsection shall include--
``(I) a statement of financial position;
``(II) a statement of operations;
``(III) a statement of cash flows;
``(IV) a statement on internal accounting and
administrative control systems;
``(V) the report resulting from an audit of the
financial statements of the Trust conducted under
clause (i); and
``(VI) any other comments and information necessary
to inform the Congress about the operations and
financial condition of the Trust.
``(iii) The Trust shall provide the President, the
Railroad Retirement Board, and the Director of the Office
of Management and Budget a copy of the management report
when it is submitted to Congress.
``(F) Enforcement.--The Railroad Retirement Board may bring
a civil action--
``(i) to enjoin any act or practice by the Trust, its
Board of Trustees, or its employees or agents that violates
any provision of this Act; or
``(ii) to obtain other appropriate relief to redress
such violations, or to enforce any provisions of this Act.
``(6) Rules and administrative powers.--The Board of Trustees
shall have the authority to make rules to govern its operations,
employ professional staff, and contract with outside advisers,
including the Railroad Retirement Board, to provide legal,
accounting, investment advisory, or other services necessary for
the proper administration of this subsection. In the case of
contracts with investment advisory services, compensation for such
services may be on a fixed contract fee basis or on such other
terms and conditions as are customary for such services.
``(7) Quorum.--Five members of the Board of Trustees constitute
a quorum to do business. Investment guidelines must be adopted by a
unanimous vote of the entire Board of Trustees. All other decisions
of the Board of Trustees shall be decided by a majority vote of the
quorum present. All decisions of the Board of Trustees shall be
entered upon the records of the Board of Trustees.
``(8) Funding.--The expenses of the Trust and the Board of
Trustees incurred under this subsection shall be paid from the
Trust.''.
(b) Conforming and Technical Amendments Governing Investments.--
Section 15(e) of the Railroad Retirement Act of 1974 (45 U.S.C.
231n(e)) is amended--
(1) in the first sentence, by striking ``, the Dual Benefits
Payments Account'' and all that follows through ``may be made
only'' in the second sentence and inserting ``and the Dual Benefits
Payments Account as are not transferred to the National Railroad
Retirement Investment Trust as the Board may determine'';
(2) by striking ``the Second Liberty Bond Act, as amended'' and
inserting ``chapter 31 of title 31''; and
(3) by striking ``the foregoing requirements'' and inserting
``the requirements of this subsection''.
(c) Means of Financing.--For all purposes of the Congressional
Budget Act of 1974, the Balanced Budget and Emergency Deficit Control
Act of 1985, and chapter 11 of title 31, United States Code, and
notwithstanding section 20 of the Office of Management and Budget
Circular No. A-11, the purchase or sale of non-Federal assets (other
than gains or losses from such transactions) by the National Railroad
Retirement Investment Trust shall be treated as a means of financing.
(d) Effective Date.--The amendments made by this section shall take
effect on the first day of the month that begins more than 30 days
after enactment.

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(a) Source of Payments.--Section 7(c)(1) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231f(c)(1)) is amended by striking ``payments of
supplemental annuities under section 2(b) of this Act shall be made
from the Railroad Retirement Supplemental Account, and''.
(b) Elimination of Account.--Section 15(c) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n(c)) is repealed.
(c) Amendment to Railroad Retirement Account.--Section 15(a) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n(a)) is amended by
striking ``, except those portions of the amounts covered into the
Treasury under sections 3211(b),'' and all that follows through the end
of the subsection and inserting a period.
(d) Transfer.--
(1) Determination.--As soon as possible after December 31,
2001, the Railroad Retirement Board shall--
(A) determine the amount of funds in the Railroad
Retirement Supplemental Account under section 15(c) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n(c)) as of the
date of such determination; and
(B) direct the Secretary of the Treasury to transfer such
funds to the National Railroad Retirement Investment Trust
under section 15(j) of such Act (as added by section 105).
(2) Transfer by the secretary of the treasury.--The Secretary
of the Treasury shall make the transfer described in paragraph (1).
(e) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments made
by subsections (a), (b), and (c) shall take effect January 1, 2002.
(2) Account in existence until transfer made.--The Railroad
Retirement Supplemental Account under section 15(c) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n(c)) shall continue to exist
until the date that the Secretary of the Treasury makes the
transfer described in subsection (d)(2).

f44939b20cbc01232963d9eb82c198aec5aa78c241e7b9a6a8c3f4dce5cf8265

(a) Railroad Retirement Account.--Section 15 of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n) is amended by adding after
subsection (j) the following new subsection:
``(k) Transfers to the Trust.--The Board shall, upon establishment
of the National Railroad Retirement Investment Trust and from time to
time thereafter, direct the Secretary of the Treasury to transfer, in
such manner as will maximize the investment returns to the Railroad
Retirement system, that portion of the Railroad Retirement Account that
is not needed to pay current administrative expenses of the Board to
the National Railroad Retirement Investment Trust. The Secretary shall
make that transfer.''.
(b) Transfers From the National Railroad Retirement Investment
Trust.--Section 15 of the Railroad Retirement Act of 1974 (45 U.S.C.
231n), as amended by subsection (a), is further amended by adding after
subsection (k) the following new subsection:
``(l) National Railroad Retirement Investment Trust.--The National
Railroad Retirement Investment Trust shall from time to time transfer
to the disbursing agent described in section 7(b)(4) or as otherwise
directed by the Railroad Retirement Board pursuant to section 7(b)(4),
such amounts as may be necessary to pay benefits under this Act (other
than benefits paid from the Social Security Equivalent Benefit Account
or the Dual Benefit Payments Account).''.
(c) Social Security Equivalent Benefit Account.--
(1) Transfers to trust.--Section 15A(d)(2) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n-1(d)(2)) is amended to read
as follows:
``(2) Upon establishment of the National Railroad Retirement
Investment Trust and from time to time thereafter, the Board shall
direct the Secretary of the Treasury to transfer, in such manner as
will maximize the investment returns to the Railroad Retirement system,
the balance of the Social Security Equivalent Benefit Account not
needed to pay current benefits and administrative expenses required to
be paid from that Account to the National Railroad Retirement
Investment Trust, and the Secretary shall make that transfer. Any
balance transferred under this paragraph shall be used by the National
Railroad Retirement Investment Trust only to pay benefits under this
Act or to purchase obligations of the United States that are backed by
the full faith and credit of the United States pursuant to chapter 31
of title 31, United States Code. The proceeds of sales of, and the
interest income from, such obligations shall be used by the Trust only
to pay benefits under this Act.''.
(2) Transfers to disbursing agent.--Section 15A(c)(1) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(c)(1)) is amended
by adding at the end the following new sentence: ``The Secretary
shall from time to time transfer to the disbursing agent under
section 7(b)(4) amounts necessary to pay those benefits.''.
(3) Conforming amendment.--Section 15A(d)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n-1(d)(1)) is amended by
striking the second and third sentences.
(d) Dual Benefits Payments Account.--Section 15(d)(1) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n(d)(1)) is amended by
adding at the end the following new sentence: ``The Secretary of the
Treasury shall from time to time transfer from the Dual Benefits
Payments Account to the disbursing agent under section 7(b)(4) amounts
necessary to pay benefits payable from that Account.''.
(e) Certification by the Board and Payment.--Paragraph (4) of
section 7(b) of the Railroad Retirement Act of 1974 (45 U.S.C.
231f(b)(4)) is amended to read as follows:
``(4)(A) The Railroad Retirement Board, after consultation with the
Board of Trustees of the National Railroad Retirement Investment Trust
and the Secretary of the Treasury, shall enter into an arrangement with
a nongovernmental financial institution to serve as disbursing agent
for benefits payable under this Act who shall disburse consolidated
benefits under this Act to each recipient. Pending the taking effect of
that arrangement, benefits shall be paid as under the law in effect
prior to the enactment of the Railroad Retirement and Survivors'
Improvement Act of 2001.
``(B) The Board shall from time to time certify--
``(i) to the Secretary of the Treasury the amounts required to
be transferred from the Social Security Equivalent Benefit Account
and the Dual Benefits Payments Account to the disbursing agent to
make payments of benefits and the Secretary of the Treasury shall
transfer those amounts;
``(ii) to the Board of Trustees of the National Railroad
Retirement Investment Trust the amounts required to be transferred
from the National Railroad Retirement Investment Trust to the
disbursing agent to make payments of benefits and the Board of
Trustees shall transfer those amounts; and
``(iii) to the disbursing agent the name and address of each
individual entitled to receive a payment, the amount of such
payment, and the time at which the payment should be made.''.
(f) Benefit Payments.--Section 7(c)(1) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231f(c)(1)) is amended--
(1) by striking ``from the Railroad Retirement Account'' and
inserting ``by the disbursing agent under subsection (b)(4) from
money transferred to it from the National Railroad Retirement
Investment Trust or the Social Security Equivalent Benefit Account,
as the case may be''; and
(2) by inserting ``by the disbursing agent under subsection
(b)(4) from money transferred to it'' after ``Public Law 93-445
shall be made''.
(g) Transitional Rule for Existing Obligation.--In making transfers
under sections 15(k) and 15A(d)(2) of the Railroad Retirement Act of
1974, as amended by subsections (a) and (c), respectively, the Railroad
Retirement Board shall consult with the Secretary of the Treasury to
design an appropriate method to transfer obligations held as of the
date of enactment of this Act or to convert such obligations to cash at
the discretion of the Railroad Retirement Board prior to transfer. The
National Railroad Retirement Investment Trust may hold to maturity any
obligations so received or may redeem them prior to maturity, as the
Trust deems appropriate.

212e3899e950d55b9df629f0a09eb01944358aca2673f80ecc918452f69dde4d

RETIREMENT BOARD.
(a) Projections.--Section 22(a)(1) of the Railroad Retirement Act
of 1974 (45 U.S.C. 231u(a)(1)) is amended--
(1) by inserting after the first sentence the following new
sentence: ``On or before May 1 of each year beginning in 2003, the
Railroad Retirement Board shall compute its projection of the
account benefits ratio and the average account benefits ratio (as
defined by section 3241(c) of the Internal Revenue Code of 1986)
for each of the next succeeding five fiscal years.''; and
(2) by striking ``the projection prepared pursuant to the
preceding sentence'' and inserting ``the projections prepared
pursuant to the preceding two sentences''.
(b) Certifications.--The Railroad Retirement Act of 1974 (45 U.S.C.
231 et seq.) is amended by adding at the end the following new section:
``computation and certification of account benefit ratios
``Sec. 23. (a) Initial Computation and Certification.--On or before
November 1, 2003, the Railroad Retirement Board shall--
``(1) compute the account benefits ratios for each of the most
recent 10 preceding fiscal years, and
``(2) certify the account benefits ratios for each such fiscal
year to the Secretary of the Treasury.
``(b) Computations and Certifications After 2003.--On or before
November 1 of each year after 2003, the Railroad Retirement Board
shall--
``(1) compute the account benefits ratio for the fiscal year
ending in such year, and
``(2) certify the account benefits ratio for such fiscal year
to the Secretary of the Treasury.
``(c) Definition.--As used in this section, the term `account
benefits ratio' has the meaning given that term in section 3241(c) of
the Internal Revenue Code of 1986.''.

7c53f7b89ac6638ae7c84b92a55d6287a5c56ddace57bab2243ab5bbf2ecb750

Except as otherwise provided, whenever in this title an amendment
or repeal is expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered to be
made to a section or other provision of the Internal Revenue Code of
1986.

fcf6b0dc2b2c9e7d193e76422a991a7257e6cfa2698ffbbfaa2aca0f7f2fdf78

INVESTMENT TRUST.
Subsection (c) of section 501 is amended by adding at the end the
following new paragraph:
``(28) The National Railroad Retirement Investment Trust
established under section 15(j) of the Railroad Retirement Act of
1974.''.

143e43d9ad840f40f9f5b7968329b35ac0c49150148354606ccb69253bdff02a

(a) Repeal of Tax on Employee Representatives.--Section 3211 is
amended by striking subsection (b).
(b) Repeal of Tax on Employers.--Section 3221 is amended by
striking subsections (c) and (d) and by redesignating subsection (e) as
subsection (c).
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2001.

ebe6c286f1dd1baff057af19a86a2edd7d0e42bbed35edce6ad7833b7696fdc2

RATE ADJUSTMENTS.
(a) Rate of Tax on Employers.--Subsection (b) of section 3221 is
amended to read as follows:
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is hereby
imposed on every employer an excise tax, with respect to having
individuals in his employ, equal to the applicable percentage of
the compensation paid during any calendar year by such employer for
services rendered to such employer.
``(2) Applicable percentage.--For purposes of paragraph (1),
the term `applicable percentage' means--
``(A) 15.6 percent in the case of compensation paid during
2002,
``(B) 14.2 percent in the case of compensation paid during
2003, and
``(C) in the case of compensation paid during any calendar
year after 2003, the percentage determined under section 3241
for such calendar year.''.
(b) Rate of Tax on Employee Representatives.--Section 3211, as
amended by section 203, is amended by striking subsection (a) and
inserting the following new subsections:
``(a) Tier 1 Tax.--In addition to other taxes, there is hereby
imposed on the income of each employee representative a tax equal to
the applicable percentage of the compensation received during any
calendar year by such employee representative for services rendered by
such employee representative. For purposes of the preceding sentence,
the term `applicable percentage' means the percentage equal to the sum
of the rates of tax in effect under subsections (a) and (b) of section
3101 and subsections (a) and (b) of section 3111 for the calendar year.
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is hereby
imposed on the income of each employee representative a tax equal
to the applicable percentage of the compensation received during
any calendar year by such employee representatives for services
rendered by such employee representative.
``(2) Applicable percentage.--For purposes of paragraph (1),
the term `applicable percentage' means--
``(A) 14.75 percent in the case of compensation received
during 2002,
``(B) 14.20 percent in the case of compensation received
during 2003, and
``(C) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.
``(c) Cross Reference.--
``For application of different contribution bases with respect
to the taxes imposed by subsections (a) and (b), see section
3231(e)(2).''.
(c) Rate of Tax on Employees.--Subsection (b) of section 3201 is
amended to read as follows:
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is hereby
imposed on the income of each employee a tax equal to the
applicable percentage of the compensation received during any
calendar year by such employee for services rendered by such
employee.
``(2) Applicable percentage.--For purposes of paragraph (1),
the term `applicable percentage' means--
``(A) 4.90 percent in the case of compensation received
during 2002 or 2003, and
``(B) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.''.
(d) Determination of Rate.--Chapter 22 is amended by adding at the
end the following new subchapter:
``Subchapter E--Tier 2 Tax Rate Determination
``Sec. 3241. Determination of tier 2 tax rate based on average
account benefits ratio.
``SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED ON AVERAGE ACCOUNT
BENEFITS RATIO.
``(a) In General.--For purposes of sections 3201(b), 3211(b), and
3221(b), the applicable percentage for any calendar year is the
percentage determined in accordance with the table in subsection (b).
``(b) Tax Rate Schedule.--
------------------------------------------------------------------------
``Average account benefits ratio       Applicable
-----------------------------------   percentage for       Applicable
sections 3211(b)    percentage for
At least        But less than      and 3221(b)      section 3201(b)
------------------------------------------------------------------------
2.5                22.1                4.9
2.5               3.0                18.1                4.9
3.0               3.5                15.1                4.9
3.5               4.0                14.1                4.9
4.0               6.1                13.1                4.9
6.1               6.5                12.6                4.4
6.5               7.0                12.1                3.9
7.0               7.5                11.6                3.4
7.5               8.0                11.1                2.9
8.0               8.5                10.1                1.9
8.5               9.0                 9.1                0.9
9.0                                   8.2                  0
------------------------------------------------------------------------
---------------------------------------------------------------------------
``(c) Definitions Related to Determination of Rates of Tax.--
``(1) Average account benefits ratio.--For purposes of this
section, the term `average account benefits ratio' means, with
respect to any calendar year, the average determined by the
Secretary of the account benefits ratios for the 10 most recent
fiscal years ending before such calendar year. If the amount
determined under the preceding sentence is not a multiple of 0.1,
such amount shall be increased to the next highest multiple of 0.1.
``(2) Account benefits ratio.--For purposes of this section,
the term `account benefits ratio' means, with respect to any fiscal
year, the amount determined by the Railroad Retirement Board by
dividing the fair market value of the assets in the Railroad
Retirement Account and of the National Railroad Retirement
Investment Trust (and for years before 2002, the Social Security
Equivalent Benefits Account) as of the close of such fiscal year by
the total benefits and administrative expenses paid from the
Railroad Retirement Account and the National Railroad Retirement
Investment Trust during such fiscal year.
``(d) Notice.--No later than December 1 of each calendar year, the
Secretary shall publish a notice in the Federal Register of the rates
of tax determined under this section which are applicable for the
following calendar year.''.
(e) Conforming Amendments.--
(1) Section 24(d)(3)(A)(iii) is amended by striking ``section
3211(a)(1)'' and inserting ``section 3211(a)''.
(2) Section 72(r)(2)(B)(i) is amended by striking
``3211(a)(2)'' and inserting ``3211(b)''.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section 3231(e)
are amended by striking ``3211(a)(1)'' and inserting ``3211(a)''.
(4) Section 3231(e)(2)(B)(ii)(I) is amended by striking
``3211(a)(2)'' and inserting ``3211(b)''.
(5) The table of subchapters for chapter 22 is amended by
adding at the end the following new item:
``Subchapter E. Tier 2 tax rate determination.''.
(f) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2001.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

0d02d7457ca61089045d67816d9977370218886ef2f3d7d91798ec865bb1828a

Pension Reform bill — HR. 10

Other Sections

TITLE I

TITLE II

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