Rule2026-16250
Determining Disability
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 10, 2026
Effective
September 9, 2026
Issuing agencies
Railroad Retirement Board
Abstract
The Railroad Retirement Board amends its regulations to update the amount of monthly allowable earnings for a disability annuitant to reflect the formula in section 2(e)(4) of the Railroad Retirement Act. The existing regulation is no longer consistent with the statutory formula in the Railroad Retirement Act for the maximum monthly allowable earnings for a disability annuitant and is therefore facially unlawful.
Full Text
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<title>Federal Register, Volume 91 Issue 152 (Monday, August 10, 2026)</title>
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[Federal Register Volume 91, Number 152 (Monday, August 10, 2026)]
[Rules and Regulations]
[Pages 51382-51385]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-16250]
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RAILROAD RETIREMENT BOARD
20 CFR Parts 220 and 230
RIN 3220-AB82
Determining Disability
AGENCY: Railroad Retirement Board.
ACTION: Final rule.
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SUMMARY: The Railroad Retirement Board amends its regulations to update
the amount of monthly allowable earnings for a disability annuitant to
reflect the formula in section 2(e)(4) of the Railroad Retirement Act.
The existing regulation is no longer consistent with the statutory
formula in the Railroad Retirement Act for the maximum monthly
allowable earnings for a disability annuitant and is therefore facially
unlawful.
DATES: This rule is effective September 9, 2026.
FOR FURTHER INFORMATION CONTACT: Peter J. Orlowicz, Senior Counsel,
Railroad Retirement Board, 844 North Rush Street, Chicago, IL 60611-
1275, (312) 751-4922.
SUPPLEMENTARY INFORMATION: Section 2(e)(4) of the Railroad Retirement
Act imposes limits on the amount of earnings from employment or self-
employment that an individual who is under retirement age can earn
while also receiving a disability annuity under the Railroad Retirement
Act. 45 U.S.C. 231a(e)(4). If an individual earns more than the monthly
or annual allowable earnings limits in a given month or year, annuities
payable to that individual must be withheld or deducted. Prior to 2007,
these limits were fixed at $400 per month and $4800 per year. See 45
U.S.C. 231a(e)(4) (2005).
The Railroad Retirement Disability Earnings Act, Public Law 109-
478, 120 Stat. 3573 (Jan. 12, 2007) amended section 2(e)(4) of the
Railroad Retirement Act to raise the disability earning thresholds and
index them to increases in the national average wage index. The monthly
allowable earnings amount for calendar year 2007 was raised to $700,
and for each year after 2007 the amount was calculated as the larger of
(1) the amount for the previous year or (2) the amount calculated by
multiplying $700 by the ratio of the national average wage index for
the year two calendar years before the year for which the amount was
being calculated to the national average wage index for the year 2005.
The annual allowable earnings limit was calculated as the total amount
of monthly allowable earnings for each month in that calendar year. For
calendar year 2026, under this statutory calculation the monthly
allowable earnings limit is $1,320 per month and the annual allowable
earnings limit is $15,840. Although the Board implemented this
statutory formula in policy and practice to apply the higher monthly
disability earnings limits for 2007 and later years, including posting
an annual notice on its website and notifying disability annuitants by
letter of the applicable limits, the regulation at 20 CFR part 220
Subpart M was not updated to reflect these statutory amendments. The
pre-2007 statutory language was also reproduced in regulations at 20
CFR 230.1.
The Board also finds it necessary to note a discrepancy between the
statutory definition of the annual allowable earnings amount in section
2(e)(4) of the Railroad Retirement Act, and in 20 CFR Part 220 Subpart
M and the Board's annual notices regarding the annual allowable
earnings amount. Section 2(e)(4) of the Railroad Retirement Act defines
the annual allowable earnings amount to be the total amount of monthly
allowable earnings for each month in the calendar year. However, if an
individual exceeds the annual allowable earnings amount by less than
one-half of the amount of a single monthly allowable earnings amount,
the fifth and sixth sentences of section 2(e)(4) of the Railroad
Retirement Act direct that no deduction is made. In effect, an
individual can earn up to twelve and one-half times the monthly
allowable earnings amount over the course of a calendar year before any
deduction is made at the end of the year. As a result, in its
regulations and notices, the Board has historically included this
additional one-half of the monthly allowable earnings limit in its
reporting of the annual allowable earnings amount to aid annuitants in
understanding the actual dollar threshold at which annuity deductions
are made. For calendar year 2026, this resulted in a reported annual
allowable earnings limit of $16,500 instead of $15,840. Nevertheless,
this inclusion is not strictly consistent with the statutory definition
of the annual allowable earnings amount, and the Board will correct the
amount for calendar year 2027 and future years in all notices and
correspondence after the effective date of this direct final rule.
As part of its review of regulations directed by Executive Order
14219, Ensuring Lawful Governance and Implementing the President's
``Department of Government Efficiency'' Deregulatory Initiative (Feb.
19, 2025), the Board identified these provisions purporting to set
monthly and annual allowable earnings limits for disability annuitants
as facially unlawful and in conflict with the statutory criteria in
[[Page 51383]]
section 2(e)(4) of the Railroad Retirement Act for calculating such
limits. In accordance with the Presidential memorandum of April 9,
2025, directing the repeal of unlawful regulations, the Board is
revising its regulations at 20 CFR Part 220 Subpart M to reflect the
current statutory calculation. The Board is also removing the obsolete
statutory language reproduced in its regulations at 20 CFR 230.1.
Pursuant to the memorandum, notice and comment proceedings are
unnecessary and contrary to the public interest because the statutory
language of section 2(e)(4) of the Railroad Retirement Act determines
the monthly and annual allowable earnings limits applicable to
disability annuitants under the Act, with no discretion left to the
agency. Therefore, no comments are being requested.
Regulatory Analysis
Executive Order 12866, as Supplemented by Executive Order 13563
The Board, with the Office of Management and Budget, has determined
that this is not a significant regulatory action under Executive Order
12866, as supplemented by Executive Order 13563. Therefore, no
regulatory impact analysis is required.
Regulatory Flexibility Act
The Board certifies that this direct final rule would not have a
significant economic impact on a substantial number of small entities
because it affects only individuals.
Paperwork Reduction Act
This direct final rule imposes no reporting or recordkeeping
requirements subject to Office of Management and Budget clearance.
List of Subjects
20 CFR Part 220
Disability benefits, railroad employees, railroad retirement.
20 CFR Part 230
Railroad retirement, reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Railroad Retirement
Board amends 20 CFR Subchapter B as follows:
PART 220--DETERMINING DISABILITY
0
1. The authority citation for part 220 continues to read as follows:
Authority: 45 U.S.C. 231a; 45 U.S.C. 231f.
0
2. Revise and republish subpart M to part 220 to read as follows:
Subpart M--Disability Annuity Earnings Restrictions
Sec.
220.160 How work for a railroad employer affects a disability
annuity.
220.161 How non-railroad work affects an employee disability
annuity.
220.162 Earnings report.
220.163 Employee penalty deductions.
220.164 Employee end-of-year adjustment.
Sec. 220.160 How work for a railroad employer affects a disability
annuity.
A disability annuity is not payable and the annuity must be
returned for any month in which the disabled annuitant works for an
employer as defined in part 202 of this chapter.
Sec. 220.161 How non-railroad work affects an employee disability
annuity.
(a) General. An employee's disability annuity is not payable and
the employee must return the annuity payment for any month in which the
employee earns more than the monthly allowable earnings amount (after
deduction of impairment-related work expenses) in employment or self-
employment of any kind. If earnings in any one calendar month are for
accruals in more than one calendar month, such earnings shall be deemed
to have been paid in each of the months in which accrued. Any annuity
amounts withheld because the annuitant earned over the monthly
allowable earnings amount in a month may be paid after the end of the
year, as shown in Sec. 220.164. The monthly allowable earnings amount
no longer applies when the employee attains retirement age and the
disability annuity is converted to a full age annuity. See Sec.
220.145 for the definition of impairment-related work expenses.
(b) Monthly allowable earnings amount. (1) Calendar years 2006 and
earlier. The monthly allowable earnings amount for calendar years 2006
and earlier is $400.
(2) Calendar year 2007. The monthly allowable earnings amount for
calendar year 2007 is $700.
(3) Calendar years 2008 and later. For calendar years 2008 and
later, the monthly allowable earnings amount is the larger of:
(i) The amount for the previous year, or
(ii)The amount calculated by multiplying $700 by the ratio of the
national average wage index for the year 2 calendar years before the
year for which the amount is being calculated to the national average
wage index for the year 2005. An amount calculated under this paragraph
will be rounded to the nearest multiple of $10 (amounts ending in $5
will be rounded up.)
(4) Annual notice. The Board will publish an annual notice of the
monthly allowable earnings amount for calendar years after 2026 on its
website and provide notice directly to disability annuitants of the
amount.
Sec. 220.162 Earnings report.
(a) General. Any annuitant receiving an annuity based on disability
must report to the Board any work and earnings as described in
Sec. Sec. 220.160 and 220.161. The report may be a written or oral
statement by the annuitant, or a person acting for the annuitant, made
or sent to a representative of the Board. The report should include the
name and address of the railroad or non-railroad employer, a
description of the work and the amount of gross wages (before
deductions) or the net income from self-employment (earnings after
deducting business expenses).
(b) Employee reports. In addition to the requirement described in
(a), a report of earnings over the monthly allowable earnings amount
must be made before the employee accepts a disability annuity (the
annuity payment is issued and not returned) for the second month after
the first month in which earnings are over the monthly allowable
earnings amount. Along with the report, the employee must return the
annuity payment for any month in which he or she earns over the monthly
allowable earnings amount.
Sec. 220.163 Employee penalty deductions.
If the employee earns over the monthly allowable earnings amount in
a month and does not report it within the time limit shown in Sec.
220.162(b), a penalty deduction may be imposed. The penalty deduction
for the first failure to report equals the annuity amount for the first
month in which the employee earned over the monthly allowable earnings
amount. The deduction for a second or later failure to report equals
the annuity amount for each month in which the employee earned over the
monthly allowable earnings amount and failed to report it on time.
Sec. 220.164 Employee end-of-year adjustment.
(a) General. After the end of a year, an employee whose annuity was
withheld for earnings over the monthly allowable earnings amount in a
month receives a form on which to report his or her earnings for the
year.
(b) Earnings are less than or equal to the annual allowable
earnings amount. If the employee's total earnings for the year are less
than or equal to the annual allowable earnings amount, all annuity
payments withheld during the year
[[Page 51384]]
because of earnings in a month over the monthly allowable earnings
amount, and all deductions imposed for failing to report excess monthly
earnings, are paid to the employee after the end of the year.
(c) Earnings are more than the annual allowable earnings amount.
(1) If the employee's total earnings for a year exceed the annual
allowable earnings amount, the Board will calculate the number of
annuity payments to be deducted by dividing the amount of the
employee's annual earnings above the annual allowable amount by the
monthly allowable earnings amount. If the computation results in a
remainder greater than or equal to one-half, the number of months for
which an annuity is not payable shall be increased by one. The
resulting number is the number of months for that year for which the
annuity is not payable and must be deducted. If the Board withheld
monthly annuity payments during the year based on Sec. 220.161, then
the employee will be deducted the difference between the amount
calculated under this paragraph and the annuities that were already
withheld based on Sec. 220.161. If the annuity payments withheld based
on Sec. 220.161 are greater than those calculated under this
paragraph, then the employee will be repaid the difference. If the
annuity rate changes during the year, any annuities due at the end of
the year are paid first for months in which the annuity rate is higher.
Penalty deductions may also apply as described in paragraph (c)(2) of
this section. However, no deductions for excess earnings or penalty
deductions for failing to report are made if the employee exceeds the
annual allowable earnings amount by less than half of the monthly
allowable earnings limit for that year.
(2) If the employee's total earnings for a year exceed the annual
allowable earnings amount by more than one-half the monthly allowable
earnings amount and the employee failed to report monthly earnings over
the monthly allowable earnings amount within the time limit described
in Sec. 220.162(b), penalty deductions will also apply. If it is the
employee's first failure to report, the penalty deduction is equal to
one month's annuity. If it is the employee's second or later failure to
report, the penalty deduction equals the annuity amount for each month
in which the employee earned over the monthly allowable earnings amount
and failed to report it on time.
Example 1 to paragraph (c): An employee is awarded a disability
annuity based upon his inability to engage in his regular railroad
occupation effective January 1, 2025. During the year, he works in non-
railroad employment from April to September and earns $2,100 per month
for these six months. The employee properly reports his excess earnings
and returns the annuity payments for these months. At the end of the
year, his total annual earnings are $12,600 ($2,100 times 6 months),
which does not exceed the annual allowable earnings limit of $15,120
($1,260 times 12 months) for 2025. Therefore, at the end-of-year
adjustment, the Board will repay the returned annuity payments for
April through September to the employee. (This occurs even if the
employee failed to report the earnings to the Board within two months,
because no penalty deduction is made when the employee's total annual
earnings are less than the annual allowable earnings amount.)
Example 2 to paragraph (c): An employee is awarded a disability
annuity based upon his inability to engage in his regular railroad
occupation effective January 1, 2025. During that year, he works in
non-railroad employment from April to September and earns $2,550 per
month for those six months. He does not report these earnings to the
Board until the following January. At the end of the year, his total
annual earnings are $15,300 ($2,550 times 6 months), which exceeds the
annual allowable earnings limit of $15,120 (12 times $1,260) for 2025.
The employee's excess earnings for 2025 total $180 ($15,300 minus
$15,120), which is less than one-half of the monthly allowable earnings
amount (one-half of $1,260 equals $630.) Therefore, at the end-of-year
adjustment, no deductions for excess earnings and no penalty deductions
for failing to report will be applied.
Example 3 to paragraph (c): An employee is awarded a disability
annuity based upon his inability to engage in his regular railroad
occupation effective January 1, 2025. During that year, he works in
non-railroad employment from April to September and earns $3,000 per
month for those six months. He does not report these earnings to the
Board until the following January. At the end of the year, his total
annual earnings are $18,000 ($3,000 times 6 months), which exceeds the
annual allowable earnings limit of $15,120 (12 times $1,260) for 2025.
The employee's excess earnings for 2025 total $2,880 ($18,000 minus
$15,120). The employee's total excess earnings divided by the monthly
allowable earnings limit equals 2.286, which rounds to two ($2,880
divided by $1,260). At the end of the year, the employee has two months
of annuity payments deducted for earnings. Additionally, the employee
incurs a penalty deduction of one month's annuity payment because he
failed to report his excess earnings for April through September 2025
and it is the first time a penalty deduction is ever applied.
Therefore, a total of three annuity payments are deducted.
Example 4 to paragraph (c): The same employee from example 3 works
again in 2026 in non-railroad employment from April to September,
earning $3,100 per month for those six months. This time, he reports
his earnings on September 30. At the end of the year, his total annual
earnings are $18,600 ($3,100 times 6 months), which exceeds the annual
allowable earnings limit of $15,840 (12 times $1,320) for 2026. The
employee's excess earnings for 2026 total $2,760 ($18,600 minus
$15,840). The employee's total excess earnings divided by the monthly
allowable earnings limit equals 2.091, which rounds to two ($2,760
divided by $1,320). At the end of the year, the employee has two months
of annuity payments deducted for earnings. Additionally, the employee
incurs penalty deductions of three months' annuity payments for April,
May, and June 2026 because he failed to report his monthly excess
earnings during the year for those months before accepting the annuity
for the second month following those months, and it is not his first
penalty deduction for failing to report. Therefore, a total of five
months of annuity payments are deducted.
(d) Annual allowable earnings amount--(1) Calendar years 2006 and
earlier. The annual allowable earnings amount for calendar years 2006
and earlier is $4,800.
(2) Calendar year 2007 and later. The annual allowable earnings
amount for calendar year 2007 and later is 12 times the monthly
allowable earnings amount for that year.
(3) Annual notice. The Board will publish an annual notice of the
annual allowable earnings amount for calendar years after 2026 on its
website and provide notice directly to disability annuitants of the
amount.
PART 230--MONTHS ANNUITIES NOT PAYABLE BY REASON OF WORK
0
3. The authority citation for part 230 continues to read as follows:
Authority: 45 U.S.C. 231f.
Sec. 230.1 [Removed and Reserved]
0
4. Remove and reserve Sec. 230.1.
Dated: August 6, 2026.
[[Page 51385]]
By Authority of the Board.
Stephanie Hillyard,
Secretary to the Board.
[FR Doc. 2026-16250 Filed 8-7-26; 8:45 am]
BILLING CODE 7905-01-P
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