System subordinate units include:

Form OE-1 is used to report creditable compensation and service for system units of national rail labor organizations covered under the provisions of the Railroad Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA). The report should be sent to your National Secretary-Treasurer or National Reporting Officer within 15 days after the end of the period covered by the report. Do not send Form OE-1 to the Railroad Retirement Board (RRB) or to the Internal Revenue Service (IRS).

Where to go for Additional Information

• For additional forms or questions about these instructions, contact your national organization or;
   
• For questions about tax deposits, contact the CT-1 Specialist at the IRS at (913) 345-5622.

A. Instructions for Completing Items 1-14

• Name of your national organization.
• Page number and the total number of pages included in this report. Example: Page 1 of 2.
• Name and/or number of your reporting unit.
• RRB code assigned to your type of unit. To obtain your unit code, contact your national organization.
• Appropriate month or quarter and year. Example: Mar 2002 or 1st Q 2002.
• Employee's last name followed by initials of first and middle names. Also, enter the employee's nine-digit social security number.
• Employee's last daily pay rate for the report year exclusive of overtime and other allowances. Instructions for converting pay rates to daily rates are in Part C of these instructions.  Use the actual daily rate of pay if it is less than $100.  If the rate is equal or greater than $99.99, report $99.99. Do not report amounts in excess of $99.99. The last daily pay rate need be reported ONLY for the last month the employee worked in the year. This information is used, in certain situations, to determine the RUIA benefit rate.
• Gross earnings and Tier I Medicare earnings both consist of all taxable compensation. Include only amounts earned for services to your unit.
• Employee Medicare tax withheld from the employee's earnings. Instructions for calculating withholding amounts are in Part B of these instructions.
• Tier I creditable retirement compensation.
• Tier I employee taxes withheld from the employee's earnings.
• Tier II creditable retirement compensation.
• Tier II employee taxes withheld from the employee's earnings.
• Creditable RUIA compensation. Instructions for determining creditable RUIA compensation are in Part F of these instructions.

Sign and date the form. The box entitled "Date Received by NRO" is for use by the national organization.

B. Instructions for Calculating Withholding Amounts

In October of each year, the RRB sends to each National Reporting Officer or National Secretary-Treasurer, notices of the earnings maximums and the Tier I, Tier II, Medicare tax, and RUIA contribution rates for the following year.

Enter the annual compensation maximums in the corresponding boxes on the OE-1. Compensation should not be taxed or reported in excess of the annual earnings maximums. Tier I taxes are not assessed on earnings above the Tier I annual maximum limit and Tier II taxes are not assessed on earnings above the Tier II annual maximum limit. There is no compensation maximum for Medicare tax.

An employee pays three payroll taxes, Tier I, Tier II, and Medicare tax. Employees do not pay the RUIA contribution. The employee and employer tax rates are the same for Tier I and Medicare, but are different for Tier II. To calculate withholding, multiply the taxable earnings by:

• The employee Tier I tax rate to obtain the Tier I tax.
• The employee Tier II tax rate to obtain the Tier II tax.
• The Medicare tax rate to obtain the Medicare tax.

Following is the calculation of employee tax withholding based upon $480.00 in earnings in a month and employee tax rates of 1.45% for Medicare, 6.2% for Tier I and 4.9% for Tier II.

C. Instructions for Calculating the Daily Pay Rate

To determine the daily rate of an employee paid on an:
 

D. Instructions for Use of Form OE-1 in Completing Form CT-1  

Form CT-1 is the IRS form used to report railroad retirement taxes. Form CT-1 is filed annually for taxes on earnings paid in a calendar year. If all employees' cumulative earnings are under the Tier II maximum, the cumulative gross earnings will also be the cumulative Tier I earnings and the cumulative Tier II earnings.

Enter the cumulative earnings totals and withholding totals in the appropriate spaces in the Tax Calculation Worksheet on the back of Form OE-1. The cumulative totals are the sums of the totals from all Forms OE-1 filed in the year. Enter the tax rates in Items A, B, and C on the worksheet and multiply by the earnings. The items from the Tax Calculation Worksheet are in the same order and directly correspond to items on Form CT-1. Transcribe the amounts from the worksheet to Form CT-1 using the "CT-1 references" column on the worksheet as a guide.

The cumulative yearly totals reported on the CT-1 should be equal to the totals of all four (4) OE-1's for the calendar year.

E. Instructions for Use of Form OE-1 in Determining Tax Liability  

CT-1 taxes are paid monthly with two exceptions, 1) your tax liability is more than $50,000, in which case taxes are paid more often than monthly, or 2) your tax liability is less than $2,500, in which case taxes may be paid annually. Deposits are made with a Federal Reserve Bank using Form 8109, Federal Tax Deposit Coupon or electronically using RRBLINK. Contact the IRS for Form 8109 and deposit information. DC-1 contributions are paid quarterly to your National Secretary-Treasurer or National Reporting Officer.

The frequency, monthly or quarterly, for filing Form OE-1 is determined by your national organization. If you file Form OE-1 monthly, the form can be used to calculate your monthly tax liability by completing Items A through G on the TAX CALCULATION WORKSHEET. It will be necessary, however, to sum the RUIA compensation for the three months in the quarter to calculate the quarterly DC-1 RUIA contribution amount. If you file OE-1 quarterly, the form can be used to calculate your DC-1 tax liability by completing Item H of the TAX CALCULATION WORKSHEET. The Form OE-1 will not have the monthly totals needed to determine monthly tax liability. If you develop the monthly earnings and withholding totals, you can enter the monthly totals in the TAX CALCULATION WORKSHEET to calculate the monthly tax liability.

If all employees' earnings are less than the Tier II maximum, another option for determining monthly tax liability is to multiply the monthly gross earnings by the combined tax rate. The combined tax rate is the sum of the six tax rates; Employee and Employer-Medicare rates, Tier I rates, and Tier II rates. For example, the sum of the six tax rates for 2002 is 35.8%. Multiply the monthly 2002 gross earnings by .358 to obtain the monthly 2002 CT-1 tax liability. However, the rates are subject to change. (See section B of these instructions).

F. Instructions for Determining Creditable RUIA Compensation

If an employee worked only for the system unit in a month, earnings are creditable under the RUIA up to the monthly RUIA maximum. If an employee of a system unit also worked for a railroad carrier in the same month, the employee's combined earnings are creditable up to the RUIA monthly maximum. If the combined earnings exceed the RUIA monthly maximum, the creditable RUIA compensation may be prorated or allocated between the two employers. The method of prorating is not set by the RRB but by agreement between the two employers. Any method which yields the correct total RUIA compensation is acceptable to the RRB.  If RUIA compensation is apportioned between the system unit and the railroad carrier, the system unit must retain, for the full payroll records retention period, the records of earnings paid by the carrier provided by the employee for determining the apportionment.

Method 1

One common method of apportioning RUIA compensation between two employers is for the system unit to report RUIA compensation only in the amount not reported by the primary employer. For example, the 2002 RUIA monthly maximum is $1,100. If both the system unit and the primary employer pay $1,000 in earnings for the month of January 2002, the primary employer reports RUIA compensation of $1,000 for January 2002 and the system unit reports $100. The sum of RUIA compensation reported by the two employers is $1,100 the maximum for the month.

Method 2

Another method of apportioning RUIA compensation is for each employer to report RUIA compensation in a ratio equal to the ratio of the gross earnings paid by the two employers. 1) Determine the total earnings for the month and the total creditable RUIA compensation based on the total earnings. 2) Determine the ratio of the system unit earnings to the total earnings. 3) Multiply the creditable RUIA compensation by the system unit ratio. This will yield the system unit share of RUIA compensation under this method.

The following is a comparison of the two RUIA compensation apportioning methods with a $1,100.00 RUIA monthly maximum.

  * Jan: $480.00 + $1500.00 = $1980.00; 2) $480.00 / $1980.00 = .24; 3) .24 x $1100.00 = $264.00

** Feb: $512.00 + $500.00 = $1012.00; 2) $512.00 / $1012.00 = .51; 3) .51 x $1012.00 = $516.12

The following is a second comparison of the two RUIA compensation apportioning methods with a $1,100.00 RUIA monthly maximum.

   * Jan: $150.00 + $2000.00 = $2150.00; 2) $150.00 / $2150.00 = .070; 3) .070 x $1100.00 = $77.00

 ** Feb: $190.00 + $2000.00 = $2190.00; 2) $190.00 / $2190.00 = .087; 3) .087 x $1100.00 = $95.70

*** Mar: $10.00 + $300.00 = $310.00; 2) $10.00 / $310.00 = .032; 3) .032 x $310.00 = $9.92