[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 180 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 180
To modernize the financing of the railroad retirement system and to
provide enhanced benefits to employees and beneficiaries.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 3, 2001
Mr. Shuster introduced the following bill; which was referred to the
Committee on Transportation and Infrastructure, and in addition to the
Committee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
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,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(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:
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 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 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 sections 202(e)(7), 202(f)(2), or
section 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 widow'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) Generally.--The amendment made by this section shall
take effect January 1, 2001 and shall apply to annuity amounts
accruing for months after December 2000 in the case of
annuities awarded on or after that date and in the case of
annuities awarded before that date if the annuity amount under
section 4(g) of the Railroad Retirement Act was computed under
section 4(g), as amended by Public Law 97-35.
(2) Special rule for annuities awarded before january 1,
2001.--In applying the amendments made by this section to
annuities awarded before January 1, 2001, the calculation of
the initial minimum amount under new section 4(g)(10)(ii) of
the Act shall be made as of the date of 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 is amended by inserting after ``(2)'' the following: ``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 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 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, 2001.
(2) Exception.--The amount of the annuity provided for a
spouse under section 4(a) shall be computed under section
4(a)(3), as in effect before the date of the enactment of this
section, if the annuity amount provided under section 3(a) for
the individual on whose employment record the spouse annuity is
based was computed under section 3(a)(3), as in effect before
the date of the enactment of this section.
SEC. 103. VESTING REQUIREMENT.
(a) Certain Annuities for Individuals.--Section 2(a) of the
Railroad Retirement Act of 1974 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:
``(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, 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 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 is amended by adding at the end the following:
``(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 the Social Security Act on the basis of the
individual's employment record under both the Railroad Retirement Act
and the Social Security Act.''.
(e) Computation Rule for Spouses' Annuities.--Section 4(a) of the
Railroad Retirement Act of 1974, 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 is amended by striking the second sentence and
inserting the following: ``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 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 occurs; 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
Railroad Retirement Act of 1974 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
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) of the Railroad Retirement Act of 1974
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 is amended by
inserting ``or five or more years of service, all of which
accrues after December 31, 1995,'' after ``ten years of
service''.
(j) Effective Date.--The amendments made by this section shall take
effect January 1, 2001.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(a) Employee Annuities.--Section 3(f) of the Railroad Retirement
Act of 1974 is amended by striking paragraph (1).
(b) Spouse and Survivor Annuities.--Section 4 of the Railroad
Retirement Act of 1974 is amended by striking subsection (c).
(c) Effective Date.--The amendments made by this section shall be
effective January 1, 2001, and shall apply to annuity amounts accruing
for months after December 2000.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(a) Establishment of Railroad Retirement Investment Trust.--Section
15 of the Railroad Retirement Act of 1974 is amended by inserting after
subsection (i) the following:
``(j) Railroad Retirement Investment Trust.--
``(1) Establishment.--The Railroad Retirement Investment
Trust (hereinafter in this subsection referred to as the
`Trust') is hereby established. The Trust shall manage and
invest the assets of the Railroad Retirement Trust Fund
(hereinafter in this section referred to as the ``Fund'', which
is hereby established as a trust organized 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.
``(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.--The Trust shall have a Board of
Trustees, consisting of seven members, each appointed
by a unanimous vote of the Railroad Retirement Board.
The Railroad Retirement Board may remove any member so
appointed by unanimous vote. Of the seven members,
three shall represent the interests of labor, three
shall represent the interests of management, and one
shall represent the interests of the general public.
The members of the Board of Trustees shall not be
considered officers or employees of the Government of
the United States.
``(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 three 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. 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 Fund in a manner consistent
with such investment guidelines;
``(C) invest assets in the Fund, pursuant to the
policies adopted in subparagraph (A);
``(D) pay administrative expenses of the Fund and
the Trust from the money in the Fund; and
``(E) transfer money to the disbursing agent to pay
benefits payable under this Act from money in the Fund
and administrative expenses related to those benefits.
``(5) Reporting requirements and fiduciary standards.--The
following reporting requirements and fiduciary standards shall
apply with respect to the Railroad Retirement Trust and the
Railroad Retirement Trust Fund (and the assets held in such
Trust Fund):
``(A) Duties of the board of trustees.--The
Railroad Retirement Trust and each member of the Board
of Trustees shall discharge their duties with respect
to the assets of the Fund 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, 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 Fund 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 Fund on behalf of a party (or
represent a party) whose interests are adverse
to the interests of the Trust, the Fund, 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 Fund.
``(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 Fund (hereafter
in this subsection referred to as `Trust official')
shall be bonded. Such bond shall provide protection to
the Fund 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 Fund 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 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 Fund.
``(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 subparagraph
(E)(i); and
``(VI) any other comments and
information necessary to inform the
Congress about the operations and
financial condition of the Trust and
the Fund.
``(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
Railroad Retirement Investment 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 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.''.
(b) Conforming and Technical Amendments Governing Investments.--
Subsection 15(e) of the Railroad Retirement Act of 1974 is amended--
(1) beginning 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 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) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this section.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.
(a) Source of Payments.--Section 7(c)(1) of the Railroad Retirement
Act of 1974 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 is repealed.
(c) In General.--Section 15(a) of the Railroad Retirement Act of
1974 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) Effective Date.--The amendments made by this section shall take
effect January 1, 2001, except that the Railroad Retirement
Supplemental Account shall continue to exist until the transfer
authorized by the following sentence occurs. As soon as possible after
December 31, 2000, the Board shall determine the balance in the
Railroad Retirement Supplemental Account and shall direct the Secretary
of the Treasury to transfer such amount to the Railroad Retirement
Trust Fund and the Secretary shall make such transfer.
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(a) Railroad Retirement Account.--Section 15 of the Railroad
Retirement Act of 1974 is amended by adding after subsection (j) the
following:
``(k) Transfers to the Fund.--The Board shall, upon establishment
of the Railroad Retirement Trust Fund 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 Railroad
Retirement Trust Fund. The Secretary shall make that transfer.''.
(b) Railroad Retirement Trust Fund.--Section 15 of the Railroad
Retirement Act of 1974, as amended by subsection (a), is further
amended by adding after subsection (k) the following:
``(l) Railroad Retirement Trust Fund.--The Railroad Retirement
Trust shall from time to time transfer to the disbursing agent
described in 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.--Section 15A(d)(2)
of the Railroad Retirement Act of 1974 is amended to read as follows:
``(2) Upon establishment of the Railroad Retirement Trust Fund 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 required to be paid from that Account to the Railroad
Retirement Trust Fund, and the Secretary shall make that transfer. Any
balance transferred under this paragraph shall be used by the Railroad
Retirement 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 is amended by adding at the
end the following: ``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 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 is amended by adding at the end the
following: ``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 is amended to read
as follows:
``(4)(A) The Railroad Retirement Board, after consultation with the
Board of Trustees of the Railroad Retirement 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.
``(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 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 Railroad Retirement
Investment Trust the amounts required to be transferred from
the 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 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 Railroad Retirement Trust
Fund 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 subsections (a) and (c), the Board shall consult with the
Secretary of the Treasury to design an appropriate method to transfer
obligations held as of the date of the enactment or to convert such
obligations to cash prior to transfer. The Railroad Retirement Trust
may hold to maturity any obligations so 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 is amended--
(1) by adding the following sentence after the first
sentence: ``On or before May 1 of each year beginning in 2002,
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 is amended
by adding at the end the following:
``computation and certification of account benefit ratios
``Sec. 23. (a) On or before November 1, 2002, 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.
``(b) On or before November 1 of each year after 2002, 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.
``(c) Definition.--As used in this section, the term `account
benefit 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 RAILROAD RETIREMENT INVESTMENT TRUST.
Subsection (c) of section 501 is amended by adding at the end the
following new paragraph:
``(28) The Railroad Retirement Investment Trust established
under section 15(j) of the Railroad Retirement Act of 1974.''.
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(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).
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2000.
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 2001,
``(B) 14.2 percent in the case of compensation paid
during 2002, and
``(C) in the case of compensation paid during any
calendar year after 2002, 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 2001,
``(B) 14.20 percent in the case of compensation
received during 2002, and
``(C) in the case of compensation received during
any calendar year after 2002, 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 2001 or 2002, and
``(B) in the case of compensation received during
any calendar year after 2002, the percentage determined
under section 3241 for such calendar year.''.
(d) Determination of Rate.--Chapter 22 is amended by adding at the
end thereof 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 Railroad
Retirement Investment Trust (and for years before 2001, 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
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 ``section
3211(a)(2)'' and inserting ``section 3211(b)''.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section
3231(e) is 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, 2000.
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