Railroad retirement and survivor benefits are financed by the following sources of income:
1. Payroll taxes on railroad earnings paid by covered employees and employers.
2. Income from a financial interchange with the social security trust funds.
3. Earnings on investments. Funds not needed immediately for benefit payments or administrative expenses are transferred to the National Railroad Retirement Investment Trust for investment.
4. Borrowing from general revenues related to certain features of the financial interchange mentioned in (2).
5. Appropriations from general revenues.
6. Revenues from Federal income taxes on railroad retirement benefits.
Each of these six income sources are described briefly in the following pages.
Note.--The Social Security Equivalent Benefit (SSEB) Account came into existence on October 1, 1984. Certain items of income to the railroad retirement system are credited to that account, and the portion of benefits which is equivalent to social security benefits is charged to that account. The existence of the account changes only the manner of accounting for income and outgo, but does not change the financing of the railroad retirement system in any way. For this reason, the term Railroad Retirement Account may be read as referring to the combined Railroad Retirement and SSEB Accounts.