Sec. 5. Inclusion of surplus earnings in social security benefit formula
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Section 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended— in clauses (i), (ii), and (iii), by inserting basic before average indexed monthly earnings each place it appears; in clause (ii), by striking and at the end; in clause (iii), by inserting and at the end; and by inserting after clause
(iii)the following new clause: 2 percent of the individual’s surplus average indexed monthly earnings, . Section 215(b)(1) of such Act ( 42 U.S.C. 415(b)(1) ) is amended— in the matter preceding subparagraph (A), by inserting basic before average ; and in subparagraph (A), by striking paragraph
(3)and inserting paragraph (3)(A) and by inserting before the comma the following: to the extent such total does not exceed the contribution and benefit base for the applicable year . Section 215(b)(1) of such Act (as amended by paragraph (1)) is amended— by redesignating subparagraphs
(A)and
(B)as clauses
(i)and (ii), respectively; by inserting
(A)after (b)(1) ; and by adding at the end the following new subparagraph: An individual’s surplus average indexed monthly earnings shall be equal to the quotient obtained by dividing— the total (after adjustment under paragraph (3)(B)) of such individual’s surplus earnings (determined under clause (ii)) for such individual’s benefit computation years (determined under paragraph (2)), by the number of months in those years. For purposes of clause
(i)and paragraph (3)(B), an individual’s surplus earnings for a benefit computation year are the total of such individual’s additional wages (as defined in section 209(l)) paid in and additional self-employment income (as defined in section 209(m)) credited to such benefit computation year, to the extent such total does not exceed the amount determined for such year under clause (iii). For purposes of clause (ii), the amount determined under this clause is— in the case of a benefit computation year beginning after December 31, 2014, and before January 1, 2016, $500,000; and in the case of any benefit computation year beginning on or after January 1, 2016, the product of $500,000 and the quotient obtained by dividing— the national average wage index (as defined in section 209(k)(1)) for the calendar year which is 2 years before the calendar year in which the benefit computation year begins, by the national average wage index for calendar year 2013. . The heading for section 215(b) of such Act is amended by striking Average Indexed Monthly Earnings and inserting Basic Average Indexed Monthly Earnings; Surplus Average Indexed Monthly Earnings . Section 215(b)(3) of such Act ( 42 U.S.C. 415(b)(3) ) is amended— in subparagraph (A), by striking subparagraph
(B)and inserting subparagraph
(C)and by inserting and determination of basic average indexed monthly income after paragraph
(2); by redesignating subparagraph
(B)as subparagraph (C); and by inserting after subparagraph
(A)the following new subparagraph: For purposes of determining under paragraph (1)(B) an individual’s surplus average indexed monthly earnings, the individual’s surplus earnings (described in paragraph (1)(B)(ii)) for a benefit computation year shall be deemed to be equal to the product of— the individual’s surplus earnings for such year (as determined without regard to this subparagraph), and the quotient described in subparagraph (A)(ii). . Section 1(h)(5) of the Railroad Retirement Act of 1974 ( 45 U.S.C. 231(h)(5) ) is amended— by striking and at the end of clause (ii); by striking the period at the end of clause
(iii)and inserting ; and ; and by adding at the end the following new clause: for each such calendar month after 2014, the amount which is creditable as such individual's additional wages under section 209(l) of the Social Security Act. . The amendments made by this section shall apply with respect to individuals who initially become eligible (within the meaning of section 215(a)(3)(B) of the Social Security Act ( 42 U.S.C. 415(a)(3)(B) )) for old-age or disability insurance benefits under title II of the Social Security Act, or who die (before becoming eligible for such benefits), in any calendar year after 2014.
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