sum benefit if there is no person eligible for a monthly annuity on the basis of the employee's earnings record in the month in which the employee died. The benefit is paid to the widow or widower if she or he was living with the employee at the time of his death or, in the absence of any such widow or widower, to the person, or persons, who paid the employee's burial expenses.

If the deceased employee did not complete ten years of service prior to January 1, 1975, subdivision (2) provides a lump-sum death benefit. in the amount which would have been payable under the Social Security Act. However, as under section 5(f) (1) of the 1937 Act, such a benefit will be payable only if there is no person eligible for a monthly annuity on the basis of the employee's earnings record in the month in which the employee died.

The 1937 Act provides, in section 5(f) (2) of that Act, for the payment of a lump-sum benefit, which is referred to as a residual lumpsum benefit, in certain cases. In essence, this benefit is payable only in cases where no other benefits are payable on the basis of a deceased employee's compensation and years of service, and is intended to guarantee that in no case will the benefits paid on account of the employee's compensation and service be less than the taxes which he paid for railroad retirement purposes. Section 6 (c) of the new Act provides an identical benefit except that the amount of the residual lump sum will be based only on the employee's compensation prior to January 1, 1975, when the 1974 Act becomes effective.

Subsection (d) of section 6 provides that an employee who will have completed ten years of service at the time of his retirement or death, but is not qualified for a dual benefit amount under section 3(h) (1) or 3(h) (2), may be entitled to a lump-sum payment when he begins receiving an annuity under section 2(a) (1). The amount of any such lump-sum payment will be computed (A) by combining the employee's wages and self-employment income under the Social Security Act for each year after 1950 and prior to 1975 with his compensation under the Railroad Retirement Act for each year after 1950 and prior to 1975 and (B) by applying the social security employee tax rate in effect for each year (exclusive of that portion of the tax rate levied for Medicare purposes after 1967, with respect to which refunds have been available under section 6413(c) (3) of the Internal Revenue Code) to that portion of his combined earnings for such year as is in excess of the maximum amount creditable for that year under the 1937 Act. The sum of the amounts so computed for each year will be the amount of the lump-sum payment to which the employee is entitled.

If an employee otherwise entitled to a lump-sum payment under this subsection dies before receiving such payment, the payment will be made to the employee's widow or widower. If there is no such widow or widower, the payment will be made to the employee's children, grandchildren, parents, brothers and sisters, or estate in the same manner as if it were a lump sum payable under subesction (c) (1) of this section. Such lump-sum payments will be made from the Railroad Retirement Account.

Section 7

This section provides the composition of the Railroad Retirement Board and sets forth its powers and duties. Subsection (a) provides that the Board established by section 10(b)4 of the 1937 Act shall continue in existence and shall administer the new Act. In this regard, subsection (a) specifically provides that Board members who are holding office under the 1937 Act at the time the new Act becomes effective shall continue in office under the new Act until the terms for which the were appointed under the 1937 Act expire. The provisions in subsection (a) regarding the appointment and terms of Board members are the same as those contained in section 10(a) of the 1937 Act.

The powers and duties of the Board set forth in subsection (b) of section 7 are, with the exception of those provided by subdivision (2), the same as those contained in section 4(1), 5(k), or 10(b) of the 1937 Act or section 12 of the Railroad Unemployment Insurance Act. Thus subdivision (1) gives the Board the general authority to exercise whatever powers and duties may be necessary to administer the Act. Certain specific powers and duties are set forth in subdivision (3), including the authority to delegate any of the powers conferred upon it, except the power to prescribe rules and regulations, to its employees. In this regard, it may be noted that, while section 10(b)4 of the 1937 Act authorizes the Board, or its designated employees, “to require and compel the attendance of witnesses, administer oaths, take testimony, and make all necessary investigations in any matter involving annuities or other payments", the authority provided in this respect by sections 12 (a) and 12(b) of the Railroad Unemployment Insurance Act is much more explicit concerning the right to require attendance and testimony of witnesses. Accordingly, powers and duties provided by those sections are incorporated into the new Railroad Retirement Act by subdivision (3) of section 7(b). Subdivision (4) requires the Board to certify the names of individuals entitled to payments to the Secretary of the Treasury and requires that Secretary to make payments in accordance with the Board's certifications. Subdivision (5) authorizes the Board to promulgate rules and regulations, and subdivisions (6), (7) and (8) authorize the Board to acquire information and data necessary to properly carry out its duties under section 7. Subdivision (9) concerns the Board's authority to hire employees.

In addition to administering the new Railroad Retirement Act, subdivision (2) of section 7(b) provides that the Board shall make payments, on behalf of the Managing Trustee of the social security trust funds, of all social security benefits, including old-age insurance benefits payable to (A) an employee who has ten years of service, (B) the wife or husband of such an employee, (C) any survivor who is entitled, or on application could become entitled, to an annuity under section 2 of this Act, and (D) any other person entitled to social security benefits on the basis of the social security earnings of an employee who has ten years of railroad service, except a survivor in a case where the employee lacked a current connection with the railroad industry at the time of his death. Such payments will be in amounts certified to the Board by the Secretary of Health, Education, and Welfare and will be made from the appropriate social security trust funds.

Subsection (c) provides, in subdivision (1), that all benefits, except supplemental annuities under section 2(b), determined by the Board to be payable under the 1974 Act shall be paid from the Railroad Retirement Account; supplemental annuities will be paid from the Railroad Retirement Supplemental Account. The present railroad retirement system contains a program, usually referred to as "financial interchange". under which the railroad retirement system pays annually to the social security system an amount equal to the total in social security taxes which would have been paid by railroad employees into the social security system if railroad employment were covered under the Social Security Act. In return for these payments, the social security system transfers to the railroad retirement system, each year, an amount equal to the total in additional social security benefits that would have been paid under the Social Security Act to all retirees and dependents, and survivors, if railroad employment had been considered as covered employment under the Social Security Act over what the social security system had been paying (if anything) to such beneficiaries. This financial interchange program is retained in the 1974 Act by subdivisions (2) and (3) of subsection (c).

Subsection (d) contains the provisions setting forth the Board's role in the administration of the Medicare program, which provisions are much the same as those contained in sections 21 and 22 of the 1937 Act. Subdivision (1), the provisions of which are virtually identical to those set forth in section 21 (a) of the 1937 Act, provides that the Board shall determine the rights to hospital insurance benefits under section 226, and parts A and C of title XVIII, of the Social Security Act in cases involving qualified railroad retirement beneficiaries.

The persons who will be considered qualified railroad retirement beneficiaries are specified in subdivision (2). Generally speaking, a person is a qualified railroad retirement beneficiary if (A) he is over age 65 and is a railroad retirement annuitant or (B) he is under age 65, has been a railroad retirement annuitant for at least 24 months. and could have been entitled to social security benefits on the basis of disability for 24 months if railroad employment after 1936 had been covered under the Social Security Act and an application for disability benefits had been filed.

In this regard, subdivision (3) provides, in effect, that if a disability annuitant met the social security requirements of an "insured status for disability insurance benefits" (which, generally speaking, requires that a disabled individual have 20 quarters of coverage during the 40quarter period prior to the time he became disabled), at the time his annuity began, he will be deemed. solely for Medicare purposes, to meet that insured status requirement at any future time when he satisfies the other requirements for entitlement to social security disability insurance benefits.

Subdivision (4) of subsection (d) contains the provisions of sec 21(e) of the 1937 Act, which provides hospital insurance benefi certain railroad retirement annuitants who are Canadian citi are provided services in Canada; the cost of these benefits is the Railroad Retirement Account. The provisions of sectio the 1937 Act providing for the exchange between the Bo Secretary of Health. Education, and Welfare of inform

sary to the administration of the Medicare program are set forth in subdivision (5) of subsection (d).

The Board from time to time is made the beneficiary of gifts and becuests from annuitants or former annuitants. Although the Board believes that it has authority to accept such gifts and bequests, the 1937 Act contains no express statutory provision conferring such authority. Subsection (e) of section 7 provides such specific authority, which is similar to the comparable provision contained in section 201 (1) of the Social Security Act.

Section 8

This section sets forth the provisions for court review of Board decisions. Review of all Board decisions will be by an appropriate United States court of appeals, as under the 1937 Act, with no review by any other court or by any governmental agency, officer, or employee.

Section 9

Section 9 contains the provisions regarding the requirement that employers covered under the Act furnish reports of compensation paid to their employees and regarding the finality of such reports. These provisions are identical to those contained in section 8 of the 1937 Act, with the Board's records as to the amount of an employee's compensation, or as to whether any compensation was paid, for a particular year, hg conclusive four years after the date on which the return of compensation for that year was required to be made.

Section 19

The provisions of section 9 of the 1937 Act relating to the recovery of erroneous benefit payments are retained in section 10 of this Act. The Board has the authority to recover any erroneous payments which t makes by adjusting subsequent payments due the overpaid individLal or any other individual on the basis of the same earnings record. Sidsection (b) provides that such recovery can be made either through deductions from subsequent payments or by actuarial reductions in

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sequent payments. Recovery of erroneous payments is to be waived menses where the individual was without fault and recovery would be contrary to the purpose of the Act or would be against equity and good conscience. Subsection (d) provides that certifying and disbursat g officers are not to be held personally liable for erroneous payments at they made such erroneous payments in good faith.

Section 11

Under the provisions of this section an annuitant may, if he or she chooses, waive payment of all or any part of the annuity. The waiver may be revoked at any time; however, the portion of the annuity waved will not, despite any revocation, be paid for the period during which the waiver was in effect. A waiver of a particular annuity, or any portion thereof, will not affect entitlement to, or the amount of. any other annuity or benefit.

Section 12

This section contains the same provisions as section 19 of the 1937 Act regarding the competence of a beneficiary and the Board's authority in cases where a beneficiary is incompetent. Under these pro

visions any claimant or recipient of benefits is presumed to be competent until the Board receives written notice to the contrary. If a claimant or beneficiary is incompetent the Board may make payments to, or conduct transactions with, any legally appointed guardian on behalf of the claimant or beneficiary. Furthermore, the proviso of subsection (a) expressly authorizes the Board to make payments, or conduct transactions, directly with the claimant or beneficiary, or with any other person on his behalf, even though he is an incompetent for whom a guardian is acting In such cases, the Board may conduct such transactions without regard to whether or not the incompetent is represented by legal counsel. The provisions of this section are applicable to benefits claimed or paid under any Act administered in whole or part by the Board, including any payment of social security benefits. made by the Board pursuant to section 7(b) (2) of this Act.

Section 13

Section 13 of this Act sets forth the penalty provisions, consisting of a fine or imprisonment or both, for knowingly failing to furnish information required in the administration of the Act or for knowingly furnishing false information. The maximum fine under this section is $10,000, and the maximum prison term is one year. Any fines and penalties imposed by a court pursuant to the Act are to be credited to the Railroad Retirement Account.

Section 14

As under section 12 of the 1937 Act, section 14 of this Act exempts annuity payments from taxation, garnishment, attachment, or other legal process. As was also true under the 1937 Act. however, a supplemental annuity, while exempt from State taxation, is subject to taxation under the Federal income tax provisions of the Internal Revenue Code.

Section 15

The Railroad Retirement Account and the Railroad Retirement Supplemental Account established by sections 15(a) and 15(b) of the 1937 Act are continued in effect, pursuant to subsections (a) and (c) of this section, and the funds contained therein will be available for the payment of all benefits administered by the Board and the expenses incurred in the administaration of all provisions of this Act. As was explained previously, a portion of these benefit costs and administrative expenses will be reimbursed in accordance with the financial interchange provisions of section 7 (c) (2). The funds credited to the Accounts will be derived largely from the taxes levied by the Railroad Retirement Tax Act.

Under sections 15(a) and 15(b) of the 1937 Act, taxes levied under the Railroad Retirement Tax Act for supplemental annuity purposes are appropriated to the Railroad Retirement Supplemental Account, with the remaining taxes levied under the Tax Act being appropriated to the Railroad Retirement Account. For reasons which will be set forth in discussing the amendment to the Tax Act made by section 501(a)(2) of this Act, the taxes imposed by the Tax Act for supplemental annuity purposes will continue to be levied at rates necessary to support supplemental annuities at the level provided under the 1937