
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document affected by Public Law 107-90 Section 102(a)]
[Document affected by Public Law 107-90 Section 102(c)]
[Document affected by Public Law 107-90 Section 103(b)]
[Document affected by Public Law 107-90 Section 104/a/1,2/A]
[Document affected by Public Law 107-90 Section 104(c)]
[CITE: 45USC231b]

 
                           TITLE 45--RAILROADS
 
               CHAPTER 9--RETIREMENT OF RAILROAD EMPLOYEES
 
             SUBCHAPTER IV--RAILROAD RETIREMENT ACT OF 1974
 
Sec. 231b. Computation of annuities


(a) Amount

    (1) The annuity of an individual under section 231a(a)(1) of this 
title shall be in an amount equal to the amount (before any reduction on 
account of age and before any deductions on account of work) of the old-
age insurance benefit or disability insurance benefit to which such 
individual would have been entitled under the Social Security Act [42 
U.S.C. 301 et seq.] if all of his or her service as an employee after 
December 31, 1936, had been included in the term ``employment'' as 
defined in that Act.
    (2) For purposes of this subsection, individuals entitled to an 
annuity under paragraph (iv) or (v) of section 231a(a)(1) of this title 
shall be deemed to be entitled to a disability insurance benefit under 
section 223 of the Social Security Act [42 U.S.C. 423].
    (3) In lieu of an annuity amount provided under subdivision (1), the 
annuity of an individual entitled to an annuity under paragraph (ii) of 
section 231a(a)(1) of this title which begins to accrue before the 
individual attains age 62 shall be in an amount equal to--
        (i) for each month prior to the first month throughout which the 
    individual is age 62, the amount (after any reduction on account of 
    age but before any deductions on account of work) of the old-age 
    insurance benefit to which such individual would have been entitled 
    under the Social Security Act [42 U.S.C. 301 et seq.] as of the date 
    on which such individual's annuity begins to accrue if such 
    individual had attained age 62 on the first day of the month in 
    which his or her annuity begins to accrue and if all of such 
    individual's service as an employee after December 31, 1936, had 
    been included in the term ``employment'' as defined in that Act, 
    using for purposes of this computation the number of benefit 
    computation years applicable to a person born in the year in which 
    such individual was born; and
        (ii) for months beginning with the first month throughout which 
    the individual is age 62, the amount (after any reduction on account 
    of age but before any deductions on account of work) of the old-age 
    insurance benefit to which such individual would have been entitled 
    under the Social Security Act if all of such individual's service as 
    an employee after December 31, 1936, had been included in the term 
    ``employment'' as defined in that Act.

(b) Increased annuities under subsection (a)

    (1) The amount of the annuity of an individual provided under 
subsection (a) of this section shall be increased by an amount equal to 
seven-tenths of 1 per centum of the product which is obtained by 
multiplying such individual's ``years of service'' by such individual's 
``average monthly compensation'' as determined under this subsection. 
The annuity amount payable to the individual under this subsection shall 
be reduced by 25 per centum of the annuity amount computed for such 
individual under subsection (h)(1) or (h)(2), and subsection (h)(5), of 
this section without regard to section 231f(c)(1) of this title. An 
individual's ``average monthly compensation'' for purposes of this 
subsection shall be the quotient obtained by dividing by 60 such 
individual's total compensation for the 60 months, consecutive or 
otherwise, during which such individual received that individual's 
highest monthly compensation, except that no part of any month's 
compensation in excess of the maximum amount creditable for any 
individual for such month under subsection (j) of this section shall be 
recognized. In determining the months of compensation to be used for 
purposes of this subsection, the total compensation reported for the 
individual under section 231h of this title or credited to such 
individual under subsection (j) of this section for a year divided by 
the number of months of service credited to such individual under 
subsection (i) of this section with respect to such year shall be 
considered the monthly compensation of the individual for each month of 
service in any year for which records of the Board do not show the 
amount of compensation paid to the individual on a monthly basis. If the 
``average monthly compensation'' computed under this subsection is not a 
multiple of $1, it shall be rounded to the next lower multiple of $1.
    (2) For purposes of subdivision (1) of this subsection, in 
determining ``average monthly compensation'' for an individual who has 
not engaged in employment for an employer in the 60-month period 
preceding the month in which such individual's annuity began to accrue, 
and whose major employment during such 60-month period was for a United 
States department or agency named in section 231(o) of this title, the 
amount of compensation used with respect to each month used in making 
such determination shall be the product of--
        (i) the compensation credited to such individual for such month 
    under paragraph (1) of this subsection; and
        (ii) the quotient obtained by dividing--
            (I) the average of total wages (as determined under section 
        215(b)(3)(A)(ii)(I) of the Social Security Act [42 U.S.C. 
        415(b)(3)(A)(ii)(I)]) for the second calendar year preceding the 
        earliest of the year of the individual's death or the year in 
        which an annuity begins to accrue to such individual 
        (disregarding an annuity based on disability which is terminated 
        because such individual has recovered from such disability if 
        such individual engages in any regular employment after such 
        termination); by
            (II) the average of total wages (as determined under section 
        215(b)(3)(A)(ii)(II) of the Social Security Act [42 U.S.C. 
        415(b)(3)(A)(ii)(II)]) for the calendar year during which such 
        month occurred, unless such month occurred prior to calendar 
        year 1951, in which case, the average of total wages so 
        determined for 1951.

In no event shall ``average monthly compensation'' determined for an 
individual under this subdivision exceed the maximum ``average monthly 
compensation'' which can be determined under subdivision (1) of this 
subsection for any person retiring January 1 of the year in which such 
individual's annuity began to accrue.

(c), (d) Repealed. Pub. L. 97-35, title XI, Sec. 1118(b), Aug. 13, 1981, 
        95 Stat. 631

(e) Supplemental annuities

    The supplemental annuity of an individual under section 231a(b) of 
this title shall be $23 plus an additional amount of $4 for each year of 
service that the individual has in excess of 25 years, but in no case 
shall the supplemental annuity exceed $43.

(f) Reductions in annuities

    (1) If the total amount of an individual's annuity and supplemental 
annuity computed under the preceding subsections of this section would, 
before any reductions on account of age, before any reduction due to 
such individual's entitlement to a monthly insurance benefit under the 
Social Security Act [42 U.S.C. 301 et seq.], and disregarding any 
increases in such total amount which become effective after the date on 
which such individual's annuity under section 231a(a)(1) of this title 
begins to accrue, exceed an amount equal to the sum of (A) 100 per 
centum of his ``final average monthly compensation'' up to an amount 
equal to 50 per centum of one-twelfth of the maximum annual taxable 
``wages'' (as defined in section 3121 of the Internal Revenue Code of 
1986 [26 U.S.C. 3121]) for the calendar year in which such individual's 
annuity under section 231a(a)(1) of this title begins to accrue, plus 
(B) 80 per centum of so much of his ``final average monthly 
compensation'' as exceeds 50 per centum of one-twelfth of the maximum 
annual taxable ``wages'' (as defined in section 3121 of the Internal 
Revenue Code of 1986) for the calendar year in which such individual's 
annuity under section 231a(a)(1) of this title begins to accrue, the 
supplemental annuity of such individual first, and then, if necessary, 
the annuity amount of such individual as computed under subsection (b) 
of this section, shall be reduced until such total amount of such 
individual's annuity and supplemental annuity equals such sum or until 
such supplemental annuity and such annuity amount computed under 
subsection (b) of this section are reduced to zero, whichever occurs 
first: Provided, however, That the provisions of this subdivision shall 
not operate to reduce the total amount of an individual's annuity and 
supplemental annuity computed under the preceding subsections of this 
section below $1,200. For purposes of this subdivision, the ``final 
average monthly compensation'' of an individual shall except as provided 
in the following sentence be determined by dividing the total 
compensation received by such individual in the two calendar years, 
consecutive or otherwise, in which he was credited with the highest 
total compensation during the ten-year period ending with December 31 of 
the year in which such individual's annuity under section 231a(a)(1) of 
this title begins to accrue by 24. If the individual's ``average monthly 
compensation'' is determined under subdivision (2) of subsection (b) of 
this section, the ``final average monthly compensation'' for such 
individual shall be the average of the compensation for the 24 months in 
which the compensation determined for the purpose of subdivision (2) of 
subsection (b) of this section is the highest. For purposes of this 
subdivision, the term ``compensation'' shall include ``compensation'' as 
defined in section 231(h) of this title, ``wages'' as defined in section 
209 of the Social Security Act [42 U.S.C. 409], ``self-employment 
income'' as defined in section 211(b) of the Social Security Act [42 
U.S.C. 411(b)], and wages deemed to have been paid under section 217 or 
229 of the Social Security Act [42 U.S.C. 417, 429] on account of 
military service: Provided, however, That in no case shall the 
compensation with respect to any calendar month exceed the limitation on 
the compensation for such month prescribed in subsection (j) of this 
section. Wages and self-employment income included as compensation for 
purposes of this subdivision shall, in the absence of evidence to the 
contrary, be presumed to have been paid in equal proportions with 
respect to all months in the calendar quarter in which credited, in the 
case of wages paid before 1978, or in equal proportions with respect to 
all months in the calendar year in which credited, in the case of self-
employment income and in the case of wages paid after 1977.
    (2) If, in the case of an individual whose annuity under section 
231a(a)(1) of this title began to accrue prior to January 1, 1983, the 
annuity (before any reduction due to such individual's entitlement to a 
monthly insurance benefit under the Social Security Act [42 U.S.C. 301 
et seq.] and disregarding any amount provided by subsection (h) of this 
section) plus the supplemental annuity to which such individual is 
entitled for any month under this subchapter, together with the annuity, 
if any, of the spouse of such individual (before any reduction due to 
such spouse's entitlement to a wife's or husband's insurance benefit 
under the Social Security Act and disregarding any amount provided by 
section 231c(e) of this title), before any reductions under the 
provisions of section 231a(f) of this title is less than the total 
amount which would have been payable to such individual and his spouse 
for such month, on the basis of the individual's compensation and years 
of service, under the provisions of the Railroad Retirement Act of 1937 
as in effect on December 31, 1974 [45 U.S.C. 228a et seq.], 
disregarding, for purposes of the computations under such Railroad 
Retirement Act of 1937 compensation for any month after December 31, 
1974, in excess of one-twelfth of the maximum annual taxable ``wages'' 
(as defined in section 3121 of the Internal Revenue Code of 1986 [26 
U.S.C. 3121]) for the calendar year 1974, the annuity of such individual 
and the annuity of such spouse, if any, shall be increased, without 
regard to the provisions of subdivision (1) of this subsection, 
proportionately so as to equal such total amount. For the purpose of 
computing amounts under this subdivision, the Board shall have the 
authority to approximate the effect of the reductions prescribed by 
sections 3(a)(2) and 3(a)(3) of the Railroad Retirement Act of 1937 [45 
U.S.C. 228c(a)(2), (a)(3)]. For purposes of computing amounts payable 
under the Railroad Retirement Act of 1937, any increases in the amounts 
determined under the first proviso of section 3(e) of such Act which 
would have become effective after December 31, 1974, shall be 
disregarded.
    (3) If for any month in which an annuity accrues and is payable 
under this subchapter the annuity to which an individual is entitled 
under this subchapter (or would have been entitled except for a 
reduction pursuant to a joint and survivor election), together with the 
annuity, if any, of the spouse and divorced wife of such individual, is 
less than the total amount, or the additional amount, which would have 
been payable to all persons for such month under the Social Security Act 
[42 U.S.C. 301 et seq.] if such individual's service as an employee 
after December 31, 1936, were included in the term ``employment'' as 
defined in that Act, the annuities of the individual and spouse shall be 
increased proportionately to such total amount, or such additional 
amount: Provided, however, That if an annuity accrues to an individual 
or a spouse for a part of a month, the amount payable for such part of a 
month under this subdivision shall be one-thirtieth of the amount 
payable under this subdivision for an entire month, multiplied by the 
number of days in such part of a month. For purposes of this 
subdivision, (i) persons not entitled to an annuity under section 231a 
of this title shall not be included in the computation under this 
subdivision except a spouse who could qualify for an annuity under 
section 231a(c) of this title if the individual from whom the spouse's 
annuity under this subchapter would derive had attained age 60 or 62, as 
the case may be, and such individual's children who meet the definition 
as such contained in section 216(e) of the Social Security Act [42 
U.S.C. 416(e)]; (ii) after an annuity has been certified for payment and 
this subdivision was inapplicable after allowing for any waiting period 
under section 223(c)(2) of the Social Security Act [42 U.S.C. 
423(c)(2)], and after having considered the inclusion of all persons who 
were then eligible for inclusion in the computation under this 
subdivision, or was then applicable but later became inapplicable, any 
recertification in such annuity under this subdivision shall not take 
into account persons not entitled to an annuity under section 231a of 
this title except a spouse who could qualify for an annuity under 
section 231a(c) of this title when she attains age 60 or 62, as the case 
may be, if the individual from whom the spouse's annuity would derive 
had attained age 60 or 62, as the case may be, and who was married to 
such individual at the time he applied for his annuity; and (iii) in 
computing the amount to be paid under this subdivision the only benefits 
under title II of the Social Security Act [42 U.S.C. 401 et seq.] which 
shall be considered shall be those to which the persons included in the 
computation are entitled.

(g) Increased annuities under subsection (b)

    (1) Effective with the date of any increase after January 31, 1984, 
in monthly insurance benefits under the Social Security Act [42 U.S.C. 
301 et seq.] which occurs, or which would have occurred had there not 
been a general benefit increase under that Act, pursuant to the 
automatic cost-of-living provisions of section 215(i) of that Act [42 
U.S.C. 415(i)], that portion of the annuity of an individual which is 
computed under subsection (b) of this section shall, if such 
individual's annuity under section 231a(a)(1) of this title began to 
accrue on or before the effective date of a particular increase under 
this subdivision, be increased by 32.5 per centum of the percentage 
increase in the index which is used, or which would have been used had 
there not been a general benefit increase under the Social Security Act, 
in increasing benefits under the Social Security Act pursuant to the 
automatic cost-of-living provisions of section 215(i) of that Act. Any 
increase under this subsection shall not be deferred and shall be 
reflected in all payments made to annuitants after such increase under 
this subsection becomes effective.
    (2) The first and, if necessary, the following time or times after 
January 1, 1983, that monthly insurance benefits under section 202 of 
the Social Security Act [42 U.S.C. 402] are increased, that portion of 
the annuity of an individual which is computed under subsection (b) of 
this section as increased under subdivision (1) of this subsection 
shall, if such individual's annuity under section 231a(a)(1) of this 
title began to accrue in or before the year in which such first increase 
under the Social Security Act [42 U.S.C. 301 et seq.] became effective, 
be reduced by the dollar amount by which that portion of the annuity 
provided such individual under subsection (a) of this section was 
increased, after any reduction under subsection (m) of this section, as 
a result of such increase or increases under the Social Security Act 
until the total dollar amount of such reduction or reductions equals 5 
per centum of the annuity amount provided such individual under 
subsection (a) of this section, as reduced under subsection (m) of this 
section, prior to such first increase. In no case shall the reduction by 
reason of this paragraph operate to reduce such portion to an amount 
less than $10.

(h) Increased annuities under subsections (a) and (b)

    (1) The amount of the annuity provided under subsections (a) and (b) 
of this section of an individual who (A) will have (i) rendered service 
as an employee to an employer, or as an employee representative, during 
the calendar year 1974, or (ii) had a current connection with the 
railroad industry on December 31, 1974, or at the time his annuity under 
section 231a(a)(1) of this title began to accrue, or (iii) completed 
twenty-five years of service prior to January 1, 1975, and (B) will have 
(i) completed ten years of service prior to January 1, 1975, and (ii) 
been permanently insured under the Social Security Act [42 U.S.C. 301 et 
seq.] on December 31, 1974, shall be increased by an amount equal to the 
amount by which (C) the sum of (i) the primary insurance amount to which 
such individual would have been entitled, upon the attainment of age 65 
(or, if later, for January 1975), under the provisions of the Social 
Security Act as in effect on December 31, 1974, if his service as an 
employee after December 31, 1936, and prior to January 1, 1975, were 
included in the term ``employment'' as defined in that Act and if he had 
no wages or self-employment income under that Act other than wages 
derived from such service as an employee, and (ii) the primary insurance 
amount to which such individual would have been entitled, upon the 
attainment of age 65 (or, if later, for January 1975), under the 
provisions of the Social Security Act as in effect on December 31, 1974, 
on the basis of his wages and self-employment income derived from 
employment and self-employment under that Act prior to January 1, 1975, 
exceeds (D) the primary insurance amount to which such individual would 
have been entitled, upon the attainment of age 65 (or, if later, for 
January 1975), under the provisions of the Social Security Act as in 
effect on December 31, 1974, on the basis of his wages and self-
employment income derived from employment and self-employment under that 
Act prior to January 1, 1975, and on the basis of compensation derived 
from service as an employee after December 31, 1936, and prior to 
January 1, 1975, if such service as an employee had been included in the 
term ``employment'' as defined in that Act.
    (2) The amount of the annuity provided under subsections (a) and (b) 
of this section to an individual who (A) will not have met the 
conditions set forth in subclause (i), (ii), or (iii) of clause (A) of 
subdivision (1) of this subsection, but (B) will have (i) completed ten 
years of service prior to January 1, 1975, and (ii) been permanently 
insured under the Social Security Act [42 U.S.C. 301 et seq.] as of 
December 31 of the calendar year prior to 1975 in which he last rendered 
service as an employee to an employer, or as an employee representative, 
shall be increased by an amount equal to the amount by which (C) the sum 
of (i) the primary insurance amount to which such individual would have 
been entitled, upon the attainment of age 65 (or, if later, for January 
1975), under the provisions of the Social Security Act as in effect on 
December 31, 1974, if his service as an employee after December 31, 
1936, and prior to January 1, 1975, were included in the term 
``employment'' as defined in that Act and if he had no wages or self-
employment income under that Act other than wages derived from such 
service as an employee, and (ii) the primary insurance amount to which 
such individual would have been entitled, upon the attainment of age 65 
(or, if later, for January 1975), under the provisions of the Social 
Security Act as in effect on December 31, 1974, on the basis of his 
wages and self-employment income derived from employment and self-
employment under that Act as of December 31 of the calendar year prior 
to 1975 in which he last performed service as an employee under this 
subchapter, exceeds (D) the primary insurance amount to which such 
individual would have been entitled, upon the attainment of age 65 (or, 
if later, for January 1975), under the provisions of the Social Security 
Act as in effect on December 31, 1974, on the basis of his wages and 
self-employment income derived from employment and self-employment under 
that Act as of December 31 of the calendar year prior to 1975 in which 
he last performed service as an employee under this subchapter and on 
the basis of compensation derived from service as an employee after 
December 31, 1936, and prior to January 1, 1975, if such service as an 
employee had been included in the term ``employment'' as defined in that 
Act.
    (3) The amount of the annuity provided under subsections (a) and (b) 
of this section of an individual who (A) will have (i) rendered service 
as an employee to an employer, or as an employee representative, during 
the calendar year 1974, or (ii) had a current connection with the 
railroad industry on December 31, 1974, or at the time his annuity under 
section 231a(a)(1) of this title began to accrue, or (iii) completed 
twenty-five years of service prior to January 1, 1975, and (B) will have 
completed ten years of service prior to January 1, 1975, and is the 
wife, husband, widow, or widower of a person who will have been 
permanently insured under the Social Security Act [42 U.S.C. 301 et 
seq.] on December 31, 1974, shall be increased by an amount equal to the 
smaller of (C) the wife's, husband's, widow's, or widower's insurance 
benefit to which such individual would have been entitled, upon 
attaining age 65 (or, if later, for January 1975), under the provisions 
of the Social Security Act as in effect on December 31, 1974, on the 
basis of such person's wages and self-employment income derived from 
employment and self-employment under that Act prior to January 1, 1975, 
or (D) the primary insurance amount to which such individual would have 
been entitled upon attaining age 65 (or, if later, for January 1975), 
under the provisions of the Social Security Act as in effect on December 
31, 1974, on the basis of such individual's wages and self-employment 
income derived from employment and self-employment under that Act prior 
to January 1, 1975, and on the basis of compensation derived from 
service as an employee after December 31, 1936, and prior to January 1, 
1975, if such service as an employee had been included in the term 
``employment'' as defined in that Act.
    (4) The amount of the annuity provided under subsections (a) and (b) 
of this section of an individual who (A) will not have met the 
conditions set forth in subclause (i), (ii), or (iii) of clause (A) of 
subdivision (3) of this subsection, but (B) will have completed ten 
years of service prior to January 1, 1975, and is the wife, husband, 
widow, or widower of a person who will have been permanently insured 
under the Social Security Act [42 U.S.C. 301 et seq.] as of December 31 
of the calendar year prior to 1975 in which such individual last 
rendered service as an employee to an employer, or as an employer 
representative, shall be increased by an amount equal to the smaller of 
(C) the wife's husband's widow's, or widower's insurance benefit to 
which such individual would have been entitled, upon attaining age 65 
(or, if later, for January 1975), under the provisions of the Social 
Security Act as in effect on December 31, 1974, on the basis of such 
person's wages and self-employment income derived from employment and 
self-employment under that Act as of December 31 of the calendar year 
prior to 1975 in which such individual last performed service as an 
employee under this subchapter or (D) the primary insurance amount to 
which such individual would have been entitled upon attaining age 65 
(or, if later, for January 1975), under the provisions of the Social 
Security Act as in effect on December 31, 1974, on the basis of such 
individual's wages and self-employment income derived from employment 
and self-employment under that Act as of December 31 of the calendar 
year prior to 1975 in which such individual last performed service as an 
employee under this subchapter and on the basis of compensation derived 
from service as an employee after December 31, 1936, and prior to 
January 1, 1975, if such service as an employee had been included in the 
term ``employment'' as defined in that Act.
    (5) The amount computed under subdivision (1), (2), (3), or (4) of 
this subsection shall be increased by the same percentage, or 
percentages, as benefits under the Social Security Act [42 U.S.C. 301 et 
seq.] are increased, or would have been increased had there been no 
general benefit increases under the Social Security Act, pursuant to the 
automatic cost-of-living provisions of section 215(i) of that Act [42 
U.S.C. 415(i)] during the period from January 1, 1975, to the earlier of 
the date on which the individual's annuity under section 231a(a)(1) of 
this title began to accrue or January 1, 1982.
    (6) No amount shall be payable to an individual under subdivision 
(3) or (4) of this subsection unless the entitlement of such individual 
to such amount had been determined prior to August 13, 1981.

(i) Years of service

    (1) The ``years of service'' of an individual shall include all his 
service subsequent to December 31, 1936.
    (2) The ``years of service'' of an individual shall also include his 
voluntary or involuntary military service, within or without the United 
States, during any war service period: Provided, however, That such 
military service shall be included only if, prior to the beginning of 
his military service and in the same calendar year in which such 
military service began, or in the next preceding calendar year, the 
individual rendered service for compensation to an employer or to a 
person service to which is otherwise creditable under this subchapter, 
or lost time as an employee for which he received remuneration, or was 
serving as an employee representative: Provided further, That such 
military service shall be included only subject to and in accordance 
with the provisions of subdivisions (1) and (3) of this subsection in 
the same manner as though military service were service rendered as an 
employee: And provided further, That such military service rendered 
after December 1956 shall not be included with respect to any month if 
(A) any benefits are payable for that month under the Social Security 
Act [42 U.S.C. 301 et seq.] on the basis of such individual's wages and 
self-employment income, (B) such military service was included in the 
computation of such benefits, and (C) the inclusion of such military 
service in the computation of such benefits resulted (for that month) in 
benefits not otherwise payable or in an increase in the benefits 
otherwise payable: And provided further, That an individual who entered 
military service prior to a war service period shall not be regarded as 
having been in military service in a war service period with respect to 
any part of the period for which he entered such military service.
    (3) The ``years of service'' of an individual who was an employee on 
August 29, 1935, shall, if the total number of his ``years of service'' 
as determined under subdivisions (1) and (2) is less than thirty, also 
include his service prior to January 1, 1937, but not so as to make his 
total years of service exceed thirty: Provided, however, That with 
respect to any such individual who rendered service to any employer 
subsequent to December 31, 1936, and who on August 29, 1935, was not an 
employee of an employer conducting the principal part of its business in 
the United States, no greater proportion of his service rendered prior 
to January 1, 1937, shall be included in his ``years of service'' than 
the proportion which his total compensation (without regard to any 
limitation on the amount of compensation otherwise provided in this 
subchapter) for service subsequent to December 31, 1936, rendered 
anywhere to an employer conducting the principal part of its business in 
the United States or rendered in the United States to any other employer 
bears to his total compensation (without regard to any limitation on the 
amount of compensation otherwise provided in this subchapter) for 
service rendered anywhere to an employer subsequent to December 31, 
1936. Where the ``years of service'' include only part of the service 
prior to January 1, 1937, the part included shall be taken in reverse 
order beginning with the last calendar month of such service.
    (4) Where for any calendar year after 1984 an individual has 
performed service for compensation in less than twelve months of the 
calendar year but has received compensation in excess of an amount 
determined by multiplying the number of months in the year in which such 
individual performed service for compensation by an amount equal to one-
twelfth of the current maximum annual taxable ``wages'' as defined in 
section 3121 of the Internal Revenue Code of 1986 [26 U.S.C. 3121], the 
individual shall be deemed to have rendered service for compensation in 
that number of months in the calendar year, but not to exceed twelve, 
which is equal to the quotient of the amount of such individual's 
compensation for the calendar year divided by an amount equal to one-
twelfth of the current maximum annual taxable ``wages'' as defined in 
section 3121 of the Internal Revenue Code of 1986, with any remainder 
produced by this computation increasing the quotient by one, but an 
individual shall not be deemed under this subdivision to have rendered 
service for compensation in any month in which such individual was 
neither in an employment relation to one or more employers nor an 
employee representative.

(j) Average monthly compensation

    The ``average monthly compensation'' shall be computed in the manner 
specified in subsection (b) of this section, except (1) that with 
respect to service prior to January 1, 1937, the monthly compensation 
shall be the average compensation paid to an employee with respect to 
calendar months included in his years of service in the years 1924-1931, 
and (2) the amount of compensation paid or attributable as paid to him 
with respect to each month of service before September 1941 as a station 
employee whose duties consisted of or included the carrying of 
passengers' hand baggage and otherwise assisting passengers at passenger 
stations and whose remuneration for service to the employer was, in 
whole or in substantial part, in the forms of tips, shall be the monthly 
average of the compensation paid to him as a station employee in his 
months of service in the period September 1940 through August 1941: 
Provided, however, That where service in the period 1924 through 1931 in 
the one case, or in the period September 1940 through August 1941 in the 
other case, is, in the judgment of the Board, insufficient to constitute 
a fair and equitable basis for determing \1\ the amount of compensation 
paid or attributable as paid to him in each month of service before 
1937, or September 1941, respectively, the Board shall determine the 
amount of such compensation for each such month in such manner as in its 
judgment shall be fair and equitable. In computing the monthly 
compensation, no part of any month's compensation in excess of $300 for 
any month before July 1, 1954, or in excess of $350 for any month after 
June 30, 1954, and before June 1, 1959, or in excess of $400 for any 
month after May 31, 1959, and before November 1, 1963, or in excess of 
$450 for any month after October 31, 1963, and before October 1, 1965, 
or in excess of (i) $450, or (ii) an amount equal to one-twelfth of the 
current maximum annual taxable ``wages'' as defined in section 3121 of 
the Internal Revenue Code of 1986 [26 U.S.C. 3121], whichever is 
greater, for any month after September 30, 1965, shall be recognized. If 
for any calendar year after 1984 an employee has received compensation 
of less than one-twelfth of the current maximum annual taxable ``wages'' 
as defined in section 3121 of the Internal Revenue Code of 1986 in one 
or more months of the calendar year, the total compensation paid such 
employee in the calendar year (without regard to the limitation on the 
amount of compensation provided in the preceding sentence) shall be 
deemed to have been paid in equal proportions with respect to all months 
in the year in which the employee will have been in the service of one 
or more employers for compensation or will have performed service for 
compensation as an employee representative, but this sentence shall not 
operate to increase the employee's compensation for any month above an 
amount equal to one-twelfth of the current maximum annual taxable 
``wages'' as defined in section 3121 of the Internal Revenue Code of 
1986. If the employee earned compensation in service after June 30, 
1937, and after the last day of the calendar year in which he attained 
age sixty-five, such compensation and service shall be disregarded in 
computing the average monthly compensation if the result of taking such 
compensation into account in such computation would be to diminish his 
annuity. Where an employee claims credit for months of service rendered 
within two years prior to his retirement from the service of an 
employer, with respect to which the employer's return pursuant to 
section 231h of this title has not been entered on the records of the 
Board before the employee's annuity could otherwise be certified for 
payment, the Board may, in its discretion (subject to subsequent 
adjustment at the request of the employee) include such months in the 
computation of the annuity without further verification and may consider 
the compensation for such months to be the average of the compensation 
for months in the last period for which the employer has filed a return 
of the compensation of such employee and such return has been entered on 
the records of the Board.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``determining''.
---------------------------------------------------------------------------

(k) Employee representatives

    The annuity of an individual who shall have been an employee 
representative shall be determined in the same manner and with the same 
effect as if the employee organization by which he shall have been 
employed were an employer.

(l) Reductions for increased annuities

    (1) Except as provided in subdivision (2) of this subsection, if an 
annuity awarded under section 231a(a)(1)(iii) of this title or under 
section 231a(c)(2) of this title is increased or decreased either by a 
change in the law or by a recomputation, the reduction on account of age 
in the amount of such increase or decrease shall be computed as though 
such increased or decreased annuity amount had been in effect for and 
after the month in which the annuitant first became entitled to such 
annuity under section 231a(a)(1)(iii) or section 231a(c)(2) of this 
title.
    (2) The reduction required under section 231a(a)(1)(iii) or section 
231a(c)(2) of this title may be applied separately to each of the 
annuity amounts computed under subsections (a), (b), and (h) of this 
section and subsections (a), (b), and (e) of section 231c of this title. 
For this purpose, in any case in which an annuity amount was computed 
for an individual under the provisions of this subchapter or of Public 
Law 93-445 prior to October 1, 1981, an annuity amount computed under 
subsections (a), (b), (c), (d) and (h) of this section, subsection (a), 
(b), or (e) of section 231c of this title, and section 204 or section 
206 of Public Law 93-445 shall be reduced by its proportionate share of 
the reduction on account of age. For purposes of the preceding sentence, 
annuity amounts computed for an individual under subsections (b), (c), 
and (d) of this section prior to October 1981 shall be considered as one 
annuity amount.

(m) Reductions due to monthly social security payments

    The annuity of any individual under subsection (a) of this section 
for any month shall, after any reduction pursuant to paragraph (iii) of 
section 231a(a)(1) of this title, be reduced, but not below zero, by the 
amount of any monthly benefit (before any deductions on account of work) 
payable to that individual for that month under title II of the Social 
Security Act [42 U.S.C. 401 et seq.].

(Aug. 29, 1935, ch. 812, Sec. 3, as restated June 24, 1937, ch. 382, pt. 
I, 50 Stat. 307, as restated Pub. L. 93-445, title I, Sec. 101, Oct. 16, 
1974, 88 Stat. 1319; amended Pub. L. 95-216, title III, Sec. 358(a), 
Dec. 20, 1977, 91 Stat. 1556; Pub. L. 96-582, Sec. 1, Dec. 23, 1980, 94 
Stat. 3374; Pub. L. 97-35, title XI, Sec. 1118, Aug. 13, 1981, 95 Stat. 
630; Pub. L. 98-76, title I, Sec. 101(a), 102(a), 107(a), (b), title IV, 
Secs. 404(1), (2), 405(a), Aug. 12, 1983, 97 Stat. 411, 413, 418, 434, 
435; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095.)

                       References in Text

    The Social Security Act, referred to in subsecs. (a)(1), (3), (f), 
(g), (h)(1) to (5), (i)(2), and (m), is act Aug. 14, 1935, ch. 531, 49 
Stat. 620, as amended, which is classified generally to chapter 7 
(Sec. 301 et seq.) of Title 42, The Public Health and Welfare. Title II 
of the Social Security Act is classified generally to subchapter II 
(Sec. 401 et seq.) of chapter 7 of Title 42. For complete classification 
of this Act to the Code, see section 1305 of Title 42 and Tables.
    The Railroad Retirement Act of 1937, referred to in subsec. (f)(2), 
is act Aug. 29, 1935, ch. 812, 49 Stat. 867, as amended generally by act 
June 24, 1937, ch. 382, part I, 50 Stat. 307, which is classified 
principally to subchapter III (Sec. 228a et seq.) of this chapter. The 
Railroad Retirement Act of 1937 was amended generally and redesignated 
the Railroad Retirement Act of 1974 by Pub. L. 93-445, title I, Oct. 16, 
1974, 88 Stat. 1305. The Railroad Retirement Act of 1974 is classified 
generally to this subchapter. For complete classification of these Acts 
to the Code, see Tables.
    Section 3 of the Railroad Retirement Act of 1937, referred to in 
subsec. (f)(2), which was classified to section 228c of this title, has 
been omitted from the Code.
    Sections 204 and 206 of Public Law 93-445 (approved Oct. 16, 1974, 
88 Stat. 1352, 1354), referred to in subsec. (l)(2), are set out as part 
of the Transitional Provisions note under section 231 of this title.


                               Amendments

    1986--Subsecs. (f)(1), (2), (i)(4), (j). Pub. L. 99-514 substituted 
``Internal Revenue Code of 1986'' for ``Internal Revenue Code of 1954'' 
wherever appearing.
    1983--Subsec. (a)(2). Pub. L. 98-76, Sec. 101(a)(1), amended par. 
(2) generally, substituting provisions that for purposes of this 
subsection, individuals entitled to an annuity under section 
231a(a)(1)(iv) or (v) of this title shall be deemed to be entitled to a 
disability insurance benefit under section 223 of the Social Security 
Act, for provisions that for purposes of this subsection, individuals 
entitled to an annuity under paragraph (ii) of section 231a(a)(1) of 
this title would except for purposes of recomputations in accordance 
with the provisions of section 215(f) of the Social Security Act, be 
deemed to have attained age 65, and individuals entitled to an annuity 
under paragraph (iv) or (v) of such section 231a(a)(1) of this title 
would be deemed to be entitled to a disability insurance benefit under 
section 223 of the Social Security Act.
    Subsec. (a)(3). Pub. L. 98-76, Sec. 101(a)(2), added par. (3).
    Subsec. (f)(1). Pub. L. 98-76, Sec. 404(1), inserted ``except as 
provided in the following sentence'' in sentence relating to the 
determination of the ``final average monthly compensation'' of an 
individual.
    Pub. L. 98-76, Sec. 404(2), inserted ``If the individual's `average 
monthly compensation' is determined under subdivision (2) of subsection 
(b) of this section, the `final average monthly compensation' for such 
individual shall be the average of the compensation for the 24 months in 
which the compensation determined for the purpose of subdivision (2) of 
subsection (b) of this section is the highest.''
    Subsec. (f)(3). Pub. L. 98-76, Sec. 405(a), in first sentence, 
inserted ``and divorced wife'' after ``of the spouse'', and substituted 
``the annuities of the individual and spouse'' for ``such annuity or 
annuities''.
    Subsec. (g). Pub. L. 98-76, Sec. 102(a), amended subsec. (g) 
generally. Prior to amendment, subsec. (g) read as follows: ``Effective 
with the month of June for any year after 1981, that portion of the 
annuity of an individual which is computed under subsection (b) of this 
section shall, if such individual's annuity under section 231a(a)(1) of 
this title began to accrue on or before June 1 of such year, be 
increased by 32.5 per centum of the percentage increase, if any (rounded 
to the nearest one-tenth of 1 per centum), obtained by comparing (A) the 
unadjusted Consumer Price Index for the calendar quarter ending March 31 
of such year with (B) the higher of (i) such index for the calendar 
quarter ending March 31 of the year immediately preceding such year or 
(ii) such index for the calendar quarter ending March 31 of any 
preceding year after 1980. The unadjusted Consumer Price Index for any 
calendar quarter shall be the arithmetical mean of such index for the 
three months in such quarter.''
    Subsec. (i)(4). Pub. L. 98-76, Sec. 107(a), added par. (4).
    Subsec. (j). Pub. L. 98-76, Sec. 107(b), inserted provision that if 
for any calendar year after 1984 an employee has received compensation 
of less than one-twelfth of the current maximum annual taxable ``wages'' 
as defined in section 3121 of the Internal Revenue Code of 1954 in one 
or more months of the calendar year, the total compensation paid such 
employee in the calendar year (without regard to the limitation on the 
amount of compensation provided in the preceding sentence) shall be 
deemed to have been paid in equal proportions with respect to all months 
in the year in which the employee will have been in the service of one 
or more employers for compensation or will have performed service for 
compensation as an employee representative, but this sentence shall not 
operate to increase the employee's compensation for any month above an 
amount equal to one-twelfth of the current maximum annual taxable 
``wages'' as defined in section 3121 of the Internal Revenue Code of 
1954.
    1981--Subsec. (b). Pub. L. 97-35, Sec. 1118(a), substituted new 
criteria for computation of increase in annuity of an individual 
provided under subsec. (a) of this section.
    Subsec. (c). Pub. L. 97-35, Sec. 1118(b), repealed subsec. (c) which 
provided for amount of increase of annuity of an individual entitled to 
an annuity under section 231a(a)(1) of this title and who rendered 
service as an employee to an employer, or as an employee representative 
subsequent to Dec. 31, 1974.
    Subsec. (d). Pub. L. 97-35, Sec. 1118(b), repealed subsec. (d) which 
prescribed a formula for increase in amount of annuity of an individual 
provided for in other provisions of this section.
    Subsec. (f)(1). Pub. L. 97-35, Sec. 1118(c)(2), substituted ``such 
individual's annuity under section 231a(a)(1) of this title begins to 
accrue, exceed an amount equal to the sum of (A)'' for ``such begins to 
accrue, exceed an amount equal to the sum of individual's annuity under 
section 231a(a)(1) of this title (A)''.
    Pub. L. 97-35, Sec. 1118(c)(1), substituted ``subsection (b) of this 
section'' for ``subsections (b), (c), and (d) of this section'' in two 
places.
    Subsec. (g). Pub. L. 97-35, Sec. 1118(d), substituted new formula 
for increase of portion of annuity of an individual computed under 
subsec. (b) of this section for formula for increase of portions of 
annuity of an individual computed under subsecs. (b) and (d) of this 
section, and revised effective dates for such increases.
    Subsec. (h)(1) to (4). Pub. L. 97-35, Sec. 1118(e)(1), substituted 
``subsections (a) and (b) of this section'' for ``subsections (a) 
through (d) of this section'' in subdivs. (1) to (4).
    Subsec. (h)(5). Pub. L. 97-35, Sec. 1118(e)(2), substituted 
``January 1, 1975, to the earlier of the date on which the individual's 
annuity under section 231a(a)(1) of this title began to accrue or 
January 1, 1982'' for ``January 1, 1975, to the date on which the 
individual's annuity under section 231a(a)(1) of this title began to 
accrue''.
    Subsec. (h)(6). Pub. L. 97-35, Sec. 1118(e)(3), added subdiv. (6).
    Subsec. (j). Pub. L. 97-35, Sec. 1118(f), substituted definition of 
average monthly compensation by reference to computation in manner 
specified in subsec. (b) of this section, for definition by reference to 
average compensation paid to an employee with respect to calendar months 
included in his years of service, and struck out provision rounding to 
next lower multiple of $1 if average monthly compensation is not a 
multiple of $1.
    Subsec. (l). Pub. L. 97-35, Sec. 1118(g), designated existing 
provisions as subdiv. (1), substituted provisions that except as 
provided in subdiv. (2) of this subsection, if an annuity awarded under 
section 231a(a)(1)(iii) or under section 231a(c)(2) of this title is 
increased or decreased either by a change in law or by a recomputation, 
the reduction on account of age in the amount of such increase or 
decrease shall be computed as though such increased or decreased annuity 
amount had been in effect for and after month in which annuitant first 
became entitled to such annuity under section 231a(a)(1)(iii) or section 
231a(c)(2) of this title, for provisions that in cases where an annuity 
awarded under section 231a(a)(1)(iii) or under section 231a(c)(2) of 
this title is increased either by a change in law or by a recomputation, 
the reduction for the increase in the annuity shall be determined 
separately and period with respect to which the reduction applies shall 
be determined as if such increase were a separate annuity payable for 
and after first month for which such increase is effective, and added 
subdiv. (2).
    Subsec. (m). Pub. L. 97-35, Sec. 1118(h)(2), inserted ``(before any 
deductions on account of work)'' after ``monthly benefit''.
    Pub. L. 97-35, Sec. 1118(h)(1), substituted ``shall, after any 
reduction pursuant to paragraph (iii) of section 231a(a)(1) of this 
title, be reduced'' for ``shall be reduced''.
    1980--Subsec. (g). Pub. L. 96-582 designated existing provisions as 
subdiv. (1) and added subdiv. (2).
    1977--Subsec. (f)(1). Pub. L. 95-216 substituted ``Wages and self-
employment income included as compensation for purposes of this 
subdivision shall, in the absence of evidence to the contrary, be 
presumed to have been paid in equal proportions with respect to all 
months in the calendar quarter in which credited, in the case of wages 
paid before 1978, or in equal proportions with respect to all months in 
the calendar year in which credited, in the case of self-employment 
income and in the case of wages paid after 1977'' for ``Wages and self-
employment income included as compensation for purposes of this 
subdivision shall, in the absence of evidence to the contrary, be 
presumed to have been paid in equal proportions with respect to all 
months in the calendar quarter in which credited in the case of wages, 
or in equal proportions with respect to all months in the calendar year 
in which credited, in the case of self-employment income''.


                    Effective Date of 1983 Amendment

    Section 101(c) of Pub. L. 98-76 provided that: ``The amendments made 
by this section [amending sections 231b and 231c of this title] shall 
become effective on July 1, 1984, and shall apply only with respect to 
awards in cases where the individual's annuity under section 2(a)(1) of 
the Railroad Retirement Act of 1974 [42 U.S.C. 231a(a)(1)] began to 
accrue on or after that date and the individual had not completed thirty 
years of service and attained age 60 prior to that date. In the case of 
an individual who has completed thirty years of service and has attained 
age 60 before January 1, 1986, the amount of the reduction on account of 
age in the annuity amount provided to such individual under section 
3(a)(3) of the Railroad Retirement Act of 1974 [subsec. (a)(3) of this 
section] and the amount of the reduction on account of age in the 
annuity amount provided to the spouse of such individual under 
subdivision (3) of section 4(a) of the Railroad Retirement Act of 1974 
[42 U.S.C. 231c(a)(3)] shall be only one-half of the amount by which 
such annuity would be reduced on account of age except for the 
provisions of this sentence.''
    Section 102(d) of Pub. L. 98-76 provided that: ``The amendments made 
by this section [amending sections 231b and 231c of this title] shall be 
effective on the date of the enactment of this Act [Aug. 12, 1983]. For 
purposes of the amendments made by subsection (a) of this section 
[amending this section], annuity portions computed under subsections (b) 
and (d) of section 3 of the Railroad Retirement Act of 1974 [subsecs. 
(b) and (d) of this section] as in effect before October 1, 1981, shall 
be treated as having been computed under subsection (b) of such section 
as in effect after that date.''
    Section 107(c) of Pub. L. 98-76 provided that: ``The amendments made 
by this section [amending this section] shall become effective on 
January 1, 1985.''
    Section 404(c) of Pub. L. 98-76 provided that: ``The amendments made 
by this section [amending this section] shall be effective October 1, 
1983, and shall apply with respect to annuities awarded on or after that 
date.''
    Section 405(b) of Pub. L. 98-76 provided that: ``The amendments made 
by this section [amending this section] shall be effective October 1, 
1981.''


                    Effective Date of 1981 Amendment

    Amendment by section 1118(a), (d) of Pub. L. 97-35 effective on the 
later of Oct. 1, 1981, and the date, after July 1, 1981, on which there 
is an increase in the rate of any tax imposed under chapter 22 of Title 
26, Internal Revenue Code, and applicable only with respect to annuities 
awarded on or after such date, amendment by section 1118(b), (g) of Pub. 
L. 97-35 effective Oct. 1, 1981, amendment by section 1118(c)(2) of Pub. 
L. 97-35 effective Jan. 1, 1975, amendment by section 1118(e)(3) of Pub. 
L. 97-35 effective Aug. 31, 1981, amendment by section 1118(h)(2) of 
Pub. L. 97-35 effective Jan. 1, 1982, and amendment by other provisions 
of section 1118 of Pub. L. 97-35 effective Oct. 1, 1981 and applicable 
only with respect to annuities awarded on or after Oct. 1, 1981, see 
section 1129 of Pub. L. 97-35, set out as a note under section 231 of 
this title.


                    Effective Date of 1980 Amendment

    Section 3 of Pub. L. 96-582 provided that: ``The provisions of this 
Act [amending this section] shall take effect on the date of the 
enactment of this Act [Dec. 23, 1980].''


                    Effective Date of 1977 Amendment

    Section 358(b) of Pub. L. 95-216 provided that: ``The amendments 
made by this section [amending this section] shall be effective January 
1, 1978.''

                  Section Referred to in Other Sections

    This section is referred to in sections 231, 231a, 231c, 231d, 231e, 
231f, 231m, 231n, 231r, 231u of this title; title 2 section 905; title 7 
section 2014; title 26 sections 72, 86, 3231, 6050F; title 42 sections 
405, 410, 1395r.
