[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3221-4]

[Page 144-145]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
Subpart C_Railroad Retirement Tax Act (Chapter 22, Internal Revenue Code 
                                of 1954)
 
Sec. 31.3221-4  Exception from supplemental tax.

    (a) General rule. Section 3221(d) provides an exception from the 
excise tax imposed by section 3221(c). Under this exception, the excise 
tax imposed by section 3221(c) does not apply to an employer with 
respect to employees who are covered by a supplemental pension plan, as 
defined in paragraph (b) of this section, that is established pursuant 
to an agreement reached through collective bargaining between the 
employer and employees, within the meaning of paragraph (c) of this 
section.
    (b) Definition of supplemental pension plan--(1) In general. A plan 
is a supplemental pension plan covered by the section 3221(d) exception 
described in paragraph (a) of this section only if it meets the 
requirements of paragraphs (b)(2) through (b)(4) of this section.
    (2) Pension benefit requirement. A plan is a supplemental pension 
plan within the meaning of this section only if the plan is a pension 
plan within the meaning of Sec. 1.401-1(b)(1)(i) of this chapter. Thus, 
a plan is a supplemental pension plan only if the plan provides for the 
payment of definitely determinable benefits to employees over a period 
of years, usually for life, after retirement. A plan need not be funded 
through a qualified trust that meets the requirements of section 401(a) 
or an annuity contract that meets the requirements of section 403(a) in 
order to meet the requirements of this paragraph (b)(2). A plan that is 
a profit-sharing plan within the meaning of Sec. 1.401-1(b)(1)(ii) of 
this chapter or a stock bonus plan within the meaning of Sec. 1.401-
1(b)(1)(iii) of this chapter is not a supplemental pension plan within 
the meaning of this paragraph (b).
    (3) Railroad Retirement Board determination with respect to the 
plan. A plan is a supplemental pension plan within the meaning of this 
paragraph (b) with respect to an employee only during any period for 
which the Railroad Retirement Board has made a determination under 20 
CFR 216.42(d) that the plan is a private pension, the payments from 
which will result in a reduction in the employee's supplemental annuity 
payable under 45 U.S.C. 231a(b). A plan is not a supplemental pension 
plan for any time period before the Railroad Retirement Board has made 
such a determination, or after that determination is no longer in force.
    (4) Other requirements. [Reserved]
    (c) Collective bargaining agreement. A plan is established pursuant 
to a collective bargaining agreement with respect to an employee only 
if, in accordance with the rules of Sec. 1.410(b)-6(d)(2) of this 
chapter, the employee is included in a unit of employees covered by an 
agreement that the Secretary of Labor finds to be a collective 
bargaining agreement between employee representatives and one or more 
employers, provided that there is evidence that retirement benefits were 
the subject of good faith bargaining between

[[Page 145]]

employee representatives and the employer or employers.
    (d) Substitute section 3221(d) excise tax. Section 3221(d) imposes 
an excise tax on any employer who has been excepted from the excise tax 
imposed under section 3221(c) by the application of section 3221(d) and 
paragraph (a) of this section with respect to an employee. The excise 
tax is equal to the amount of the supplemental annuity paid to that 
employee under 45 U.S.C. 231a(b), plus a percentage thereof determined 
by the Railroad Retirement Board to be sufficient to cover the 
administrative costs attributable to such payments under 45 U.S.C. 
231a(b).
    (e) Effective date--(1) In general. Except as provided in paragraph 
(e)(2) of this section, this section applies beginning on October 1, 
1998.
    (2) Delayed effective date for collective bargaining agreement 
provisions. Paragraph (c) of this section applies beginning on January 
1, 2000.

[T.D. 8832, 64 FR 42833, Aug. 6, 1999]

                           General Provisions