(2) (B), and the last sentence of section 216(e) of the Act, and

(3) The total of the monthly benefits to which all persons are entitled for such month, on the basis of the individual's earnings records for such month after August 1960, would be reduced by reason of the reduction described in § 404.403 (b), the amount of the benefit to which each person referred to in subparagraph (1) of this paragraph is entitled for a month after August 1960 shall not, after the reduction described in § 404.403(b), be less than the amount it would have been (determined without regard to subparagraph (2) of paragraph (f) of this section) if no person referred to in subparagraph (2) of this paragraph was entitled to a benefit described therein for such month after August 1960. The amount of the benefit to which each person referred to in subparagraph (2) of this paragraph is entitled shall be determined under the reduction described in § 404.403(b) taking into account the benefits payable for such subsequent month to all persons entitled to benefits on the individual's earnings record, including the insured individual himself.

(f) Months after October 1960. The reduction described in § 404.403(b) shall not apply to benefits for months after October 1960 in the following cases:

(1) Prior disability period established. Where the insured individual became entitled to old-age or disability insurance benefits based on an application filed after October 1960 and before August 1965, or if such individual died prior to becoming so entitled and no person was, based on an application filed prior to November 1960, entitled to monthly benefits for October 1960 or any earlier month, then the reduction described in § 404.403(b) shall not apply:

(i) If a period of disability began for such individual prior to January, 1959, and

(ii) Such period of disability continued until the insured individual became entitled to disability or old-age insurance benefits, or died, whichever occurred first, and

(iii) The primary insurance amount of such insured individual is determined under the provisions of section 215 (a) (1) or (3) of the Act, and is $66 or more but less than $97.

Under these circumstances, the total of the benefits payable on the earnings rec

(2) Cases in which child's insurance benefit rate increased under 1960 amendments. Where:

(i) Based on applications filed prior to December 1960, one or more persons were entitled upon the earnings record of a deceased individual to monthly benefits for November 1960 (but not including any person who became so entitled by reason of the provisions of section 216(h) (1) (B), section 216(h) (2) (B), and the last sentence of section 216(e) of the Act, as amended by the Social Security Amendments of 1960), and

(ii) No person (other than those persons referred to in subdivision (i) of this subparagraph and those persons entitled to child's, widow's, widower's, or mother's insurance benefits only by reason of the above cited provisions of the Act) is entitled, based on the deceased individual's earnings record, to benefits for any subsequent month (or for any month after November 1960 and prior to such subsequent month), and

(iii) The total of the benefits to which all persons referred to in clause (i) are entitled for such subsequent month on the basis of the deceased individual's earnings record, exceeds the maximum described in § 404.403 (b) then, the amount of the benefit of such person referred to in subdivision (i) of this subas paragraph shall be determined follows:

(a) In the case of a person entitled to widow's, widower's, mother's, or parent's insurance benefits, as though the child's insurance benefit rate had not been in

creased and the provisions of section 216 (h) (1) (B), section 216 (h) (2) (B), and the last sentence of section 216(e) of the Act were not effective, and

(b) In the case of a person entitled to child's insurance benefits, as though no person is entitled to widow's, widower's, mother's, or parent's insurance benefits for such subsequent month and as though the maximum payable is the amount as determined under section 203(a) of the Act, as amended by the 1960 amendments, less the amount of each person's benefit for such month determined pursuant to (a) of this subparagraph.

(g) Months after July 1961. The reduction described in § 404.403(b) shall not apply where:

(1) Based on applications filed before August 1961, two or more persons were entitled to monthly benefits for July 1961, based on the earnings record of a deceased individual, and one or more of such persons is entitled to a widow's, widower's, or parent's insurance benefit for July 1961; and

(2) No person, other than the persons referred to in subparagraph (1) of this paragraph, is entitled to monthly benefits on the basis of such deceased individual's earnings record for a subsequent month or for any month after July 1961 and before such subsequent month; and

(3) The total of the benefits to which all persons are entitled for such subsequent month on the basis of the deceased individual's earnings record is to be reduced by reason of the reduction described in § 404.403(b). The amount of the benefit to which each person referred to in subparagraph (1) of this paragraph is entitled for such subsequent month, shall be determined without regard to the increase, for months after July 1961, in the benefit rate for widow's, widower's, or parent's insurance benefits to 822 percent of the deceased individual's primary insurance amount if, after the application of the provisions occasioning such increase, such person's benefit for such month is less than the amount of such benefit for July 1961.

(h) Months after 1964. The reduction described in § 404.403 (a) does not apply where two or more persons filed application before August 1965 and were entitled to monthly benefits for any month after December 1964 and before August 1965. In such a case, the maximum family benefit on the insured individual's earnings record, for any month after Decem

ber 1964 may not be less than the larger of:

(1) The maximum family benefit for that month determined under the table in section 215 (a) of the Act, or

(2) (1) For months after December 1964 and before August 1965, the total obtained by multiplying each benefit, after reduction for the maximum (and before deduction or reduction for age) as in effect before enactment of the Social Security Amendments of 1965, for each person other than a person entitled to benefits based on full-time school attendance) for that month, by 107 percent and raising each such increased amount, if it is not a multiple of 10 cents, to the next higher multiple of 10 cents.

(ii) For months after July 1965, the total obtained by multiplying each benefit, after reduction for the maximum (and before deduction or reduction for age) as in effect before enactment of the Social Security Amendments of 1965, for each person (other than a person entitled to benefits based on full-time school attendance) for the month of July 1965, by 107 percent and raising each such increased amount, if it is not a multiple of 10 cents, to the next higher multiple of 10 cents. The amount determined to be the maximum family benefit for July 1965 is the maximum payable for months thereafter, without regard to subsequent entitlement (or termination) of persons to benefits on the individual's earnings record.

(i) Benefits of divorced wife or surviving divorced wife for months after August 1965. Where a woman is entitled to monthly benefits as a divorced wife or as a surviving divorced wife for a month after August 1965, the benefit to which she is entitled on the earnings record of the insured individiual for such month is determined without regard to § 404.403 (a), and the benefits of all other persons who are entitled for that month to monthly benefits on the earnings record of the insured individual are determined as if no such divorced wife or surviving divorced wife was entitled to benefits for that month.

§ 404.406 Reduction for maximum because of retroactive effect of application for monthly benefits.

Under the provisions described in § 404.403, beginning with the month in which a person files an application and becomes entitled to benefits on an insured individual's earnings record, the benefit

rate of other persons entitled on the same earnings record (aside from the individual on whose earnings record entitlement is based) are adjusted downward, if necessary, so that the maximum benefits payable on one earnings record will not be exceeded. An application may also be effective (retroactively) for benefits for months before the month of filing (see § 404.607). For any month before the month of filing, however, benefits that have been previously certified by the Administration for payment to other persons (on the same earnings record) are not changed. Rather, the benefit payment of the person filing the application in the later month is reduced for each month of the retroactive period to the extent that may be necessary, so that no earlier payment to some other person is made erroneous. This means that for each month of the retroactive period the amount payable to the person filing the later application is the difference, if any, between (a) the total amount of benefits actually certified for payment to other persons for that month, and (b) the maximum amount of benefits payable for that month to all persons, including the person filing later. § 404.407 Reduction because of entitlement to other benefits.

(a) Entitlement to old-age or disability insurance benefit and other monthly benefit. If an individual is entitled to an old-age insurance benefit or disability insurance benefit for any month after August 1958 and to any other monthly benefit payable under the provisions of title II of the Act (see Subpart D of this part) for the same month, such other benefit for that month, after any reduction under section 202(q) of the Act because of entitlement to such benefit for months before retirement age and any reduction under section 203 (a) of the Act, is reduced (but not below zero) by an amount equal to such old-age insurance benefit (after reduction under section 202 (q) of the Act) or such disability insurance benefit, as the case may be.

(b) Entitlement to widow's or widower's benefit and other monthly benefit. If an individual is entitled for any month after August 1965 to a widow's or widower's insurance benefit under the provisions of section 202 (e) (4) or (f) (5) of the Act and to any other monthly benefit payable under the provisions of title II of the Act (see Subpart D) for the same

month, except an old-age insurance benefit, such other insurance benefit for that month, after any reduction under paragraph (a) of this section, any reduction for age under 202(q) of the Act, and any reduction under the provisions described in section 203 (a) of the Act, shall be reduced, but not below zero, by an amount equal to such widow's or widower's insurance benefit after any reduction or reductions under paragraph (a) of this section or section 203 (a) of the Act.

(c) Entitlement to old-age insurance benefit and disability insurance benefit. Any individual who is entitled for any month after August 1965 to both an oldage insurance benefit and a disability insurance benefit shall be entitled to only the larger of such benefits for such month, except that where the individual so elects, he shall instead be entitled to only the smaller of such benefits for such month.

(d) Child's insurance benefits. A child may, for any month, be entitled to a child's insurance benefit on more than one individual's earnings if all the conditions for entitlement described in § 404.320 are met with respect to each claim. In any case in which a child's entitlement to more than one child's insurance benefit is established for a month, such child shall be paid only the child's insurance benefit for such month which is based on the earnings of the individual who has the highest primary insurance amount.

(e) Entitlement to more than one benefit where not all benefits are child's insurance benefits and no benefit is an old-age or disability insurance benefit. If an individual (other than an individual to whom section 202 (e) (4) or (f) (5) of the Act applies) is entitled for any month to more than one monthly benefit payable under the provisions of this subpart, none of which is an old-age or disability insurance benefit and all of which are not child's insurance benefits, only the greater of the monthly benefits to which he would (but for the provisions of this paragraph) otherwise be entitled is payable for such month. For months after August 1965, an individual who is entitled for any month to more than one widow's or widower's insurance benefit to which section 202 (e) (4) or (f) (5) of the Act applies is entitled to only one such benefit for such month, such benefit to be the largest of such benefits.

§ 404.408 Reduction of benefits based on disability on account of receipt of workmen's compensation.

(a) When reduction required. Under section 224 of the Act, a disability insurance benefit to which an individual is entitled under section 223 of the Act for a month after 1965 and before the individual attains age 62 (and any monthly benefit for the same month payable to others under section 202 of the Act on the basis of the same earnings record) is reduced (except as provided in paragraph (b) of this section) by an amount as determined under paragraph (c) of this section if:

(1) The individual entitled to the disability insurance benefit is also entitled under a workmen's compensation law or plan of the United States or a State to a periodic benefit for such month for a total or partial disability (whether or not permanent) and

(2) The Secretary has, in a month before such month, received notice of such entitlement for such month, and

(3) The period of disability involved began after June 1, 1965.

(b) When reduction not made. The reduction of a benefit otherwise required by paragraph (a) of this section is not made if the workmen's compensation law or plan under which the periodic benefit is payable provides for the reduction of such periodic benefit when anyone is entitled to a benefit under title II of the Act on the basis of the earnings record of an individual entitled to a disability insurance benefit under section 223 of the Act.

(c) Amount of reduction (1) General. The total of benefits payable for a month under sections 223 and 202 of the Act to which paragraph (a) of this section applies is reduced (but not below zero) by the amount by which the sum of such total of benefits and such periodic benefits payable (and actually paid) for such month to such individual under the workmen's compensation law or plan exceeds the higher of:

(i) Eighty percent of his "average current earnings," as defined in subparagraph (3) of this paragraph, or

(ii) The total of such individual's disability insurance benefit for such month and all other benefits payable for such month based on such individual's earnings record, prior to reduction under this section.

(2) Limitation on reduction. In no case may the total of monthly benefits payable for a month to the disabled worker and to the persons entitled to benefits for such month on his earnings record be less than:

(1) The total of the benefits payable (after reduction under paragraph (a) of this section) to such beneficiaries for the first month for which reduction under this section is made, and

(ii) Any increase in such benefits which is made effective for months after the first month for which reduction under this section is made.

(3) Average current earnings defined— (i) In general. An individual's "average current earnings" for purposes of this section means the larger of:

(a) The average monthly wage used for purposes of computing the individual's disability insurance benefit under section 223 of the Act, or

(b) One-sixtieth of the total of such individual's wages and earnings from self-employment without the limitations under sections 209(a) and 211(b) (1) of the Act for the 5 consecutive calendar years after 1950 for which such wages and earnings from self-employment were highest. The extent by which such individual's wages and earnings from selfemployment exceed the limitations under sections 209(a) and 211(b) (1) of the Act for any calendar year after 1950 is computed in accordance with the provisions of subdivision (ii) of this subparagraph. Any amount so computed which is not a multiple of $1 is reduced to the next lower multiple of $1.

(ii) Method of determining calendar year earnings in excess of the limitations under sections 209(a) and 211(b) (1) of the Act-(a) In general. For the purposes of subdivision (i)(b) of this subparagraph, the extent by which the wages or earnings from self-employment of an individual exceed the maximum amount of earnings creditable under sections 209(a) and 211(b) (1) of the Act in any celander year after 1950 will ordinarily be estimated on the basis of the earnings information available in the records of the Administration. (See Subpart I of this part.) If an individual adduces satisfactory evidence of his actual earnings in any year, the extent, if any, by which his earnings exceed the limitations under sections 209(a) and 211(b) (1) of the Act shall be determined by the use of such evidence instead of by the use of estimates.

(b) Estimated wage earnings-(1) One employer involved. In any calendar year after 1950 in which wages are reported for an individual, the wages credited to his earnings record for each calendar quarter before the quarter in which the maximum amount creditable under section 209(a) of the Act is attained are deemed to be the individual's actual earnings for each such quarter. The amount of wages for the calendar quarter in which the maximum amount of earnings was attained and for each succeeding calendar quarter of that year, if any, in which the individual worked is deemed to be equal to the largest amount credited to his earnings account in that calendar year for any calendar quarter through the quarter in which the maximum amount of earnings was attained.

Example. In the year 1966 in which $6,600 is the maximum creditable earnings amount under section 209(a) of the Act, W worked for the XYZ Company. His earnings record shows the following amounts of wages:

Wages from Employer No. 1 reached the maximum in the third quarter. For this quarter and the succeeding fourth quarter, A's wages from Employer No. 1 are deemed to equal $2,200 in each of these two quarters. Wages from Employer No. 2 reached the maximum in the fourth quarter, but since all of the quarterly amounts credited are equal, there are no additional deemed wages. Since the total wages reported by Employer No. 3 never reached the maximum, the actual amounts credited are deemed to be his total wages from such employer. Wages from Employer No. 4 reached the maximum in the fourth quarter. However, since this is the highest quarterly amount credited and there are no succeeding quarters, the total earnings from this employer are deemed to be the actual amounts credited. Thus, A's total wages for 1964 are estimated as follows:

1st quarter. 2d quarter.. 3d quarter.. 4th quarter.

2d quarter_-

3d quarter__ 4th quarter

Total

$2,400 2, 550

2,550

2,550

10, 050

(2) Two or more employers involved. In any calendar year after 1950 in which wages are reported for an individual by more than one employer, if the total wages reported by any employer equal or exceed the maximum amount of earnings creditable under section 209 (a) of the Act, the total wages from such employer for the quarters in which the individual worked for that employer are estimated in accordance with the provisions of (1) of this subdivision (ii) (b).

Example. In the calendar year 1964 in which $4,800 is the maximum amount of earnings creditable under section 209 (a) of

(c) Estimated earnings from self-employment. In any such calendar year in which self-employment income is credited to an individual's earnings record and such credit equals the maximum amount of earnings creditable under section 211(b) (1) of the Act, the amount of earnings from self-employment for such individual's taxable year is deemed to equal his total net earnings from selfemployment as shown in his tax returns on file in the records of the Administration.

Example. In the calendar year 1957 in which $4,200 is the maximum amount creditable as self-employment income under section 211(b)(1) of the Act, C has maximum self-employment income of $4,200 credited to his earnings record. C's self-employment tax return for 1957 shows net earnings from