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the widow or widower for the month of January 1975 will not be less nor more than those which she or he would have received for that month had this Act not been enacted. Section 208

As was stated in the discussion concerning paragraph (1) of section 204(a), the social-security-level component of a 1937 Act employee annuitant's annuity under the 1974 Act will be determined under a provision contained in section 3(a) (6) of the 1937 Act which produces an amount equal to the monthly benefit the annuitant would have received under the Social Security Act if railroad service after 1936 had been creditable under that Act. This same provision is used in determining the social-security-level annuity components for 1937 Act spouse and survivor annuitants.

Section 3(a) (6) of the 1937 Act was added to that Act in 1973, by Public Law 93–69, for the purpose of providing increases in railroad retirement annuities, other than annuities computed under the socalled social security minimum guaranty provision, equal to the same dollar amount by which such annuities would have been increased if the service and compensation on which the annuities are based had been employment and wages, respectively, under the Social Security Act. As stated, section 3(a) (6) did not apply to annuities being paid under the social security minimum guaranty provision because such annuities were increased automatically whenever social security benefits were increased. Section 208, however, specifically provides that the amount determined pursuant to the provision of section 3(a) (6) discussed in the preceding paragraph will be the amount of the socialsecurity-level annuity component for each former 1937 Act annuitant, including those whose annuities were computed under the social security minimum guaranty provision or under any other minimum provision contained in the 1937 Act. Section 209

Since the social-security-level annuity amounts provided by sections 202(a), 203(a), 204(a)(i), 206(a)(1), and 207 (1) and (2) of this Act are made payable under section 2 of the 1974 Act, such annuities should automatically be increased whenever social security benefits are increased in the same manner as other social-security-level annuity amounts payable under such section 2. In order to assure that such increases will occur, however, subsection (a) of section 209 expressly provides that such social-security-level annuity amounts will be increased whenever social security benefits are increased.

Subsection (b) provides a comparable assurance with respect to the railroad service annuity amounts provided by sections 202(b), 203(b), 204(a) (2), and 206(a) (2), which are also payable under section 2 of the 1974 Act. Such annuity amounts will automatically be increased whenever other annuity amounts of the same type are increased pursuant to the provisions of section 3(g) of the 1974 Act. Section 210

Prior to the time that provisions for survivor insuranre benefits were added to the Railroad Retirement Act of 1937, that Act contained a provision for a joint and survivor annuity under which an employee could elect to receive a reduced annuity during his lifetime in order that his spouse could receive a monthly benefit after his death. New

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elections for such annuities were discontinued in 1946 when the survivor insurance benefit program was added to the 1937 Act. Many employees, however, who had made such elections prior to that date, chose not to revoke those elections and have been receiving reduced annuities pursuant to such elections. Section 210 assures that in any such case the surviving spouse of the employee will receive an annuity in accordance with the election made by the employee.

TITLE III-AMENDMENTS TO THE SOCIAL SECURITY ACT

Section 301

Section 202 (1) of the Social Security Act provides that no survivor benefits will be paid under that Act to individuals entitled to such benefits under the Railroad Retirement Act. This section is amended, by section 301, to change statutory references therein so as to conform those references to the appropriate sections of the new Railroad Retirement Act. Section 302

This section amends section 205(i) of the Social Security Act to provide that in cases where social security benefits will be paid by the Railroad Retirement Board in accordance with the provisions of section 7(b) (2) of the Railroad Retirement Act of 1974 the Secretary of Health, Education, and Welfare will certify the amounts of such benefits to the Board for payment rather than certifying such amounts directly to the Managing Trustee of the social security trust funds.

Subsection (b) of section 302 provides that the amendment to section 205(i), and, therefore, also the provisions of section 7(b) (2) of the Railroad Retirement Act of 1974, will apply only in the case of individuals who first become entitled to social security benefits after 1974. Section 303

The present subsection (o) of section 205 of the Social Security Act provides that, in cases where survivor benefits are not payable under the Railroad Retirement Act of 1937, railroad service and compensation will be credited under the Social Security Act for the purpose of determining entitlement to, and the amount of, survivor benefits payable under that Act. This provision is retained, with technical amendments, so that its language conforms with other changes made by this Act. Section 304

The amendments made to various subsections of section 216 of the Social Security Act merely change the statutory references therein from section 5 of the Railroad Retirement Act of 1937 to section 2 of the Railroad Retirement Act of 1974, Section 305

An annuitant under the Railroad Retirement Act of 1937 was provided coverage under the hospital insurance benefits program as a "qualified railroad retirement beneficiary” in accordance with the provisions of sections 21 and 22 of that Act. As a result of the enactment of this Act, such coverage will be provided under section 7(d) of the

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1974 Act, and the section references in sections 226(a), 226(d), and 226(e) of the Social Security Act are changed accordingly. Sections 306, 308, 309, and 310

These sections merely amend sections 1840(b) (1), 1843(b), 1870(b), and 1874 (a) of the Social Security Act to change the statutory references therein from the Railroad Retirement Act of 1937 to the Railroad Retirement Act of 1974. Sections 307 and 311

These sections merely change the language of sections 210(1) and 1842(g) of the Social Security Act so that they conform with the changes made by other provisions of this Act.

TITLE IV-AMENDMENTS TO THE RAILROAD UNEMPLOYMENT INSURANCE

ACT

The amendments made by this title, with the exception of that made by section 403, to the Railroad Unemployment Insurance Act are purely technical in nature and are necessary in order that the statutory references in that Act will reflect the amendments made by other provisions of this Act.

Section 10(h) of the Railroad Unemployment Insurance Act provides for an annual transfer of funds from the Railroad Retirement Account to the railroad unemployment insurance account. The amount transferred is the amount of the disability annuities which would, upon application therefor, have been paid under section 2(a) of the Railroad Retirement Act of 1937 to employees for days on which the employees were paid extended sickness benefits under section 2(c) of the Railroad Unemployment Insurance Act. The original purpose for such a transfer is no longer applicable, and, therefore, section 10(h) is eliminated by section 403 of the Act.

TITLE V-AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954

Section 501

The amendments made by this section, other than paragraph (2) of subsection (a), merely amend sections 3221(c) and 3221 (d) of the Railroad Retirement Tax Act to conform the language therein, particularly statutory references, to reflect changes made by other provisions of this Act.

Section 3221 (c) of the Tax Act now provides that taxes will be levied thereunder at such rate, determined on a quarterly basis, as will provide sufficient funds to pay supplemental annuities under the 1937 Act. Since supplemental annuities under the 1974 Act are smaller than those provided by the 1937 Act, the taxes levied by section 3221(c) would automatically decrease, if that section were not amended to provide otherwise, because less money would be needed to meet the obligation to pay supplemental annuities. As was discussed in the explanation of section 3(e) of the 1974 Act, however, the reduction in the level of supplemental annuities does not result in a lesser total cost of annuities and supplemental annuities payable under the 1974 Act because such reduction is offset by the fact that under the 1974 Act, unlike the 1937 Act, regular annuities are not reduced because the annuitant is receiving a supplemental annuity. Accordingly, in

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order to avoid a loss in income to the railroad retirement system which would not be offset by a decrease in expenses, section 3221 (c) of the Tax Act is amended, by section 501 (a) (2) of this Act, to provide that the taxes levied thereunder will be at a rate necessary to pay supplemental annuities at the level provided by section 3(j) of the 1937 Act as in effect on December 31, 1974. Section 502

The amendment made to section 6413(c) of the Internal Revenue Code by this section of the Act provides for the combining of an employee's annual railroad retirement and FICA taxes to determine whether a tax refund is due because the employee has paid taxes in excess of the FICA annual maximum. The employee will be permitted to obtain this refund through a credit against his Federal income tax.

TITLE VI–MISCELLANEOUS PROVISIONS AND EFFECTIVE DATES Section 601

Section 3(a) (6) of the 1937 Act provides for increases in railroad retirement annuities thereunder whenever social security benefits are increased in the period July 1, 1973, through December 31, 1974. Generally speaking, these increases are by the same dollar amount by which the individual's benefits would have been increased if the service and compensation on which the annuities are based had been employment and wages, respectively, under the Social Security Act. One exception to this general statement occurs in cases where an individual is receiving both railroad retirement and social security benefits. For purposes of computing increases under section 3(a) (6), any social security benefits to which the annuitant is entitled are disregarded, whereas if the annuitant's railroad service had been covered under the Social Security Act such service would have been combined with this social security service and he would be entitled to only one benefit and, of course, one benefit increase. Section 601 removes this exception, effective with respect to all increases effective after June 30, 1974, with the result that thereafter any increase in a dual beneficiary's railroad retirement annuity will be reduced by the amount of the corresponding increase in his social security benefit. Section 602

Subsection (a) of this section provides that, except as otherwise specified in subsequent subsections of section 602, the provisions of the Railroad Retirement Act of 1974 will become effective on January 1, 1975, and further provides that annuities thereunder may begin to accrue prior to that date, except that unreduced annuities for male employees at age 60 with 30 years of service cannot begin to accrue prior to July 1, 1974—this is the earliest date that such annuities can be paid to men under the 1937 Act.

Subsection (b) of section 602 provides that the provision of section 1(0) of the 1974 Act under which an employee will not lose his current connection with the railroad industry if his only employment after leaving railroad employment is with certain governmental agencies will be applicable (A), for occupational disability annuity purposes, where the employee becomes disabled on or after January 1, 1975, (B), for supplemental annuity purposes, where the employee's regular

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railroad retirement annuity first began to accrue on or after January 1, 1975, and (C), for survivor annuity purposes, where the employee died on or after January 1, 1975.

The liberalizations in the eligibility conditions for spouses' annui. ties under the 1974 Act (which are discussed in the explanation of section 2(c) of that Act) are made applicable, by subsection (c) of section 602, only to a spouse of an employee where (A) the employee's annuity first began to accrue on or after July 1, 1974, if the employee had 30 or more years of service, or (B) the employee's annuity first began to accrue on or after January 1, 1975, if the employee had less than 30 years of service. If the employee's annuity began to accrue prior to whichever of those dates is applicable, his spouse cannot become entitled to a spouse's annuity until the employee has attained age 65.

Subsection (d) of section 602 provides that the liberalization in the supplemental annuity eligibility age requirement, whereby employees with 30 years of service can become entitled to such an annuity at age 60 rather than at age 65, will be applicable only to employees whose regular railroad retirement annuities first began to accrue on or after July 1, 1974.

The provisions of section 7(e), which authorize the Board to accept certain gifts and bequests, will, pursuant to subsection (e) of section 602, become effective on the enactment date of this Act and will apply to all gifts and bequests covered thereunder, regardless of whether a particular gift or bequest was made prior to the effective date of section 7(e). Section 608

This section merely provides that the “Transitional Provisions" of the 1974 Act enacted by title II of this Act and the amendments made to the Social Security Act and the Railroad Unemployment Insurance Act, by title III and title IV, respectively, of this Act, will become effective on January 1, 1975. Section 604

The amendments to the Internal Revenue Code of 1954 made by title V of this Act will be effective with respect to compensation paid for services rendered on or after January 1, 1975. Section 605

The amendment made by section 601 of this title will become effective on the enactment date of this Act and will apply to any annuity increase effective after June 30, 1974.

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