[107th Congress Public Law 90]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ090.107]
[[Page 877]]
RAILROAD RETIREMENT AND SURVIVORS' IMPROVEMENT ACT OF 2001
[[Page 115 STAT. 878]]
Public Law 107-90
107th Congress
An Act
To modernize the financing of the railroad retirement system and to
provide
enhanced benefits to employees and beneficiaries. <<NOTE: Dec. 21,
2001 - [H.R. 10]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Railroad Retirement and
Survivors' Improvement Act of 2001.>> assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short <<NOTE: 45 USC 231t note.>> 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:
Sec. 1. Short title; table of contents.
TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974
Sec. 101. Expansion of widow's and widower's benefits.
Sec. 102. Retirement age restoration.
Sec. 103. Vesting requirement.
Sec. 104. Repeal of railroad retirement maximum.
Sec. 105. Investment of railroad retirement assets.
Sec. 106. Elimination of supplemental annuity account.
Sec. 107. Transfer authority revisions.
Sec. 108. Annual ratio projections and certifications by the Railroad
Retirement Board.
TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Exemption from tax for National Railroad Retirement Investment
Trust.
Sec. 203. Repeal of supplemental annuity tax.
Sec. 204. Employer, employee representative, and employee tier 2 tax
rate adjustments.
TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974
SEC. 101. EXPANSION OF WIDOW'S AND WIDOWER'S BENEFITS.
(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
[[Page 115 STAT. 879]]
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 <<NOTE: 45 USC 231c note.>> Date.--
(1) In <<NOTE: Applicability.>> 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.
SEC. 102. RETIREMENT AGE RESTORATION.
(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 <<NOTE: 45 USC 231c note.>> Dates.--
[[Page 115 STAT. 880]]
(1) Generally.--Except <<NOTE: Applicability.>> 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.
SEC. 103. VESTING REQUIREMENT.
(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
[[Page 115 STAT. 881]]
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--
[[Page 115 STAT. 882]]
(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 <<NOTE: 42 USC 405 note.>> Date.--The amendments made
by this section shall take effect on January 1, 2002.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(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 <<NOTE: Applicability. 45 USC 231b note.>> 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.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(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.--
[[Page 115 STAT. 883]]
``(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
[[Page 115 STAT. 884]]
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;
[[Page 115 STAT. 885]]
``(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
[[Page 115 STAT. 886]]
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) <<NOTE: Deadline.>> 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--
[[Page 115 STAT. 887]]
(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 <<NOTE: 45 USC 231n note.>> 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 <<NOTE: 45 USC 231n note.>> 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.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.
(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) <<NOTE: 45 USC 231n note.>> 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 <<NOTE: 45 USC 231n note.>> 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))
[[Page 115 STAT. 888]]
shall continue to exist until the date that the Secretary of the
Treasury makes the transfer described in subsection (d)(2).
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(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.''.
[[Page 115 STAT. 889]]
(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) <<NOTE: Certification.>> 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 <<NOTE: 45 USC 231n note.>> 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
[[Page 115 STAT. 890]]
received or may redeem them prior to maturity, as the Trust deems
appropriate.
SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFICATIONS BY THE RAILROAD
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. <<NOTE: 45 USC 231v.>> (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.''.
TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
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.
SEC. 202. EXEMPTION FROM TAX FOR NATIONAL RAILROAD RETIREMENT INVESTMENT
TRUST.
Subsection (c) <<NOTE: 26 USC 501.>> 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.''.
[[Page 115 STAT. 891]]
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(a) Repeal of Tax on Employee Representatives.--Section 3211
is <<NOTE: 26 USC 3211.>> amended by striking subsection (b).
(b) Repeal of Tax on Employers.--Section 3221 <<NOTE: 26 USC
3221.>> is amended by striking subsections (c) and (d) and by
redesignating subsection (e) as subsection (c).
(c) Effective <<NOTE: Applicability. 26 USC 3211 note.>> Date.--The
amendments made by this section shall apply to calendar years beginning
after December 31, 2001.
SEC. 204. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND EMPLOYEE TIER 2 TAX
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.
[[Page 115 STAT. 892]]
``(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 <<NOTE: 26 USC 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 <<NOTE: 26 USC 3241.>> 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
[[Page 115 STAT. 893]]
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 <<NOTE: Deadline. Federal Register,
publication.>> 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) <<NOTE: 26 USC 24.>> is amended
by striking ``section 3211(a)(1)'' and inserting ``section
3211(a)''.
(2) Section 72(r)(2)(B)(i) <<NOTE: 26 USC 72.>> is amended
by striking ``3211(a)(2)'' and inserting ``3211(b)''.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of <<NOTE: 26 USC
3231.>> 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 <<NOTE: Applicability. 26 USC 24 note.>> Date.--The
amendments made by this section shall apply to calendar years beginning
after December 31, 2001.
Approved December 21, 2001.
LEGISLATIVE HISTORY--H.R. 10:
---------------------------------------------------------------------------
HOUSE REPORTS: No. 107-51, Pt. 1 (Comm. on Ways and Means) and Pt. 2
(Comm. on Education and the Workforce).
CONGRESSIONAL RECORD, Vol. 147 (2001):
May 2, considered and passed House.
Nov. 29, Dec. 3-5, considered and passed Senate, amended.
Dec. 11, House concurred in Senate amendments.
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