deceased which the amount of burial expenses paid by such applicant bears to the total amount of burial expenses paid by all persons equitably entitled, but in no event shall the amount paid to such applicant exceed the amount of burial expenses paid by him.

(d) Effect on later entitlement. The lump sum is not in lieu of, and does not affect, later entitlement of survivors to insurance annuities.

[12 FR 2023, Mar. 27, 1947, as amended by Board Order 55-89, 20 FR 3719, May 27, 1955; Board Order 60-50, 25 FR 2890, Apr. 6, 1960]

§ 237.503 Payment when lump sum exceeds insurance annuities accrued.

(a) Conditions of payment. The payment provided for in this section shall be made to one or more of the persons described in paragraph (b) of this section if:

(1) A lump sum would have been payable to a widow or widower under § 237.502 except for the fact that a survivor was entitled to receive an insurance annuity for the month in which the employee died (see § 237.502(a)(2)); and

(2) Within 1 year after the employee's death there did not accrue to his survivors, by reason of his death, insurance annuities which, after all deductions required by § 237.702 were made, were equal to the lump sum referred to in paragraph (a)(1) of this section, and

(3) An application (see Subpart H of this part) for such payment has been filed no later than the second anniversary of the death of such employee (see § 237.902(b)).

(b) Persons entitled to receive payment. The payment provided for in this section shall be made to the widow, widower, child, or parent of the deceased employee, in that order, provided that such person is entitled to an insurance annuity on the first anniversary of the employee's death. If there is more than one such person, they shall share equally in the payment.

(c) Amount of payment. The payment to be made under this section is an amount equal to the excess of the lump sum referred to in paragraph (a)(1) of this section over the insur

ance annuities which accrued to survivors within 1 year after the employee's death, as such annuities may have been reduced by any deductions required by § 237.702 (see paragraph (a)(2) of this section).

(d) Effect on later entitlement. The payment provided for in this section is not in lieu of, and does not affect, later entitlement of survivors to insurance annuities.

[12 FR 2023, Mar. 27, 1947, as amended by Board Order 60-50, 25 FR 2890, Apr. 6, 1960]

§ 237.504 Meaning of terms.

(a) The terms "widow," "widower," "child," and "parent" as they first appear in section 5(f) of the act (see § 237.502 (a)(2)), are used as defined in §§ 237.303, 237.304, 237.306, and 237.308, respectively.

(b) The meaning of the terms "widow," "child" (or "children"), and "parent" (or "parents"), except as they first appear in section 5(f) of the act, and of the term "widower" as used in such section 5(f), is determined by reference to applicable State law. An individual is such a "widow," "widower," "child," or "parent" of a deceased employee if he is the widow, widower, child, or parent of the deceased employee, or has the same status as such, under applicable State law, without regard to the definitions referred to in paragraph (a) of this section.

[12 FR 2023, Mar. 27, 1947, as amended by Board Order 55-89, 20 FR 3720, May 27, 1955]

Subpart F-Maximum and Minimum Insurance Annuity Totals

§ 237.601 Statutory provisions.

Maximum and minimum annuity totals. Whenever according to the provisions of this section as to annuities, payable for a month with respect to the death of an employee, the total of annuities is more than $36.30 and exceeds either (a) $193.60, or (b) an amount equal to two and two-thirds times such employee's basic amount, whichever of such amounts is the lesser, such total of annuities shall, after any deductions under subsection (i), be reduced to such lesser amount or to $36.30, whichever is greater. Whenever such total of annuities is less than $16.95, such total shall, prior to

any deductions under subsection (i), be increased to $16.95. (Section 5(h) of the act.) In the case of an individual having a current connection with the railroad industry, ** if for any entire month the total of survivor annuities under this Act deriving from the same employee, is less than 110 per centum of the amount, or 110 per centum of the additional amount, which would have been payable to all persons for such month under the Social Security Act (deeming completely and partially insured individuals to be fully and currently insured, respectively, individuals entitled to insurance annuities under subsections (a) and (d) of section 5 to have attained age sixty-five, *** and individuals entitled to insurance annuities under subsection (c) of section 5 on the basis of disability to be less than eighteen years of age, and disregarding any possible deductions under subsections (f) and (g)(2) of section 203 of the Social Security Act) if such employee's service as an employee after December 31, 1936, were included in the term “employment" as defined in that Act and quarters of coverage were determined in accordance with section 5(1)(4) of this Act, such annuity or annuities, shall be increased proportionately to a total of 110 per centum of such amount or 110 per centum of such additional amount. .. (Section 3(e) of the act.)

[Board Order 60-50, 25 FR 2890, Apr. 6, 1960]

§ 237.602 Application of maximum and minimum and basis for computation. (a) Application of maximum and minimum. The reductions and increases provided for in this subpart apply only to insurance annuities for survivors. Lump sums under section 5(f) of the act are not subject to reductions or increases under this subpart.

(b) Basis for computing reductions and increases. Whether there is to be a reduction or increases in any insurance annuity or annuities, and the extent of such reduction or increase, depends upon the total amount of insurance annuities for a month as calculated under section 5 of the act with respect to the insured status of a deceased employee.

[12 FR 2024, Mar. 27, 1947]

§ 237.603 Reduction.

(a) Conditions requiring reduction. Reductions are made only when there are two or more insurance annuities based upon the insured status of a deceased employee and when the total of

such annuities, as calculated under Subpart D of this part:

(1) For a month after June 1956 and before June 1959 is more than $33 and exceeds either (i) $176, or (ii) an amount equal to two and two-thirds times the basic amount of the employee.

(2) For a month after May 1959 is more than $36.30 and exceeds either (i) $193.60, or (ii) an amount equal to two and two-thirds times the basic amount of the employee.

(b) Amount of reduction. If the conditions described in paragraph (a) of this section exist, each of the insurance annuities must be proportionately reduced so that the total of the insurance annuities:

(1) For a month after June 1956 and before June 1959 will be whichever is the least of the amounts stated in paragraph (a)(1) (i) and (ii) of this section. If, however, such least amount is under $33, the total is reduced only to $33.

(2) For a month after May 1959 will be whichever is the least of the amounts stated in paragraph (a)(2) (i) and (ii) of this section. If, however, such least amount is under $36.30, the total is reduced only to $36.30.

[Board Order 60-50, 25 FR 2891, Apr. 6, 1960]

§ 237.604 Increase.

(a) Conditions requiring increase. An increase is made when the insurance annuity or total of insurance annuities calculated under Subpart D of this part on the basis of the insured status of a deceased employee is less than $15.40 for a month after June 1956 and before June 1959, and less than $16.95 for a month after May 1959.

(b) Amount of increase. If the condition described in paragraph (a) of this section exists, the insurance annuity or total of insurance annuities is increased to $15.40 for a month after June 1956 and before June 1959, and to $16.95 for a month after May 1959.

[Board Order 60-50, 25 FR 2891, Apr. 6. 1960]

§ 237.605 Monthly application of provisions.

The total amount of insurance annuities based on the insured status of a deceased employee, as calculated under Subpart D of this part, may be different in one month than in another. Accordingly, a reduction or increase may be required in one month and not in another, or the amount of the reduction or increase may be greater or less in one month than in another.

[12 FR 2024, Mar. 27, 1947]

§ 237.606 Relation to provisions for deductions and adjustments.

(a) Reductions under this subpart are made after making any deductions which may be required under Subpart G of this part and before making any adjustments under Part 255 of this chapter.

(b) Increases under this subpart are made before making any deductions which may be required under Subpart G of this part and before making any adjustments under Part 255 of this chapter.

[Board Order 60-50, 25 FR 2891, Apr. 6, 1960]

$237.607 Overall minimum based on Social Security Act formula.

(a) When the total amount of insurance annuities payable for an entire month after May 1959, based on the insured status of a deceased individual, is less than 110 percent of the amount or 110 percent of the additional amount of insurance benefits which would be payable for that month under the Social Security Act if the individual's service as an employee after 1936 were included with "employment" as defined in the Social Security Act, the amount of such insurance annuities shall be increased proportionately to 110 percent of such amount or 110 percent of such additional amount.

(b) For the purpose of this section: (1) Completely and partially insured individuals shall be deemed to be fully and currently insured, respectively, under the Social Security Act;

(2) An individual who has attained the age of 60 but not the age of 65 and

is entitled to a widow's, widower's, or parent's insurance annuity shall be deemed to have attained the age of 65;

(3) An individual entitled to a child's insurance annuity when 18 years of age or over shall be deemed to be less than 18 years of age; and

(4) The amount of any deduction which would be applied under subsections (f) and (g)(2) of section 203 of the Social Security Act for failure to report an event which would cause a deduction under that act shall be disregarded.

[Board Order 60-50, 25 FR 2891, Apr. 6, 1960; 25 FR 3396, Apr. 20, 1960]

Subpart G-Deductions

§ 237.701 Statutory provisions.

Deductions from annuities. (1) Deductions shall be made from any payments under this section to which an individual is entitled, until the total of such deductions equals such individual's annuity or annuities under this section for any month in which such individual

(i) Will have rendered compensated service within or without the United States to an employer;

(ii) Will have been under the age of seventy-two and for which month he is charged with any excess earnings under section 203(f) of the Social Security Act or, having engaged in any activity outside the United States, would be charged under such section 203(f) with any excess earnings derived from such activity if it had been an activity within the United States; and for purposes of this subdivision the Board shall have the authority to make such determinations and such suspensions of payment of benefits in the manner and to the extent that the Secretary of Health, Education, and Welfare I would be authorized to do so under section 203(h)(3) of the Social Security Act if the individuals to whom this subdivision applies were entitled to benefits under section 202 of such Act; or

(iii) If a widow otherwise entitled to an annuity under subsection (b) will not have had in her care a child of the deceased employee entitled to receive an annuity under subsection (c).

(2) The total of deductions for all events described in paragraph (1) occurring in the same month shall be limited to the amount of such individual's annuity or annuities for that month. Such individual (or anyone in receipt of an annuity in his behalf) shall report to the Board the occurrence of any event described in paragraph (1).

60-048 0-80--12

(3) Deductions shall also be made from any payments under this section with respect to the death of any employee until such deductions total

(i) Any death benefit, paid with respect to the death of such employee, under section 5 of the Retirement Acts (other than a survivor annuity pursuant to an election); and

(ii) Any lump sum paid, with respect to the death of such employee, under title II of the Social Security Act.

(4) The deductions provided in this subsection shall be made in such amounts and at such time or times as the Board shall determine. Decreases or increases in the total of annuities payable for a month with respect to the death of an employee shall be equally apportioned among all annuities in such total. * * * (Section 5(i) of the act)

[Board Order 60-12, 25 FR 1674, Feb. 26, 1960, as amended by Board Order 63-149, 28 FR 9525, Aug. 30, 1963]

§ 237.702 Deductions because an individual works or a widow fails to have a child in her care.

Section 5(i)(1) of the act provides for deductions from an individual's insurance annuity or annuities upon the occurrence of certain events, which are enumerated in paragraphs (a), (b), and (c) of this section.

(a) Employer service. Deductions are to be made from any annuity or annuities payable to an individual under this part for any month in which such individual renders compensated service (see Parts 220 and 222 of this chapter) within or without the United States to an "employer" (see Part 202 of this chapter). The amount to be deducted is equal to the amount of such individual's insurance annuity or annuities for the month in which the compensated service was rendered.

(b) Work other than employer service-(1) When deductions imposed. Deductions are to be made from any annuity or annuities payable to an individual under this part for any month in which the individual is under age 72 and is charged, in accordance with the provisions of paragraph (b)(3) of this section, with excess earnings determined in the following manner:

(i) Excess earnings for a taxable year beginning after December 1960 and ending on or before June 30, 1961, are those "earnings," as that term is defined in paragraph (b)(6) of this section, which are in excess of $100 times

the number of months in such year, except that one-half of the first $300 of such excess (or one-half of all such excess if it is less than $300) shall not be included. The excess earnings so determined, if not a multiple of $1, shall be reduced to the next lower multiple of $1.

(ii) Excess earnings for a taxable year ending after June 30, 1961, are those "earnings," as that term is defined in paragraph (b)(6) of this section, which are in excess of $100 times the number of months in such year, except that one-half of the first $500 of such excess (or one-half of all such excess if it is less than $500) shall not be included. The excess earnings so determined, if not a multiple of $1, shall be reduced to the next lower multiple of $1.

(2) Amount of deductions. The amount to be deducted shall be equal to the annuity or total of annuities payable to the individual in the month in which such individual is charged, in accordance with the provisions of paragraph (b)(3) of this section, with excess earnings equal to such annuity or annuities. If the excess earnings to be charged are less than the annuity or annuities, the deduction with respect to such month shall be equal only to the amount of such excess earnings.

(3) Charging of excess earnings. The amount of an individual's excess earnings in a taxable year, as determined in accordance with the provisions of paragraph (b)(1) of this section, shall be charged to the first month of the taxable year in an amount equal to the annuity payable for such month (or all of the excess earnings shall be charged to such month if such excess is less than the annuity payable for such month). The balance of the excess earnings, if any, shall be charged to each succeeding month in such year to the extent of the annuity payable for such month until the total of such excess earnings has been so charged or until every month to which the excess earnings are chargeable has been charged with such excess earnings. The phrase "first month of the taxable year" means the earliest month in such year to which the charging of excess earnings is not pro

hibited by the provisions of paragraph (b)(4) of this section.

(4) Months to which excess earnings cannot be charged. Notwithstanding the provisions of paragraph (b)(3) of this section, excess earnings determined in accordance with paragraph (b)(1) of this section shall not be charged to any month:

(i) In which the individual was not entitled to an annuity;

(ii) In which the individual was 72 years of age or over;

(iii) In which the individual was entitled to a child's insurance annuity under § 237.409 based on a disability;

or

(iv) In which the individual did not engage in self-employment and did not render services for wages, as defined in paragraph (b)(6)(ii) of this section, of more than $100. (An individual shall be deemed to have engaged in self-employment in any month if in such month he renders substantial services, as defined in paragraph (b)(5) of this section, in operating a trade or business as owner or partner, even though there may be no earnings or net earnings from self-employment attributable to his services for such month; and he will be presumed with respect to any month to have rendered services for wages, as defined in paragraph (b)(6)(ii) of this section, of more than $100 until it is shown to the satisfaction of the Board that he did not render services in such month for more than such amount.)

(5) Definition of “substantial services." For the purposes of paragraph (b)(4) of this section, an individual engaged in self-employment is presumed to have rendered substantial services in each month in his taxable year. However, he may submit evidence to establish that in any month in such taxable year he did not render substantial services with respect to any trade or business the net income or loss of which is includible in computing his earnings (but without regard to paragraph (b)(6)(ii) of this section) for any taxable year if such taxable year begins after 1956. In determining whether an individual has rendered such substantial services in a month, the particular facts in his case will be examined. The following factors,

among others, will be considered in making the determination:

(i) The amount of time devoted to the trade or business;

(ii) The nature of the services rendered by the individual;

(iii) The relationship of the activity performed prior to the period of retirement with that performed subsequent to retirement;

(iv) The setting in which the services were performed, including:

(a) The presence or absence of a paid manager, a partner, or a family member who manages the business;

(b) The type of business establishment that is involved;

(c) The amount of capital invested in the trade or business; and

(d) The seasonal nature of the trade or business.

(6) Definition of earnings. When the term "earnings" is used in this paragraph and not as a part of the phrase "net earnings from self-employment" and not as a part of the term "excess earnings," it shall mean an individual's earnings with respect to a taxable year beginning after 1956 and includes the sum of his wages, as defined in paragraph (b)(6)(ii) of this section, for services rendered in such year and his net earnings from self-employment, as defined in paragraph (b)(6)(i) of this section, for such year minus any net loss from self-employment, as defined in paragraph(b)(6)(i) of this section, for such year. With respect to a taxable year beginning after 1958 an individual's earnings from an activity performed outside the United States shall be determined in the same manner as if such activity were performed within the United States.

(i) Net earnings from self-employment and net loss from self-employment. An individual's net earnings from self-employment and his net loss from self-employment for the purposes of this paragraph and paragraph (b)(5) of this section, shall be determined under the provisions of section 211 of the Social Security Act (but without regard to the provisions in paragraphs (1), (4), and (5) of subsections (c) of such section); any excess of income over deductions so resulting from such computation shall be his net earnings from self-employment