Labor Employer Reporting Instructions

Part VI	Adjustment Reports to Service and Compensation
Chapter 1	Form BA-4, Report of Creditable Compensation Adjustments
Chapter 2	Time Limitations for Adjustment Reports
Chapter 3	Records Retention Requirement

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CHAPTER 1: Form BA-4, Report of Creditable Compensation Adjustments

Form BA-4 is used to correct an error or omission in service and compensation previously reported. If an error is discovered prior to filing the annual report, the adjustment for current year service and compensation should be incorporated into the current year annual report. Adjustments for current year earnings, which cannot be incorporated into the current year annual report, should be clearly marked as current year adjustments. Otherwise the adjustments will reject from processing and the employer will be notified.

Employers may initiate an adjustment report to correct an error the employer has determined or the Railroad Retirement Board may request an adjustment report to correct an error the RRB has determined. Part III, Chapter 6 contains information on requests for adjustments and clarification sent by the RRB.

Submitting Form BA-4
If a service month and/or compensation error or omission is identified, prepare Form BA-4 to make the correction. Form G-440 is required to accompany each group of Form BA-4s submitted to the RRB. On the reverse side of Form G-440, recap the number of items and totals for each type of adjusted compensation, with separate totals for increase and decrease items.

Service Month Adjustments
If an employee was not credited or erroneously credited with a service month, complete Item 9 and Item 10 of Form BA-4. In Item 9, mark only the service months that you are increasing or decreasing. In Item 10, enter the total number of service months increased or decreased. Do not report a service month on Form BA-4 unless:

• you did not previously report the month and you are correcting this omission, or

• you previously reported the month in error and you are now removing the month.

When adjusting service months, also consider the Railroad Unemployment Insurance Act amount. If the employee has service months credited or removed, there may be associated increases or decreases in the amount of reported RUIA compensation. RUIA compensation is subject to a monthly maximum.

Compensation Adjustments
To adjust compensation amounts, enter the net compensation increase or decrease in Item 8 for RUIA compensation, Item 11 for Tier I compensation, and Item 12 for Tier II compensation.

Example
The Railroad Retirement Board received a 1995 Form BA-3a, Annual Report of Creditable Compensation, that credited an employee with 12 service months, Tier I compensation of $45,000, and RUIA compensation of $10,200. Subsequently, the employer identified the following reporting error; The employee did not perform creditable railroad service in December 1995, and was erroneously credited with December compensation of $2000 from her employer's matching contribution to a 401(k) plan.

• Employer is required to file Form BA-4, Report of Creditable Compensation Adjustments, to the Railroad Retirement Board.

• Adjust December service month by marking the December column of Item 9 and entering A1" in the decrease column of Item 10.

• Adjust the RUIA compensation reported by entering $850 ($850* 1) in the decrease column of Item 8.

• Adjust the Tier I compensation reported by entering $2000 in the decrease column of Item 11.

• Adjust the Tier II compensation reported by entering $2000 in the decrease column of Item 12.

Note - Sick Pay and Miscellaneous Compensation are creditable as Tier I compensation but adjustments to those amounts are reported on Form BA-10, Report of Miscellaneous Compensation and Sick Pay.

The Railroad Retirement Act imposes a four-year statue of limitations for adjusting a report of creditable compensation. If the calendar year being adjusted is prior to four years from the current reporting year, indicate the line number and the reason the employee's record is being adjusted in Item 15 of the adjustment form.

CHAPTER 2: Time Limitations for Adjustment Reports

Section 9 of the Railroad Retirement Act provides that the Railroad Retirement Board's records of service and compensation are conclusive as to the amount of compensation paid during the period covered by the report, unless an error is called to the RRB's attention within four years of the day on which the report was required to be made. Employers are required to file with the RRB, on or before the last day of February, an annual report of service and compensation for employees who performed compensated service in the preceding calendar year. Likewise, the fact that no report of compensation was made is taken as conclusive that no compensation was paid, unless the failure to make a report of the compensation is called to the RRB's attention within four years of the day on which the report was required to be made.

For example, 1996 reports of service and compensation were due at the RRB on February 28, 1997. The last day to submit a corrected report of Tier compensation for the year 1996 would be February 28, 2001. On February 28, 2001, the time limit for adjustments to Tier compensation in 1996 will have expired.

Section 6 of the Railroad Unemployment Insurance Act (RUIA) provides that the RRB's records of compensation are conclusive unless an error is called to the attention of the RRB within eighteen months of the date on which the return was required to be filed. The last day to submit a corrected report of RUIA compensation for the year 1996 would be August 31,1998.

Exceptions to the Four Year Adjustment Limitation
Part 211.16 of the Railroad Retirement Board's Regulations allow corrections beyond the four-year adjustment period in the following circumstances:

• the compensation was posted or not posted as the result of fraud on the part of the employer;

• the compensation was posted for the wrong person or wrong period;

• the earnings were erroneously reported to the Social Security Administration in the good faith belief by the employer or employee that such earnings were not covered under the Railroad Retirement Act;

• where a determination pertaining to the coverage under the Railroad Retirement Act of an individual, partnership, or company as an employer, is retroactive; or

• where, in the judgment of the three-member Board, failure to make a correction would be inequitable.

An employer who discovers an error in a compensation report beyond the four-year period should submit Form BA-4, Report of Creditable Compensation Adjustments, accompanied by an explanation of the delay and a statement regarding the payment of applicable taxes.

An employee will not be credited with service months or Tier II compensation beyond the four year period unless the employee establishes to the satisfaction of the Board that all employment taxes imposed by Sections 3201, 3211, and 3221 of title 26 of the Internal Revenue Code have been paid with respect to the compensation and service.

How to Determine the Four Year Period for Retroactive Payments
Reports adjusting prior-year service and compensation are due at the RRB by the end of the month following the calendar quarter in which the payment was made or the error or omission was determined. For example, if payment was made in July 1997 for a period of lost earnings in 1991 and 1992, the report would be due by October 31, 1997. If an employer is filing an adjustment which appears to be beyond the four year period, such as in the above example, the employer should complete Item 15 on the adjustment report. This item allows an employer to identify current payments which are allocated more than four years prior to that year. If the adjustment report is filed on magnetic media, the employer can put this information in the "Remarks" section of Form G-440, Report Specifications Sheet.

CHAPTER 3: Records Retention Requirement
Employers are required (20 CFR 345.24(b)) to retain payroll records on which service and compensation reports are based for 5 years after the due date of the compensation report or the date that the Railroad Unemployment Insurance Act contribution to which they relate is paid, whichever is later. For example, the payroll records for 1997 (for which compensation was reported February 28, 1998) are to be retained until March 1, 2003.

Exception
In the event of a dispute of the compensation report, the records must be retained as long as the dispute is held open. Disputes include any requests from the Railroad Retirement Board for reconciliation of report data that were made within the five year period and which remain outstanding.

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