Labor Employer Reporting Instructions

Part I	Prerequisite Knowledge for Labor Employer Reporting
Chapter 1	What is the Railroad Retirement Board?
Chapter 2	The Role of the National Reporting Officer
Chapter 3	Reporting Instructions to Labor Employers
Chapter 4	Compensation, Tax, and Benefit Relationships
Chapter 5	Establishing New Records for New Hires
Chapter 6	Employee Name Changes
Chapter 7	Address Reports for New Hires
Chapter 8	Multiple Social Security Numbers

CHAPTER 1: What is the Railroad Retirement Board?

The U. S. Railroad Retirement Board (RRB) is an independent agency in the executive branch of the Federal Government. The primary function of the RRB is to determine and pay retirement/survivor and unemployment/sickness benefits for the nation's railroad workers and their families under the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA). The benefit payments administered by the RRB are based on earnings credits, called creditable service and compensation. The service and compensation information is collected from reports of employers covered under the RRA and the RUIA, including rail labor employers. In the context of reporting to the RRB, the term "employer" refers to both rail carriers and national rail labor organizations.

The RRB maintains lifetime records of creditable service and compensation for each railroad employee for purposes of determining benefit payments. The records of service and compensation are secured from employer reports. The RRB's authority to require an employer to submit this information is authorized by RRB regulations (20 CFR 209.2) and by Sections 7(b)(6) and 9 of the RRA and Sections 6 and 12(1) of the RUIA, respectively.

CHAPTER 2: The Role of the National Reporting Officer

Each employer must designate at least one person as an official Railroad Retirement Board (RRB) contact for the various responsibilities in connection with railroad retirement reports. For the grand lodge of rail labor employers, the contact official is known as the National Reporting Officer (NRO) and has additional responsibilities because the NRO serves as the point of contact for railroad retirement report matters on behalf of the local lodge and system subordinate units.

The NRO is an agent of the RRB and is designated by the grand lodge through the Labor Member's Office (LMO). After a referral to the Chief of Compensation and Employer Services, appropriate documents are forwarded to the NRO for signature. The NRO is also provided with a written position description detailing his or her responsibilities. The position description is provided in Appendix III.

The NRO is responsible for service and compensation reports and employee earnings records. Correspondence related to these subjects, such as informational circular letters and report error referrals, will be directed to the NRO.

The NRO should:

• understand how to complete forms properly;

• answer RRB inquiries promptly;

• be familiar with the "Reporting Instructions to Labor Employers"; and,

• communicate reporting instructions to the local lodges, system subordinate units and other staff members who are involved in preparing reports.

The responsibilities of the NRO are important because if instructions are not understood, communicated, and followed properly, erroneous service and compensation information may be reported to the RRB. Erroneous reports can create difficulties and financial hardships for employees in obtaining correct benefit payments and can create unnecessary paperwork for the RRB and the employer.

Changes to the name and address of an NRO may be submitted to the LMO.

CHAPTER 3: Reporting Instructions to Labor Employers

The Reporting Instructions to Labor Employers (Labor Reporting Instructions) provide instructions to National Reporting Officers' reporting under the Railroad Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA). The Labor Reporting Instructions cover forms and correspondence relating to the following subjects:

• annual earnings reports of creditable service and compensation;

• adjusted reports of service and compensation; and,

• clarified reports of service and compensation in order to correct employee records.

What's Not in Labor Reporting Instructions

The Labor Reporting Instructions do not provide instructions for every form you must complete for the Railroad Retirement Board. However, the Labor Reporting Instructions will provide basic information for the earnings-related forms which relate to Compensation and Employer Services. For example, Internal Revenue Service (IRS) Form CT-1, Employer's Annual Railroad Retirement Tax Return, is related to creditable earnings, so the Labor Reporting Instructions describe the purpose of Form CT-1 and the taxes on compensation. The Labor Reporting Instructions do not provide instructions for completing Form CT-1 nor answer railroad retirement tax questions. The RRB Jurisdiction Referral Guide, in Appendix II, refers employers to the proper party for matters not within the scope of service and compensation.

Forms OE-1/Form OE-1a are filed by the system subordinate and local lodge units with the NRO, who subsequently consolidates the information into one annual service compensation report submitted to the RRB. Filers of Forms OE-1 and OE-1a should refer to either the Form OE-1 or OE-1a instructions prepared by the RRB for distribution to the units by the NRO. The instructions are provided to assist the units in reporting creditable service and compensation and taxable earnings to the National Reporting Officer and in reporting and paying retirement taxes to the Internal Revenue Service.

For system subordinate units, the Form OE-1 instructions also explain the procedure for reporting and paying unemployment contributions.

How to Use the Labor Reporting Instructions Effectively
The Labor Reporting Instructions may be used as an assistance source without reading it in its entirety. The Labor Reporting Instructions is organized into eight parts with numbered chapters within each part. It has exhibits which illustrate every form described and appendices with supplemental material not contained in the chapter texts. Cross references are used to guide the user to other sections of the instructions with related information about a subject.

The eight parts follow the process order in which an employer needs to know the information:

• prerequisite concept knowledge;

• descriptions and instructions for all required reports; and

• information employers must know about reports even after the original reports are submitted.

Information within a chapter in the Labor Reporting Instructions to Labor Employers which applies only to system subordinate units and grand lodges is designated in the same manner as this paragraph.

It is important to use the most current version of the Labor Reporting Instructions. Keep your copy up-to-date by immediately filing the updated pages which are released as needed. Discard obsolete pages to avoid confusion. The revision or effective date is shown in the header of each page.

Labor Reporting Instructions: The Implementation of Law
Because the Labor Reporting Instructions is based on the implementation of the RRA and RUIA and the regulations of the Railroad Retirement Board (RRB), some legal citations are included for your reference. A copy of the Railroad Retirement Act of 1974 and Railroad Unemployment Insurance Act may be purchased from the Superintendent of Documents, Government Printing Office, Washington, D.C. 20402. You may also purchase a copy of the Code of Federal Regulations, Title 20, Parts 1 to 399, which includes the requirements and forms prescribed for reporting to the RRB and the penalties for failure to report. This is published annually, usually during June, with revisions through March 31 of that year. In addition, a library with a public documents section may have copies of the RRA, the RUIA, and regulations, or may be able to secure loan copies from another library.

CHAPTER 4: Compensation, Tax, and Benefit Relationships

It is important to understand the relationships between compensation, employment tax, and benefits under the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA).

Under the RRA, creditable compensation and retirement-survivor benefits are based on two separate "layers" known as tiers. Railroad retirement taxes under the Railroad Retirement Tax Act are also computed using the tier structure. Consequently, a direct relationship exists between creditable compensation, the corresponding taxes paid to the Internal Revenue Service (IRS), and the benefit formula under the RRA.

Tier I Relationships
Tier I is the railroad retirement equivalent of social security. The railroad retirement and social security systems are coordinated by law in these areas:

• Tax The Tier I tax is computed on the same percentage rate and annual maximum tax base as social security. The Tier I tax is composed of three tax components; Old Age & Survivors (OASI), Disability (DI), and Health (HI) Insurance or Medicare. For example, the 1998 Tier I rate of 7.65% is composed of 5.26% OASI; .94% DI; and 1.45% Medicare. Like social security tax, Tier I tax is shared equally by employee and employer.

• Amounts earned over and above the Tier I maximum are not creditable under the Railroad Retirement Act even though additional amounts earned are taxable for Medicare purposes. Taxable Medicare earnings beyond the creditable Tier I maximum are not reported to the RRB, except possibly on Form BA-11, Gross Earnings Report. If an employee earned $75,000.00 in 1997, the employer should report $65,400.00 as creditable Tier I compensation and $48,600.00 as creditable Tier II compensation because those are the 1998 Tier I and Tier II maximums. The entire $75,000.00 is taxable for Medicare purposes.

• Earnings Base Employees may receive Tier I compensation credit up to the same annual maximum earnings base as that year's social security wage base; $65,400.00 in 1997.

• Benefits The Social Security Equivalent Benefit (SSEB) portion of the Tier I part of regular railroad retirement annuities is calculated by using the social security benefit formula. It yields amounts equivalent to social security benefits, based on combined Tier I compensation and non-railroad social security credits.

Tier II Relationships
Tier II may be compared to a private contributory pension. The benefit financing, earnings credit, and annuity benefit formula are based on employment solely in the railroad industry. Tier II differs from social security in these three areas:

• Tax Both employee and employer pay an additional tax, called Tier II tax, to finance railroad retirement benefit payments over social security levels. The rail employer's share of the Tier II tax is higher than the employee's share.

• Earnings Base The annual Tier II maximum earnings base is lower than the social security wage base; $48,600.00 in 1997. When the Tier II maximum is attained, additional earnings remain taxable and creditable up to the applicable Tier I retirement maximum.

• Benefits The Tier II portion of regular railroad retirement annuities is calculated in such a way as to yield benefits comparable to pensions. The Tier II benefit portion is based solely on railroad service and Tier II compensation.

A sample of the Tax Rates and Maximum Earnings Under Railroad Retirement, Social Security and Railroad Unemployment Insurance Programs table is in Appendix VI.

RUIA Relationships
The three areas of taxes, earnings, and benefits are also related under the Railroad Unemployment Insurance Act (RUIA), but the structure of the RUIA is not based on tiers. Local lodges are exempt from the provisions of the RUIA.

• Tax The railroad unemployment-sickness benefit program is financed by taxes paid solely by railroad employers and is currently based on taxable earnings of their employees. The unemployment and sickness insurance contribution rate is experience-rated. This means that each employer pays contributions at a rate which takes into consideration the employer's actual incidence of benefit usage by its employees.

• Earnings Base An employee's taxable earnings base is subject to a monthly, rather than annual, limit. The earnings base is indexed each year by a formula related to the annual rate of increase in the maximum base for Tier I taxes.

• Benefits A new unemployment-sickness benefit year begins every July 1, with eligibility generally based on railroad service and earnings in the preceding calendar year.

Two Taxation Authorities

Employer contributions (taxes) under the RUIA are collected by the RRB, but Tier I and Tier II taxes are collected by the IRS under the authority of the Railroad Retirement Tax Act.

CHAPTER 5: Establishing New Records for New Hires

Records for newly hired railroad employees are established from the annual reports of service and compensation. Thus, it is important that the social security numbers (SSN) and names under which the employees' service and compensation are reported are correct.

A current employee may appear to be a new hire if the employee is reported under an incorrect SSN. Because the incorrect SSN will not match an existing Railroad Retirement Board (RRB) record, a new record will be established for the incorrect SSN. That error is detected and corrected only after investigation with SSA and the employer and, possibly, the employee. An incorrect SSN initiates a time-consuming and costly process which is avoidable when an employer verifies that the SSNs on a report are correct.

The RRB requests employers to verify the SSN of their new hires to help prevent records from being established under incorrect numbers. Employers are expected to review the Social Security Card of new hires. If the new hire does not have a social security number or does not have a copy of their card, have the new hire file Form SS-5, Application for Social Security Number Card, with SSA. To prevent transcription or keying errors, match the SSNs in your current report of service and compensation to the previous report. Verify that all SSNs which do not match the previous report are new hires.

Step 1 A new RRB record is established when a service and compensation report is received containing a SSN which does not match an existing record. At this point, the new record is incomplete as it contains only the first five letters of the surname.

Step 2 The RRB sends all new records to SSA annually to match with SSA records. When new RRB records which match SSA records are verified, the full surname from SSA's record is posted to the RRB's records.

Step 3 New records which do not match SSA records generate referrals to employers for reconciliation. The new RRB record will remain unverified with only a five letter surname until the RRB or SSA changes their records and a match occurs. See Part VII, Chapter 4.

CHAPTER 6: Employee Name Changes

Labor organizations should report an employee name change by a timely letter to the Chief of Compensation and Employer Services or by contacting a local field office of the Railroad Retirement Board (RRB) who will file the appropriate form. All name changes must include the former name, current name, and social security number.

Please note that a change of name filed with the RRB does not change the records of the Social Security Administration (SSA), and a change of name filed with SSA does not change the records of the RRB. Because the correctness of an employee's name and account number is verified through the SSA's records, change requests must be filed at both agencies. Please advise your employees to file Form SS-5, Application for Social Security Number Card, in accordance with the instructions on the form to report a change of name. Name changes may also be reported to SSA by telephoning 1(800) 772-1213.

If the labor organization changes a name in their records but fails to notify the RRB, the name on the service and compensation report filed by the labor organization will not match the name in the RRB record. The service and compensation will not be recorded in the employee's record until the name difference is resolved.

Labor employers may extract employee name changes from their records on an annual basis and send them on a computer listing. The listing should contain the social security number, former name, and current name and should include only changes made within the last 12 months. These listings should be reported by a cover letter addressed to the Chief of Compensation and Employer Services. In order to ensure that these changes are processed prior to the annual reports, name change listings should be received no later than January 31 each year.

CHAPTER 7: Address Reports for New Hires

Employee address records are maintained for the purpose of mailing to the employee Form BA-6, Certificate of Service Months and Compensation. Under current regulations, the Railroad Retirement Board (RRB) is prohibited from releasing Form BA-6 to anyone other than the employee.

Employee's Responsibility
It is the employee's responsibility to report any address change to the RRB. Procedure for employees to report address changes is on Form BA-6. An employee can also report an address change to their local RRB office.

Employer's Responsibility
RRB regulation 20 CFR 209.12 (b), requires submission of current address information for new hires. This report is due by April 1 each year. If you have no new hires, no address report is necessary.

Addresses may be reported on:

• Form BA-6a, Form BA-6 Address Report (See Exhibits);

• magnetic media (See Form BA-6a tape/disk format in the Appendices); or

• computer listing. The computer listing should include the fields from the paper form in the same order and should identify the tape positions at the top of each field column.

If a report submitted close to the April 1 deadline contains errors, it cannot be processed. Accordingly, submission of address reports early in the year is encouraged. If Forms BA-6 are returned to the RRB by the U.S. Postal Service, the RRB will attempt to secure a better address. If our attempt to secure this information is not successful we will contact the NRO for assistance.

CHAPTER 8: Multiple Social Security Numbers

When a labor employer learns that an employee has more than one social security number, the National Reporting Officer (NRO) should notify the Chief of Compensation and Employer Services in writing. The correspondence should include the employee's name and all the social security numbers used or assigned. Upon advice from the Social Security Administration, the Railroad Retirement Board will consolidate the employee's service and compensation under one number. If the discrepancy cannot be reconciled, the NRO may be asked to file reports of employment. After the employee's account is reconciled, the NRO will be notified by the Chief of Compensation and Employer Services of the social security number to be used to report the employee's future service and compensation.

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