[Federal Register Volume 68, Number 20 (Thursday, January 30, 2003)]
[Rules and Regulations]
[Pages 4700-4712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1949]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

[Reg. No. 4]
RIN 0960-AE03


Changes in the Retirement Age

AGENCY: Social Security Administration.

ACTION: Final rules.

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SUMMARY: These final rules amend our regulations to reflect the changes 
in full retirement age and in monthly benefit reduction for early 
retirement as established by section 201 of the Social Security 
Amendments of 1983 (the 1983 Amendments), and the change in delayed 
retirement credits (DRCs) as established by section 4 of the Senior 
Citizens' Freedom to Work Act of 2000 (the Freedom to Work Act). 
Section 201 of the 1983 Amendments gradually increases the full 
retirement age for unreduced old-age, wife's or husband's, and widow's 
or widower's benefits from age 65 to age 67. Section 201 provides for 
an additional reduction in old-age and wife's or husband's benefits 
when early retirement is elected more than 36 months prior to full 
retirement age. It also requires a different method of computing the 
amount of reduction for early retirement for widow's or widower's 
benefits. Section 4 of the Freedom to Work Act allows a beneficiary who 
has attained full retirement age to voluntarily suspend retirement 
benefits to earn DRCs.

EFFECTIVE DATE: These rules are effective January 30, 2003.

FOR FURTHER INFORMATION CONTACT: Bill Hilton, Social Insurance 
Specialist, Office of Program Benefits, Social Security Administration, 
6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-2468 or 
TTY (410) 966-5609. For information on eligibility, filing for 
benefits, or coverage of earnings, call our national toll-free number, 
1-800-772-1213 or TTY at 1-800-325-0778.

SUPPLEMENTARY INFORMATION: Section 201 of the 1983 Amendments changed 
the age at which unreduced old-age benefits, wife's or husband's 
benefits, and widow's or widower's benefits are payable from age 65 to 
age 67. The change is phased in over a period of 22 years. This 
increase affects those born after January 1, 1938.
    Section 201 also changed the way reduced monthly benefits are 
computed for early retirement. The reduction factor for early 
retirement of the worker and wife or husband will remain the same as 
under the pre-amendment law for the first 36 months of the reduction 
period. For each month in excess of 36 months there will be an 
additional reduction of \5/12\ of one percent. The maximum reduction 
increases to 30 percent for old-age benefits and 35 percent for wife's 
or husband's benefits.
    The maximum reduction for widow's or widower's benefits will 
continue to be 28\1/2\ percent, but that reduction is prorated over a 
period of months equal to the total possible months of early 
retirement. That total is now 60 months for those with a full 
retirement age of 65 but will increase incrementally to 84 months for 
those with a full retirement age of 67.
    Section 4 of the Freedom to Work Act allows people who have 
attained full retirement age and are receiving retirement benefits to 
voluntarily suspend those benefits in order to earn DRCs.

Explanation of Changes

    We are adding new Sec.  404.409 to our regulations to explain the 
effect of section 201 of the 1983 Amendments. This new section shows 
the full range of dates of birth and the corresponding full retirement 
ages (the age at which a person can retire and receive unreduced old-
age, wife's, husband's, widow's or widower's benefits).
    We are revising Sec. Sec.  404.315, 404.316 and 404.321 to reflect 
the change in full retirement age mandated by section 201 of the 1983 
Amendments.
    We are revising Sec.  404.277 to reflect the change in full 
retirement age as mandated by section 201 of the 1983 Amendments. We 
are rewriting this section in plain language format to comply with the 
provisions of Executive Order 12866, as amended by Executive Order 
13258. We are correcting this section to show that automatic cost-of-
living adjustments now occur in December.
    We are revising Sec.  404.304 to reflect the change in full 
retirement age as mandated by section 201 of the 1983 Amendments. We 
are rewriting this section in plain language format to comply with the 
provisions of Executive Order 12866, as amended by Executive Order 
13258. We are correcting language in this section to say that benefits 
may be reduced because of the receipt of a government pension instead 
of saying that benefits will be reduced. This allows for the exceptions 
that sometimes occur. We are removing the incorrect language that 
indicated the benefit will be reduced by the amount of the pension.
    We are revising Sec.  404.313 to reflect the change in full 
retirement age mandated by section 201 of the 1983 Amendments. We are 
including a section to explain that delayed retirement credits may now 
be earned by a voluntary suspension of benefits as provided for in 
section 4 of the Freedom To Work Act. We are rewriting the section in 
plain language format to comply with the provisions of Executive Order 
12866, as amended by Executive Order 13258.
    We are revising Sec.  404.317 to reflect the change in full 
retirement age as mandated by section 201 of the 1983 Amendments. We 
are rewriting this section in plain language format to

[[Page 4701]]

comply with the provisions of Executive Order 12866, as amended by 
Executive Order 13258. We are correcting the age at which the receipt 
of workers' compensation or public disability benefits no longer affect 
the disability benefit from age 62 to age 65.
    We are revising Sec.  404.352 to reflect the change in full 
retirement age as mandated by section 201 of the 1983 Amendments. We 
are rewriting this section in plain language format to comply with the 
provisions of Executive Order 12866, as amended by Executive Order 
13258. We are expanding the explanation of when benefits end.
    We are revising Sec.  404.410 to reflect the change in full 
retirement age as mandated by section 201 of the 1983 Amendments. We 
are rewriting this section in plain language format to comply with the 
provisions of Executive Order 12866, as amended by Executive Order 
13258. We are adding an explanation that benefits to a widow or widower 
based on disability before age 60 are reduced only for months before 
full retirement age because the disabled widow or widower is deemed to 
be age 60.
    We are revising Sec. Sec.  404.201, 404.310, 404.311, 404.312, 
404.335, 404.336, 404.337, 404.338, 404.411, 404.412, 404.413, 404.421, 
404.621 and 404.623 to reflect the change in full retirement age 
mandated by section 201 of the 1983 Amendments. We are rewriting these 
entire sections in plain language format to comply with the provisions 
of Executive Order 12866, as amended by Executive Order 13258.

Regulatory Procedure

    Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 
902(a)(5), we follow the Administrative Procedure Act (APA) rulemaking 
procedures specified in 5 U.S.C. 553 when developing our regulations. 
The APA provides exceptions to its notice and comment procedures when 
an agency finds there is good cause for dispensing with such procedures 
on the basis that they are impracticable, unnecessary, or contrary to 
the public interest. We have determined that under 5 U.S.C. 553(b)(B), 
good cause exists for dispensing with the notice and public comment 
procedures for these rules. Good cause exists because these regulations 
simply reflect statutory changes and do not involve the making of any 
discretionary policy. Therefore, we have determined that opportunity 
for prior comment is unnecessary and we are issuing these changes to 
our regulations as final rules.
    In addition, we find good cause for dispensing with the 30-day 
delay in the effective date of a substantive rule, provided by 5 U.S.C. 
553(d). As explained above, these regulations merely reflect self-
executing statutory changes that have their own effective dates. We 
believe it would be misleading and contrary to the public interest for 
the regulations to show a later effective date, because we must compute 
benefits as directed by the statute in all cases.

Executive Order 12866, as Amended by Executive Order 13258

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules do not meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were not subject to OMB review.

Paperwork Reduction Act

    These final regulations impose no additional reporting or 
recordkeeping requirements requiring OMB clearance.

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities because they 
affect only individuals. Therefore, a regulatory flexibility analysis 
as provided in the Regulatory Flexibility Act, as amended, is not 
required.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security--Disability Insurance; 96.002, Social Security--Retirement 
Insurance; and 96.004, Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-age, Survivors and disability insurance, Reporting and 
recordkeeping requirements, Social Security.

    Dated: January 21, 2003.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set out in the preamble, we are amending subparts 
C, D, E, and G of part 404 of chapter III of title 20 of the Code of 
Federal Regulations as set forth below:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

Subpart C--[Amended]

    1. The authority citation for subpart C of part 404 continues to 
read as follows:

    Authority: Secs. 202(a), 205(a), 215, and 702(a)(5) of the 
Social Security Act (42 U.S.C. 402(a), 405(a), 415, and 902(a)(5)).


    2. Section 404.201 is revised to read as follows:


Sec.  404.201  What is included in this subpart?

    In this subpart we describe how we compute your primary insurance 
amount (PIA), how and when we will recalculate or recompute your PIA to 
include credit for additional earnings, and how we automatically adjust 
your PIA to reflect changes in the cost of living.
    (a) What is my primary insurance amount? Your primary insurance 
amount (PIA) is the basic figure we use to determine the monthly 
benefit amount payable to you and your family. For example, if you 
retire in the month you attain full retirement age (as defined in Sec.  
404.409) or if you become disabled, you will be entitled to a monthly 
benefit equal to your PIA. If you retire prior to full retirement age 
your monthly benefit will be reduced as explained in Sec. Sec.  
404.410--404.413. Benefits to other members of your family are a 
specified percentage of your PIA as explained in subpart D. Total 
benefits to your family are subject to a maximum as explained in Sec.  
404.403.
    (b) How is this subpart organized? (1) In Sec. Sec.  404.201 
through 404.204, we explain some introductory matters.
    (2) In Sec. Sec.  404.210 through 404.213, we describe the average-
indexed-monthly-earnings method we use to compute the primary insurance 
amount (PIA) for workers who attain age 62 (or become disabled or die 
before age 62) after 1978.
    (3) In Sec. Sec.  404.220 through 404.222, we describe the average-
monthly-wage method we use to compute the PIA for workers who attain 
age 62 (or become disabled or die before age 62) before 1979.
    (4) In Sec. Sec.  404.230 through 404.233, we describe the 
guaranteed alternative method we use to compute the PIA for people who 
attain age 62 after 1978 but before 1984.
    (5) In Sec. Sec.  404.240 through 404.243, we describe the old-
start method we use to compute the PIA for those who had all or 
substantially all of their social security covered earnings before 
1951.
    (6) In Sec. Sec.  404.250 through 404.252, we describe special 
rules we use to compute the PIA for a worker who previously had a 
period of disability.
    (7) In Sec. Sec.  404.260 through 404.261, we describe how we 
compute the special minimum PIA for long-term, low-paid workers.
    (8) In Sec. Sec.  404.270 through 404.278, we describe how we 
automatically increase your PIA because of increases in the cost of 
living.

[[Page 4702]]

    (9) In Sec. Sec.  404.280 through 404.288, we describe how and when 
we will recompute your PIA to include additional earnings which were 
not used in the original computation.
    (10) In Sec.  404.290 we describe how and when we will recalculate 
your PIA.
    (11) Appendices I-VII contain material such as figures and formulas 
that we use to compute PIAs.

    3. Section 404.277 is revised to read as follows:


Sec.  404.277  When does the frozen minimum primary insurance amount 
increase because of cost-of-living adjustments?

    (a) What is the frozen minimum primary insurance amount (PIA)? The 
frozen minimum is a minimum PIA for certain workers whose benefits are 
computed under the average-indexed-monthly-earnings method. Section 
404.210(a) with Sec.  404.212(e) explains when the frozen minimum 
applies.
    (b) When does the frozen minimum primary insurance amount (PIA) 
increase automatically? The frozen minimum PIA increases automatically 
in every year in which you or your dependents or survivors are entitled 
to benefits and a cost-of-living increase applies.
    (c) When are automatic increases effective for old-age or 
disability benefits based on a frozen minimum primary insurance amount 
(PIA)? Automatic cost-of-living increases apply to your frozen minimum 
PIA beginning with the earliest of:
    (1) December of the year you become entitled to benefits and 
receive at least a partial benefit;
    (2) December of the year you reach full retirement age (as defined 
in Sec.  404.409) if you are entitled to benefits in or before the 
month you attain full retirement age, regardless of whether you receive 
at least a partial benefit; or
    (3) December of the year you become entitled to benefits if that is 
after you attain full retirement age.
    (d) When are automatic increases effective for survivor benefits 
based on a frozen minimum primary insurance amount (PIA)? (1) Automatic 
cost-of-living increases apply to the frozen minimum PIA used to 
determine survivor benefits in December of any year in which your 
child(ren), your surviving spouse caring for your child(ren), or your 
parent(s), are entitled to survivor benefits for at least one month.
    (2) Automatic cost-of-living increases apply beginning with 
December of the earlier of:
    (i) The year in which your surviving spouse or surviving divorced 
spouse (as defined in Sec. Sec.  404.335 and 404.336) has attained full 
retirement age (as defined in Sec.  404.409) and receives at least a 
partial benefit, or
    (ii) The year in which your surviving spouse or surviving disabled 
spouse becomes entitled to benefits and receives at least a partial 
benefit.
    (3) Automatic cost-of-living increases are not applied to the 
frozen minimum PIA in any year in which no survivor of yours is 
entitled to benefits on your social security record.

Subpart D--[Amended]

    4. The authority citation for subpart D of part 404 continues to 
read as follows:

    Authority: Secs. 202, 203(a) and (b), 205(a), 216, 223, 225, 
228(a)-(e), and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 
403(a) and (b), 405(a), 416, 423, 425, 428(a)-(e), and 902(a)(5)).


    5. Section 404.304 is revised to read as follows:


Sec.  404.304  What are the general rules on benefit amounts?

    This subpart describes how we determine the highest monthly benefit 
amount you ordinarily could qualify for under each type of benefit. 
However, the highest monthly benefit amount you could qualify for may 
not be the amount you will be paid. In a particular month, your benefit 
amount may be reduced or not paid at all. Under some circumstances, 
your benefit amount may be increased. The most common reasons for a 
change in your benefit amount are listed below.
    (a) Age. Sections 404.410 through 404.413 explain how your old-age, 
wife's or husband's, or widow's or widower's benefits may be reduced if 
you choose to receive them before you attain full retirement age (as 
defined in Sec.  404.409).
    (b) Earnings. Sections 404.415 through 404.418 explain how 
deductions will be made from your benefits if your earnings or the 
insured person's earnings go over certain limits.
    (c) Overpayments and Underpayments. Your benefits may be increased 
or decreased to make up for any previous overpayment or underpayment 
made on the insured person's record. For more information about this, 
see subpart F of this part.
    (d) Family Maximum. Sections 404.403 through 404.406 explain that 
there is a maximum amount payable on each insured person's earnings 
record. If you are entitled to benefits as the insured's dependent or 
survivor, your benefits may be reduced to keep total benefits payable 
to the insured's family within these limits.
    (e) Government Pension Offset. If you are entitled to wife's, 
husband's, widow's, widower's, mother's or father's benefits and 
receive a Government pension for work that was not covered under social 
security, your monthly benefits may be reduced because of that pension. 
Special age 72 payments may also be reduced because of a Government 
pension. For more information about this, see Sec.  404.408a which 
covers reductions for Government pensions and Sec.  404.384(c) which 
covers special age 72 payments.
    (f) Rounding. After all other deductions or reductions, we reduce 
any monthly benefit that is not a multiple of $1 to the next lower 
multiple of $1.

    6. 404.310 is revised to read as follows:


Sec.  404.310  When am I entitled to old-age benefits?

    We will find you entitled to old-age benefits if you meet the 
following three conditions:
    (a) You are at least 62 years old;
    (b) You have enough social security earnings to be fully insured as 
defined in Sec. Sec.  404.110 through 404.115; and
    (c) You apply; or you are entitled to disability benefits up to the 
month you attain full retirement age (as defined in Sec.  404.409). 
When you attain full retirement age, your disability benefits 
automatically become old-age benefits.

    7. Section 404.311 is revised to read as follows:


Sec.  404.311  When does my entitlement to old-age benefits begin and 
end?

    (a) We will find you entitled to old-age benefits beginning with:
    (1) If you have attained full retirement age (as defined in Sec.  
404.409), the first month covered by your application in which you meet 
all requirements for entitlement; or
    (2) If you have attained age 62, but have not attained full 
retirement age (as defined in Sec.  404.409), the first month covered 
by your application throughout which you meet all requirements for 
entitlement.
    (b) We will find your entitlement to old-age benefits ends with the 
month before the month you die.

    8. Section 404.312 is revised to read as follows:


Sec.  404.312  How is my old-age benefit amount calculated?

    (a) If your old-age benefits begin in the month you attain full 
retirement age (as defined in Sec.  404.409), your monthly benefit is 
equal to the primary insurance amount (as explained in subpart C of 
this part).

[[Page 4703]]

    (b) If your old-age benefits begin after the month you attain full 
retirement age, your monthly benefit is your primary insurance amount 
plus an increase for retiring after full retirement age. See Sec.  
404.313 for a description of these increases.
    (c) If your old-age benefits begin before the month you attain full 
retirement age, your monthly benefit amount is the primary insurance 
amount minus a reduction for each month you are entitled before you 
attain full retirement age. These reductions are described in 
Sec. Sec.  404.410 through 404.413.

    9. Section 404.313 is revised to read as follows:


Sec.  404.313  What are delayed retirement credits and how do they 
increase my old-age benefit amount?

    (a) What are delayed retirement credits and how do I earn them? 
Delayed retirement credits (DRCs) are credits we use to increase the 
amount of your old-age benefit amount. You may earn a credit for each 
month during the period beginning with the month you attain full 
retirement age (as defined in Sec.  404.409) and ending with the month 
you attain age 70 (72 before 1984). You earn a credit for each month 
for which you are fully insured and eligible but do not receive an old-
age benefit either because you do not apply for benefits or because you 
elect to voluntarily suspend your benefits to earn DRCs. Even if you 
were entitled to old-age benefits before full retirement age you may 
still earn DRCs for months during the period from full retirement age 
to age 70, if you voluntarily elect to suspend those benefits.
    (b) How is the amount of the increase because of delayed retirement 
credits computed? (1) Computation of the increase amount. The amount of 
the increase depends on your date of birth and the number of credits 
you earn. We total the number of credits (which need not be 
consecutive) and multiply that number by the applicable percentage from 
paragraph (b)(2) of this section. We then multiply the result by your 
benefit amount and round the answer to the next lower multiple of 10 
cents (if the answer is not already a multiple of 10 cents). We add the 
result to your benefit amount. If a supplementary medical insurance 
premium is involved it is then deducted. The result is rounded to the 
next lower multiple of $1 (if the answer is not already a multiple of 
$1).
    (2) Credit Percentages. The applicable credit amount for each month 
of delayed retirement can be found in the table below.

------------------------------------------------------------------------
                                              The credit for each month
         If your date of birth is:            you delay  retirement is:
------------------------------------------------------------------------
Before 1/2/1917...........................  \1/12\ of 1%
1/2/1917--1/1/1925........................  \1/4\ of 1%
1/2/1925--1/1/1927........................  \7/24\ of 1%
1/2/1927--1/1/1929........................  \1/3\ of 1%
1/2/1929--1/1/1931........................  \3/8\ of 1%
1/2/1931--1/1/1933........................  \5/12\ of 1%
1/2/1933--1/1/1935........................  \11/24\ of 1%
1/2/1935--1/1/1937........................  \1/2\ of 1%
1/2/1937--1/1/1939........................  \13/24\ of 1%
1/2/1939--1/1/1941........................  \7/12\ of 1%
1/2/1941--1/1/1943........................  \5/8\ of 1%
After 1/1/1943............................  \2/3\ of 1%
------------------------------------------------------------------------

    Example: Alan was qualified for old-age benefits when he reached 
age 65 on January 15, 1998. He decided not to apply for old-age 
benefits immediately because he was still working. When he became 
age 66 in January 1999, he stopped working and applied for benefits 
beginning with that month. Based on his earnings, his primary 
insurance amount was $782.60. However, because he did not receive 
benefits immediately upon attainment of full retirement age (65), he 
is due an increase based on his delayed retirement credits. He 
earned 12 credits, one for each month from January 1998 through 
December 1998. Based on his date of birth of 1/15/1933 he is 
entitled to a credit of 11/24 of one percent for each month of 
delayed retirement. 12 credits multiplied by 11/24 of one percent 
equals a credit of 5.5 percent. 5.5% of the primary insurance amount 
of $782.60 is $43.04 which is rounded to $43.00, the next lower 
multiple of 10 cents. $43.00 is added to the primary insurance 
amount, $782.60. The result, $825.60 is the monthly benefit amount. 
If a supplementary medical insurance premium is involved it is then 
deducted. The result is rounded to the next lower multiple of $1 (if 
the answer is not already a multiple of $1).

    (c) When is the increase because of delayed retirement credits 
effective?--(1) Credits earned after entitlement and before the year of 
attainment of age 70. If you are entitled to benefits, we examine our 
records after the end of each calendar year to determine whether you 
have earned delayed retirement credits during the previous year for 
months when you were at or over full retirement age and you were fully 
insured and eligible for benefits but did not receive them. Any 
increase in your benefit amount is effective beginning with January of 
the year after the year the credits were earned.
    (2) Credits earned after entitlement in the year of attainment of 
age 70. If you are entitled to benefits in the month you attain age 70, 
we examine our records to determine if you earned any additional 
delayed retirement credits during the calendar year in which you 
attained age 70. Any increase in your benefit amount is effective 
beginning with the month you attained age 70.
    (3) Credits earned prior to entitlement. If you are full retirement 
age or older and eligible for old-age benefits but do not apply for 
benefits, your delayed retirement credits for months from the month of 
attainment of full retirement age through the end of the year prior to 
the year of filing will be included in the computation of your initial 
benefit amount. Credits earned in the year you attain age 70 will be 
added in the month you attain age 70.
    (d) How do delayed retirement credits affect the special minimum 
primary insurance amount? We do not add delayed retirement credits to 
your old-age benefit if your benefit is based on the special minimum 
primary insurance amount described in Sec.  404.260. We add the delayed 
retirement credits only to your old-age benefit based on your regular 
primary insurance amount, i.e. as computed under one of the other 
provisions of subpart C of this part. If your benefit based on the 
regular primary insurance amount plus your delayed retirement credits 
is higher than the benefit based on your special minimum primary 
insurance amount, we will pay the higher amount to you. However, if the 
special minimum primary insurance amount is higher than the regular 
primary insurance amount without the delayed retirement credits, we 
will use the special minimum primary insurance amount to determine the 
family maximum and the benefits of others entitled on your earnings 
record.
    (e) What is the effect of my delayed retirement credits on the 
benefit amount of others entitled on my earnings record?
    (1) Surviving Spouse or Surviving Divorced Spouse. If you earn 
delayed retirement credits during your lifetime, we will compute 
benefits for your surviving spouse or surviving divorced spouse based 
on your regular primary insurance amount plus the amount of those 
delayed retirement credits. All delayed retirement credits, including 
any earned during the year of death, can be used in computing the 
benefit amount for your surviving spouse or surviving divorced spouse 
beginning with the month of your death. We compute delayed retirement 
credits up to but not including the month of death.
    (2) Other Family Member. We do not use your delayed retirement 
credits to increase the benefits of other family members entitled on 
your earnings record.
    (3) Family Maximum. We add delayed retirement credits to your 
benefit after we compute the family maximum. However, we add delayed 
retirement credits to your surviving spouse's or

[[Page 4704]]

surviving divorced spouse's benefit before we reduce for the family 
maximum.

    10. Section 404.315 is amended by revising the section heading, and 
paragraph (a), introductory text, to read as follows:


Sec.  404.315  Who is entitled to disability benefits?

    (a) General. You are entitled to disability benefits while disabled 
before attaining full retirement age as defined in Sec.  404.409 if * * 
*
* * * * *

    11. Section 404.316 is amended by revising paragraph (b)(2) to read 
as follows:


Sec.  404.316  When entitlement to disability benefits begins and ends.

* * * * *
    (b)* * *
    (2) The month before the month you attain full retirement age as 
defined in Sec.  404.409 (at full retirement age your disability 
benefits will be automatically changed to old-age benefits);
* * * * *

    12. Section 404.317 is revised to read as follows:


Sec.  404.317  How is the amount of my disability benefit calculated?

    Your monthly benefit is equal to the primary insurance amount 
(PIA). This amount is computed under the rules in subpart C of this 
part as if it was an old-age benefit, and as if you were 62 years of 
age at the beginning of the 5-month waiting period mentioned in Sec.  
404.315(a). If the 5-month waiting period is not required because of 
your previous entitlement, your PIA is figured as if you were 62 years 
old when you become entitled to benefits this time. Your monthly 
benefit amount may be reduced if you receive worker's compensation or 
public disability payments before you become 65 years old as described 
in Sec.  404.408. Your benefits may also be reduced if you were 
entitled to other retirement-age benefits before you attained full 
retirement age (as defined in Sec.  404.409).

    13. Section 404.321 is amended by revising paragraph (a) and 
paragraph (c)(1) to read as follows:


Sec.  404.321  When a period of disability begins and ends.

    (a) When a period of disability begins. Your period of disability 
begins on the day your disability begins if you are insured for 
disability on that day. If you are not insured for disability on that 
day, your period of disability will begin on the first day of the first 
calendar quarter after your disability began in which you become 
insured for disability. Your period of disability may not begin after 
you have attained full retirement age as defined in Sec.  404.409.
* * * * *
    (c) * * *
    (1) The month before the month in which you attain full retirement 
age as defined in Sec.  404.409.
* * * * *

    14. Section 404.335 is revised to read as follows:


Sec.  404.335  How do I become entitled to widow's or widower's 
benefits?

    We will find you entitled to benefits as the widow or widower of a 
person who died fully insured if you meet the requirements in 
paragraphs (a) through (e) of this section:
    (a) You are the insured's widow or widower based upon a 
relationship described in Sec. Sec.  404.345 through 404.346, and you 
meet one of the conditions in paragraphs (a)(1) through (4) of this 
section:
    (1) Your relationship to the insured as a wife or husband lasted 
for at least 9 months immediately before the insured died.
    (2) Your relationship to the insured as a wife or husband did not 
last 9 months before the insured died, but at the time of your marriage 
the insured was reasonably expected to live for 9 months, and you meet 
one of the conditions in paragraphs (a)(2)(i) through (iii) of this 
section:
    (i) The death of the insured was accidental. The death is 
accidental if it was caused by an event that the insured did not 
expect; it was the result of bodily injuries received from violent and 
external causes; and as a direct result of these injuries, death 
occurred not later than 3 months after the day on which the bodily 
injuries were received. An intentional and voluntary suicide will not 
be considered an accidental death.
    (ii) The death of the insured occurred in the line of duty while he 
or she was serving on active duty as a member of the uniformed services 
as defined in Sec.  404.1019.
    (iii) You had been previously married to the insured for at least 9 
months.
    (3) You and the insured were the natural parents of a child; or you 
were married to the insured when either of you adopted the other's 
child or when both of you adopted a child who was then under 18 years 
old.
    (4) In the month before you married the insured, you were entitled 
to or, if you had applied and had been old enough, could have been 
entitled to any of these benefits or payments: widow's, widower's, 
father's (based on the record of a fully insured individual), mother's 
(based on the record of a fully insured individual), wife's, husband's, 
parent's, or disabled child's benefits; or annuity payments under the 
Railroad Retirement Act for widows, widowers, parents, or children age 
18 or older.
    (b) You apply, except that you need not apply again if you meet one 
of the conditions in paragraphs (b)(1) through (4) of this section:
    (1) You are entitled to wife's or husband's benefits for the month 
before the month in which the insured dies and you have attained full 
retirement age (as defined in Sec.  404.409) or you are not entitled to 
either old-age or disability benefits.
    (2) You are entitled to mother's or father's benefits for the month 
before the month in which you attained full retirement age (as defined 
in Sec.  404.409).
    (3) You are entitled to wife's or husband's benefits and to either 
old-age or disability benefits in the month before the month of the 
insured's death, you are under full retirement age (as defined in Sec.  
404.409) in the month of death, and you have filed a Certificate of 
Election in which you elect to receive reduced widow's or widower's 
benefits.
    (4) You applied in 1990 for widow's or widower's benefits based on 
disability and you meet both of the conditions in paragraphs (b)(4)(i) 
and (ii) of this section:
    (i) You were entitled to disability insurance benefits for December 
1990, or eligible for supplemental security income or federally 
administered State supplementary payments, as specified in subparts B 
and T of part 416 of this chapter, respectively, for January 1991.
    (ii) You were found not disabled for any month based on the 
definition of disability in Sec. Sec.  404.1577 and 404.1578, as in 
effect prior to January 1991, but would have been entitled if the 
standard in Sec.  404.1505(a) had applied. (This exception to the 
requirement for filing an application is effective only with respect to 
benefits payable for months after December 1990.)
    (c) You are at least 60 years old; or you are at least 50 years old 
and have a disability as defined in Sec.  404.1505 and you meet all of 
the conditions in paragraphs (c)(1) through (4) of this section:
    (1) Your disability started not later than 7 years after the 
insured died or 7 years after you were last entitled to mother's or 
father's benefits or to widow's or widower's benefits based upon a 
disability, whichever occurred last.
    (2) Your disability continued during a waiting period of 5 full 
consecutive

[[Page 4705]]

months, unless months beginning with the first month of eligibility for 
supplemental security income or federally administered State 
supplementary payments are counted, as explained in the Exception in 
paragraph (c)(3) of this section. The waiting period may begin no 
earlier than the 17th month before you applied; the fifth month before 
the insured died; or if you were previously entitled to mother's, 
father's, widow's, or widower's benefits, the 5th month before your 
entitlement to benefits ended. If you were previously entitled to 
widow's or widower's benefits based upon a disability, no waiting 
period is required.
    (3) Exception: For monthly benefits payable for months after 
December 1990, if you were or have been eligible for supplemental 
security income or federally administered State supplementary payments, 
as specified in subparts B and T of part 416 of this chapter, 
respectively, your disability need not have continued through a 
separate, full 5-month waiting period before you may begin receiving 
benefits. We will include as months of the 5-month waiting period the 
months in a period beginning with the first month you received 
supplemental security income or a federally administered State 
supplementary payment and continuing through all succeeding months, 
regardless of whether the months in the period coincide with the months 
in which your waiting period would have occurred, or whether you 
continued to be eligible for supplemental security income or a 
federally administered State supplementary payment after the period 
began, or whether you met the nondisability requirements for 
entitlement to widow's or widower's benefits. However, we will not pay 
you benefits under this provision for any month prior to January 1991.
    (4) You have not previously received 36 months of payments based on 
disability when drug addiction or alcoholism was a contributing factor 
material to the determination of disability (as described in Sec.  
404.1535), regardless of the number of entitlement periods you may have 
had, or your current application for widow's or widower's benefits is 
not based on a disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (d) You are not entitled to an old-age benefit that is equal to or 
larger than the insured person's primary insurance amount.
    (e) You are unmarried, unless for benefits for months after 1983 
you meet one of the conditions in paragraphs (e)(1) through (3) of this 
section:
    (1) You remarried after you became 60 years old.
    (2) You are now age 60 or older and you meet both of the conditions 
in paragraphs (e)(2)(i) and (ii) of this section:
    (i) You remarried after attaining age 50 but before attaining age 
60.
    (ii) At the time of the remarriage, you were entitled to widow's or 
widower's benefits as a disabled widow or widower.
    (3) You are now at least age 50, but not yet age 60 and you meet 
both of the conditions in paragraphs (e)(3)(i) and (ii) of this 
section:
    (i) You remarried after attaining age 50.
    (ii) You met the disability requirements in paragraph (c) of this 
section at the time of your remarriage (i.e., your disability began 
within the specified time and before your remarriage).

    15. Section 404.336 is revised to read as follows:


Sec.  404.336  How do I become entitled to widow's or widower's 
benefits as a surviving divorced spouse?

    We will find you entitled to widow's or widower's benefits as the 
surviving divorced wife or the surviving divorced husband of a person 
who died fully insured if you meet the requirements in paragraphs (a) 
through (e) of this section:
    (a) You are the insured's surviving divorced wife or surviving 
divorced husband and you meet both of the conditions in paragraphs 
(a)(1) and (2) of this section:
    (1) You were validly married to the insured under State law as 
described in Sec.  404.345 or are deemed to have been validly married 
as described in Sec.  404.346.
    (2) You were married to the insured for at least 10 years 
immediately before your divorce became final.
    (b) You apply, except that you need not apply again if you meet one 
of the conditions in paragraphs (b)(1) through (4) of this section:
    (1) You are entitled to wife's or husband's benefits for the month 
before the month in which the insured dies and you have attained full 
retirement age (as defined in Sec.  404.409) or you are not entitled to 
old-age or disability benefits.
    (2) You are entitled to mother's or father's benefits for the month 
before the month in which you attain full retirement age (as defined in 
Sec.  404.409).
    (3) You are entitled to wife's or husband's benefits and to either 
old-age or disability benefits in the month before the month of the 
insured's death, you have not attained full retirement age (as defined 
in Sec.  404.409) in the month of death, and you have filed a 
Certificate of Election in which you elect to receive reduced widow's 
or widower's benefits.
    (4) You applied in 1990 for widow's or widower's benefits based on 
disability, and you meet the requirements in both paragraphs (b)(4)(i) 
and (ii) of this section:
    (i) You were entitled to disability insurance benefits for December 
1990 or eligible for supplemental security income or federally 
administered State supplementary payments, as specified in subparts B 
and T of part 416 of this chapter, respectively, for January 1991.
    (ii) You were found not disabled for any month based on the 
definition of disability in Sec. Sec.  404.1577 and 404.1578, as in 
effect prior to January 1991, but would have been entitled if the 
standard in Sec.  404.1505(a) had applied. (This exception to the 
requirement for filing an application is effective only with respect to 
benefits payable for months after December 1990.)
    (c) You are at least 60 years old; or you are at least 50 years old 
and have a disability as defined in Sec.  404.1505 and you meet all of 
the conditions in paragraphs (c)(1) through (4) of this section:
    (1) Your disability started not later than 7 years after the 
insured died or 7 years after you were last entitled to mother's or 
father's benefits or to widow's or widower's benefits based upon a 
disability, whichever occurred last.
    (2) Your disability continued during a waiting period of 5 full 
consecutive months, unless months beginning with the first month of 
eligibility for supplemental security income or federally administered 
State supplementary payments are counted, as explained in the Exception 
in paragraph (c)(3) of this section. This waiting period may begin no 
earlier than the 17th month before you applied; the fifth month before 
the insured died; or if you were previously entitled to mother's, 
father's, widow's, or widower's benefits, the 5th month before your 
previous entitlement to benefits ended. If you were previously entitled 
to widow's or widower's benefits based upon a disability, no waiting 
period is required.
    (3) Exception: For monthly benefits payable for months after 
December 1990, if you were or have been eligible for supplemental 
security income or federally administered State supplementary payments, 
as specified in subparts B and T of part 416 of this

[[Page 4706]]

chapter, respectively, your disability does not have to have continued 
through a separate, full 5-month waiting period before you may begin 
receiving benefits. We will include as months of the 5-month waiting 
period the months in a period beginning with the first month you 
received supplemental security income or a federally administered State 
supplementary payment and continuing through all succeeding months, 
regardless of whether the months in the period coincide with the months 
in which your waiting period would have occurred, or whether you 
continued to be eligible for supplemental security income or a 
federally administered State supplementary payment after the period 
began, or whether you met the nondisability requirements for 
entitlement to widow's or widower's benefits. However, we will not pay 
you benefits under this provision for any month prior to January 1991.
    (4) You have not previously received 36 months of payments based on 
disability when drug addiction or alcoholism was a contributing factor 
material to the determination of disability (as described in Sec.  
404.1535), regardless of the number of entitlement periods you may have 
had, or your current application for widow's or widower's benefits is 
not based on a disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (d) You are not entitled to an old-age benefit that is equal to or 
larger than the insured person's primary insurance amount.
    (e) You are unmarried, unless for benefits for months after 1983 
you meet one of the conditions in paragraphs (e)(1) through (3) of this 
section:
    (1) You remarried after you became 60 years old.
    (2) You are now age 60 or older and you meet both of the conditions 
in paragraphs (e)(2)(i) and (ii) of this section:
    (i) You remarried after attaining age 50 but before attaining age 
60.
    (ii) At the time of the remarriage, you were entitled to widow's or 
widower's benefits as a disabled widow or widower.
    (3) You are now at least age 50 but not yet age 60 and you meet one 
of the conditions in paragraphs (e)(3)(i) and (ii) of this section:
    (i) You remarried after attaining age 50.
    (ii) You met the disability requirements in paragraph (c) of this 
section at the time of your remarriage (i.e., your disability began 
within the specified time and before your remarriage).

    16. Section 404.337 is revised to read as follows:


Sec.  404.337  When does my entitlement to widow's and widower's 
benefits start and end?

    (a) We will find you entitled to widow's or widower's benefits 
under Sec.  404.335 or Sec.  404.336 beginning with the first month 
covered by your application in which you meet all other requirements 
for entitlement.
    (b) We will end your entitlement to widow's or widower's benefits 
at the earliest of the following times:
    (1) The month before the month in which you become entitled to an 
old-age benefit that is equal to or larger than the insured's primary 
insurance amount.
    (2) The second month after the month your disability ends or, where 
disability ends on or after December 1, 1980, the month before your 
termination month (Sec.  404.325). However your payments are subject to 
the provisions of paragraphs (c) and (d) of this section. Note: You may 
remain eligible for payment of benefits if you attained full retirement 
age (as defined in Sec.  404.409) before your termination month and you 
meet the other requirements for widow's or widower's benefits.
    (3) If drug addiction or alcoholism is a contributing factor 
material to the determination of disability as described in Sec.  
404.1535, the month after the 12th consecutive month of suspension for 
noncompliance with treatment or after 36 months of benefits on that 
basis when treatment is available regardless of the number of 
entitlement periods you may have had, unless you are otherwise disabled 
without regard to drug addiction or alcoholism.
    (4) The month before the month in which you die.
    (c)(1) If you are entitled to widow's or widower's benefits based 
on a disability and your impairment is no longer disabling, generally, 
we will continue your benefits if you meet all the conditions in 
paragraphs (c)(1)(i) through (iv) of this section:
    (i) Your disability did not end before December 1980, the effective 
date of this provision of the law.
    (ii) You are participating in an appropriate program of vocational 
rehabilitation as described in Sec.  404.316(c)(1)(ii).
    (iii) You began the program before your disability ended.
    (iv) We determined that your completion of the program, or your 
continuation in the program for a specified period of time, would 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.
    (2) Generally, we will stop your benefits with the month you meet 
one of the conditions in paragraphs (c)(2)(i) through (iii) of this 
section:
    (i) You complete the program.
    (ii) You stop participating in the program for any reason.
    (iii) We determined that your continuing participation in the 
program would no longer significantly increase the likelihood that you 
will be permanently removed from the disability benefit rolls.
    (iv) Exception: In no case will we stop your benefits with a month 
earlier than the second month after the month your disability ends.
    (d) If, after November 1980, you have a disabling impairment (Sec.  
404.1511), we will pay you benefits for all months in which you do not 
do substantial gainful activity during the reentitlement period (Sec.  
404.1592a) following the end of your trial work period (Sec.  
404.1592). If you are unable to do substantial gainful activity in the 
first month following the reentitlement period, we will pay you 
benefits until you are able to do substantial gainful activity. 
(Earnings during your trial work period do not affect the payment of 
your benefits.) We will also pay you benefits for the first month after 
the trial work period in which you do substantial gainful activity and 
the two succeeding months, whether or not you do substantial gainful 
activity during those succeeding months. After those three months, we 
cannot pay you benefits for any months in which you do substantial 
gainful activity.

    17. Section 404.338 is revised to read as follows:


Sec.  404.338  How is the amount of my widow's or widower's benefit 
calculated?

    Your widow's or widower's monthly benefit is equal to the insured 
person's primary insurance amount. If the insured person died before 
reaching age 62 and you are first eligible after 1984, we may compute a 
special primary insurance amount to determine the amount of your 
monthly benefit (see Sec.  404.212(b)). We may increase your monthly 
benefit amount if the insured person earned delayed retirement credit 
after full retirement age (as defined in Sec.  404.409) by working or 
by delaying filing for benefits (see Sec.  404.313). The amount of your 
monthly benefit may change as explained generally in Sec.  404.304. In 
addition, your monthly benefit will be reduced if the insured person 
was entitled to old-age benefits that were reduced for age because he 
or she chose to receive them before

[[Page 4707]]

attaining full retirement age. In this instance, your benefit is 
reduced, if it would otherwise be higher, to either the amount the 
insured would have been entitled to if still alive or 82\1/2\ percent 
of his or her primary insurance amount, whichever is larger.

    18. Section 404.352 is revised to read as follows:


Sec.  404.352  When does my entitlement to child's benefits begin and 
end?

    (a) We will find your entitlement to child's benefits begins at the 
following times:
    (1) If the insured is deceased, with the first month covered by 
your application in which you meet all other requirements for 
entitlement.
    (2) If the insured is living and your first month of entitlement is 
September 1981 or later, with the first month covered by your 
application throughout which you meet all other requirements for 
entitlement.
    (3) If the insured is living and your first month of entitlement is 
before September 1981, with the first month covered by your application 
in which you meet all other requirements for entitlement.
    (b) We will find your entitlement to child's benefits ends at the 
earliest of the following times:
    (1) With the month before the month in which you become 18 years 
old, if you are not disabled or a full-time student.
    (2) With the second month following the month in which your 
disability ends, if you become 18 years old and you are disabled. If 
your disability ends on or after December 1, 1980, your entitlement to 
child's benefits continues, subject to the provisions of paragraphs (c) 
and (d) of this section, until the month before your termination month 
(Sec.  404.325).
    (3) With the last month you are a full-time student or, if earlier, 
with the month before the month you become age 19, if you become 18 
years old and you qualify as a full-time student who is not disabled. 
If you become age 19 in a month in which you have not completed the 
requirements for, or received, a diploma or equivalent certificate from 
an elementary or secondary school and you are required to enroll for 
each quarter or semester, we will find your entitlement ended with the 
month in which the quarter or semester in which you are enrolled ends. 
If the school you are attending does not have a quarter or semester 
system which requires reenrollment, we will find your entitlement to 
benefits ended with the month you complete the course or, if earlier, 
the first day of the third month following the month in which you 
become 19 years old.
    (4) With the month before the month you marry. We will not find 
your benefits ended, however, if you are age 18 or older, disabled, and 
you marry a person entitled to child's benefits based on disability or 
person entitled to old-age, divorced wife's, divorced husband's, 
widow's, widower's, mother's, father's, parent's, or disability 
benefits.
    (5) With the month before the month the insured's entitlement to 
old-age or disability benefits ends for a reason other than death or 
the attainment of full retirement age (as defined in Sec.  404.409). 
Exception: We will continue your benefits if the insured person was 
entitled to disability benefits based on a finding that drug addiction 
or alcoholism was a contributing factor material to the determination 
of his or her disability (as described in Sec.  404.1535), the insured 
person's benefits ended after 36 months of payment (see Sec.  
404.316(e)) or 12 consecutive months of suspension for noncompliance 
with treatment (see Sec.  404.316(f)), and the insured person remains 
disabled.
    (6) With the month before the month you die.
    (c) If you are entitled to benefits as a disabled child age 18 or 
over and your disability is based on a finding that drug addiction or 
alcoholism was a contributing factor material to the determination of 
disability (as described in Sec.  404.1535), we will find your 
entitlement to benefits ended under the following conditions:
    (1) If your benefits have been suspended for a period of 12 
consecutive months for failure to comply with treatment, with the month 
following the 12 months unless you are otherwise disabled without 
regard to drug addiction or alcoholism (see Sec.  404.470(c)).
    (2) If you have received 36 months of benefits on that basis when 
treatment is available, regardless of the number of entitlement periods 
you may have had, with the month following such 36-month payment period 
unless you are otherwise disabled without regard to drug addiction or 
alcoholism.
    (d)(1) Generally, we will continue your benefits after your 
impairment is no longer disabling if you meet all the following 
conditions:
    (i) Your disability did not end before December 1980, the effective 
date of this provision of the law.
    (ii) You are participating in an appropriate program of vocational 
rehabilitation as described in Sec.  404.316(c)(1)(ii).
    (iii) You began the program before your disability ended.
    (iv) We have determined that your completion of the program, or 
your continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.
    (2) Generally, we will end your entitlement to benefits with the 
month you meet one of the following conditions:
    (i) You complete the program.
    (ii) You stop participating in the program for any reason.
    (iii) We determine that your continuing participation in the 
program will no longer significantly increase the likelihood that you 
will be permanently removed from the disability benefit rolls.
    (iv) Exception: In no case will we stop your benefits with a month 
earlier than the second month after the month your disability ends.
    (e) If, after November 1980, you have a disabling impairment (Sec.  
404.1511), we will pay you benefits for all months in which you do not 
do substantial gainful activity during the reentitlement period (Sec.  
404.1592a) following the end of your trial work period (Sec.  
404.1592). If you are unable to do substantial gainful activity in the 
first month following the reentitlement period, we will pay you 
benefits until you are able to do substantial gainful activity. 
(Earnings during your trial work period do not affect the payment of 
your benefits during that period.) We will also pay you benefits for 
the first month after the trial work period in which you do substantial 
gainful activity and the two succeeding months, whether or not you do 
substantial gainful activity during those succeeding months. After 
those three months, we cannot pay you benefits for any months in which 
you do substantial gainful activity.

Subpart E--[Amended]

    19. The authority citation for subpart E of part 404 is revised to 
read as follows:

    Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c), 
216(l), 222(b), 223(e), 224, 225, 702(a)(5) and 1129A of the Social 
Security Act (42 U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 
416(l), 422(b), 423(e), 424a, 425, 902(a)(5) and 1320a-8a).


    20. Section 404.409 is added to read as follows:


Sec.  404.409  What Is Full Retirement Age?

    Full retirement age is the age at which you may receive unreduced 
old-age, wife's, husband's, widow's, or

[[Page 4708]]

widower's benefits. Full retirement age has been 65 but is being 
gradually raised to age 67 beginning with people born after January 1, 
1938. See Sec.  404.102 regarding determination of age.
    (a) What is my full retirement age for old-age benefits or wife's 
or husband's benefits? You may receive unreduced old-age, wife's, or 
husband's benefits beginning with the month you attain the age shown.

------------------------------------------------------------------------
          If your birth date is:               Full retirement age is:
------------------------------------------------------------------------
Before 1/2/1938...........................  65 years.
1/2/1938--1/1/1939........................  65 years and 2 months.
1/2/1939--1/1/1940........................  65 years and 4 months.
1/2/1940--1/1/1941........................  65 years and 6 months.
1/2/1941--1/1/1942........................  65 years and 8 months.
1/2/1942--1/1/1943........................  65 years and 10 months.
1/2/1943--1/1/1955........................  66 years.
1/2/1955--1/1/1956........................  66 years and 2 months.
1/2/1956--1/1/1957........................  66 years and 4 months.
1/2/1957--1/1/1958........................  66 years and 6 months.
1/2/1958--1/1/1959........................  66 years and 8 months.
1/2/1959--1/1/1960........................  66 years and 10 months.
1/2/1960 and later........................  67 years.
------------------------------------------------------------------------

    (b) What is my full retirement age for widow's or widower's 
benefits? You may receive unreduced widow's or widower's benefits 
beginning with the month you attain the age shown.

------------------------------------------------------------------------
          If your birth date is:               Full retirement age is:
------------------------------------------------------------------------
Before 1/2/1912...........................  62 years.
1/2/1912--1/1/1940........................  65 years.
1/2/1940--1/1/1941........................  65 years and 2 months.
1/2/1941--1/1/1942........................  65 years and 4 months.
1/2/1942--1/1/1943........................  65 years and 6 months.
1/2/1943--1/1/1944........................  65 years and 8 months.
1/2/1944--1/1/1945........................  65 years and 10 months.
1/2/1945--1/1/1957........................  66 years.
1/2/1957--1/1/1958........................  66 years and 2 months.
1/2/1958--1/1/1959........................  66 years and 4 months.
1/2/1959--1/1/1960........................  66 years and 6 months.
1/2/1960--1/1/1961........................  66 years and 8 months.
1/2/1961--1/1/1962........................  66 years and 10 months.
1/2/1962 and later........................  67 years.
------------------------------------------------------------------------

    (c) Can I still retire before full retirement age? You may still 
elect early retirement. You may receive old-age, wife's or husband's 
benefits at age 62. You may receive widow's or widower's benefits at 
age 60. Those benefits will be reduced as explained in Sec.  404.410.

    21. Section 404.410 is revised to read as follows:


Sec.  404.410  How does SSA reduce my benefits when my entitlement 
begins before full retirement age?

    Generally your old-age, wife's, husband's, widow's, or widower's 
benefits are reduced if entitlement begins before the month you attain 
full retirement age (as defined in Sec.  404.409). However, your 
benefits as a wife or husband are not reduced for any month in which 
you have in your care a child of the worker on whose earnings record 
you are entitled. The child must be entitled to child's benefits. Your 
benefits as a widow or widower are not reduced below the benefit amount 
you would receive as a mother or father for any month in which you have 
in your care a child of the worker on whose record you are entitled. 
The child must be entitled to child's benefits. Subject to Sec. Sec.  
404.411 through 404.413, reductions in benefits are made in the amounts 
described.
    (a) How does SSA reduce my old-age benefits? The reduction in your 
primary insurance amount is based on the number of months of 
entitlement prior to the month you attain full retirement age. The 
reduction is \5/9\ of 1 percent for each of the first 36 months and \5/
12\ of 1 percent for each month in excess of 36.

    Example: Alex's full retirement age for unreduced benefits is 65 
years and 8 months. She elects to begin receiving benefits at age 
62. Her primary insurance amount of $980.50 must be reduced because 
of her entitlement to benefits 44 months prior to full retirement 
age. The reduction is 36 months at \5/9\ of 1 percent and 8 months 
at \5/12\ of 1 percent.

980.50 x 36 x \5/9\ x .01 = $196.10
980.50 x 8 x \5/12\ x .01 = $ 32.68

The two added together equal a total reduction of $228.78. This 
amount is rounded to $228.80 (the next higher multiple of 10 cents) 
and deducted from the primary insurance amount. The resulting 
$751.70 is the monthly benefit payable.

    (b) How does SSA reduce my wife's or husband's benefits? Your 
wife's or husband's benefits before any reduction (see Sec. Sec.  
404.304 and 404.333) are reduced first (if necessary) for the family 
maximum under Sec.  404.403. They are then reduced based on the number 
of months of entitlement prior to the month you attain full retirement 
age. This does not include any month in which you have a child of the 
worker on whose earnings record you are entitled in your care. The 
child must be entitled to child benefits. The reduction is \25/36\ of 1 
percent for each of the first 36 months and \5/12\ of 1 percent for 
each month in excess of 36.

    Example: Sam is entitled to old-age benefits. His spouse Ashley 
elects to begin receiving wife's benefits at age 63. Her full 
retirement age for unreduced benefits is 65 and 4 months. Her 
benefit will be reduced for 28 months of entitlement prior to full 
retirement age. If her unreduced benefit is $412.40 the reduction 
will be $412.40 x 28 x \25/36\ x .01. The resulting $80.18 is 
rounded to $80.20 (the next higher multiple of 10 cents) and 
subtracted from $412.40 to determine the monthly benefit amount of 
$332.20.

    (c) How does SSA reduce my widow's or widower's benefits?
    Your entitlement to widow's or widower's benefits may begin at age 
60 based on age or at age 50 based on disability. Refer to Sec.  
404.335 for more information on the requirements for entitlement. Both 
types are reduced if entitlement begins prior to attainment of full 
retirement age (as defined in Sec.  404.409).
    (1) Widow's or widower's benefits based on age. Your widow's or 
widower's unreduced benefit amount (the worker's primary insurance 
amount after any reduction for the family maximum under Sec.  404.403), 
is reduced or further reduced based on the number of months of 
entitlement prior to the month you attain full retirement age. This 
does not include any month in which you have in your care a child of 
the worker on whose earnings record you are entitled. The child must be 
entitled to child's benefits. The number of months of entitlement prior 
to full retirement age is multiplied by .285 and then divided by the 
number of months in the period beginning with the month of attainment 
of age 60 and ending with the month immediately before the month of 
attainment of full retirement age.

    Example: Ms. Bogle is entitled to an unreduced widow benefit of 
$785.70 beginning at age 64. Her full retirement age for unreduced 
old-age benefits is 65 years and 4 months. She will receive benefits 
for 16 months prior to attainment of full retirement age. The number 
of months in the period from age 60 through full retirement age of 
65 and 4 months is 64. The reduction in her benefit is $785.70 x 16 
x .285 divided by 64 or $55.98. $55.98 is rounded to the next higher 
multiple of 10 cents ($56.00) and subtracted from $785.70. The 
result is a monthly benefit of $729.70.

    (2) Widow's or widower's benefits based on disability. (i) For 
months after December 1983, your widow's or widower's benefits are not 
reduced for months of entitlement prior to age 60. You are deemed to be 
age 60 in your

[[Page 4709]]

month of entitlement to disabled widow's or widower's benefits and your 
benefits are reduced only under paragraph (c)(1) of this section.
    (ii) For months from January 1973 through December 1983, benefits 
as a disabled widow or widower were reduced under paragraph (c)(1) of 
this section. The benefits were then subject to an additional reduction 
of \43/240\ of one percent for each month of entitlement prior to age 
60 based on disability.
    (3) Widow's or widower's benefits prior to 1973. For months prior 
to January 1973 benefits as a widow or widower were reduced only for 
months of entitlement prior to age 62. The reduction was \5/9\ of one 
percent for each month of entitlement from the month of attainment of 
age 60 through the month prior to the month of attainment of age 62. 
There was an additional reduction of \43/198\ of one percent for each 
month of entitlement prior to age 60 based on disability.
    (d) If my benefits are reduced under this section does SSA ever 
change the reduction? The reduction computed under paragraphs (a), (b) 
or (c) of this section may later be adjusted to eliminate reduction for 
certain months of entitlement prior to full retirement age as provided 
in Sec.  404.412. For special provisions on reducing benefits for 
months prior to full retirement age involving entitlement to two or 
more benefits, see Sec.  404.411.
    (e) Are my widow's or widower's benefits affected if the deceased 
worker was entitled to old-age benefits? If the deceased individual was 
entitled to old-age benefits, see Sec.  404.338 for special rules that 
may affect your reduced widow's or widower's benefits.

    22. Section 404.411 is revised to read as follows:


Sec.  404.411  How are benefits reduced for age when a person is 
entitled to two or more benefits?

    (a) What is the general rule? Except as specifically provided in 
this section, benefits of an individual entitled to more than one 
benefit will be reduced for months of entitlement before full 
retirement age (as defined in Sec.  404.409) according to the 
provisions of Sec.  404.410. Such age reductions are made before any 
reduction under the provisions of Sec.  404.407.
    (b) How is my disability benefit reduced after entitlement to an 
old-age benefit or widow's or widower's benefit? A person's disability 
benefit is reduced following entitlement to an old-age or widow's or 
widower's benefit (or following the month in which all conditions for 
entitlement to the widow's or widower's benefit are met except that the 
individual is entitled to an old-age benefit which equals or exceeds 
the primary insurance amount on which the widow's or widower's benefit 
is based) in accordance with the following provisions:
    (1) Individuals born January 2, 1928, or later whose disability 
began January 1, 1990, or later. When an individual is entitled to a 
disability benefit for a month after the month in which she or he 
becomes entitled to an old-age benefit which is reduced for age under 
Sec.  404.410, the disability benefit is reduced by the amount by which 
the old-age benefit would be reduced under Sec.  404.410 if she or he 
attained full retirement age in the first month of the most recent 
period of entitlement to the disability benefit.
    (2) Individuals born January 2, 1928, or later whose disability 
began before January 1, 1990, and, all individuals born before January 
2, 1928, regardless of when their disability began.
    (i) First entitled to disability in or after the month of 
attainment of age 62. When an individual is first entitled to a 
disability benefit in or after the month in which she or he attains age 
62 and for which she or he is first entitled to a widow's or widower's 
benefit (or would be so entitled except for entitlement to an equal or 
higher old-age benefit) before full retirement age, the disability 
benefit is reduced by the larger of:
    (A) The amount the disability benefit would have been reduced under 
paragraph (b)(1) of this section; or
    (B) The amount equal to the sum of the amount the widow's or 
widower's benefit would have been reduced under the provisions of Sec.  
404.410 if full retirement age for unreduced benefits were age 62 plus 
the amount by which the disability benefit would have been reduced 
under paragraph (b)(1) of this section if the benefit were equal to the 
excess of such benefit over the amount of the widow's or widower's 
benefit (without consideration of this paragraph).
    (ii) First entitled to disability before age 62. When a person is 
first entitled to a disability benefit for a month before the month in 
which she or he attains age 62 and she or he is also entitled to a 
widow's or widower's benefit (or would be so entitled except for 
entitlement to an equal or higher old-age benefit), the disability 
benefit is reduced as if the widow or widower attained full retirement 
age in the first month of her or his most recent period of entitlement 
to the disability benefits.
    (c) How is my old-age benefit reduced after entitlement to a 
widow's or widower's benefit?
    (1) Individual born after January 1, 1928. The old-age benefit is 
reduced in accordance with Sec.  404.410(a). There is no further 
reduction.
    (2) Individual born before January 2, 1928. The old-age benefit is 
reduced if, in the first month of entitlement, she or he is also 
entitled to a widow's or widower's benefit to which she or he was first 
entitled for a month before attainment of full retirement age or if, 
before attainment of full retirement age, she or he met all conditions 
for entitlement to widow's or widower's benefits in or before the first 
month for which she or he was entitled to old-age benefits except that 
the old-age benefit equals or exceeds the primary insurance amount on 
which the widow's or widower's benefit would be based. Under these 
circumstances, the old-age benefit is reduced by the larger of the 
following:
    (i) The amount by which the old-age benefit would be reduced under 
the regular age reduction provisions of Sec.  404.410; or
    (ii) An amount equal to the sum of:
    (A) The amount by which the widow's or widower's benefit would be 
reduced under Sec.  404.410 for months prior to age 62; and
    (B) The amount by which the old-age benefit would be reduced under 
Sec.  404.410 if it were equal to the excess of the individual's 
primary insurance amount over the widow's or widower's benefit before 
any reduction for age (but after any reduction for the family maximum 
under Sec.  404.403).
    (d) How is my wife's or husband's benefit reduced when I am 
entitled to a reduced old-age benefit in the same month? When a person 
is first entitled to a wife's or husband's benefit in or after the 
month of attainment of age 62, that benefit is reduced if, in the first 
month of entitlement, she or he is also entitled to an old-age benefit 
(but is not entitled to a disability benefit) to which she or he was 
first entitled before attainment of full retirement age. Under these 
circumstances, the wife's or husband's benefit is reduced by the sum 
of:
    (1) The amount by which the old-age benefit would be reduced under 
the provisions of Sec.  404.410; and
    (2) The amount by which the spouse benefit would be reduced under 
the provisions of Sec.  404.410 if it were equal to the excess of such 
benefit (before any reduction for age but after reduction for the 
family maximum under Sec.  404.403) over the individual's own primary 
insurance amount.

[[Page 4710]]

    (e) How is my wife's or husband's or widow's or widower's benefit 
reduced when I am entitled to a reduced disability benefit in the same 
month? When a person is first entitled to a spouse or widow's or 
widower's benefit in or after the month of attainment of age 62 (or in 
the case of widow's or widower's benefits, age 50) that benefit is 
reduced if, in the first month of entitlement to that benefit, he or 
she is also entitled to a reduced disability benefit. Under these 
circumstances, the wife's or husband's or widow's or widower's benefit 
is reduced by the sum of:
    (1) The amount (if any) by which the disability benefit is reduced 
under paragraph (b)(1) of this section, and
    (2) The amount by which the wife's or husband's or widow's or 
widower's benefit would be reduced under Sec.  404.410 if it were equal 
to the excess of such benefit (before any reduction for age but after 
reduction for the family maximum under Sec.  404.403) over the 
disability benefit (before any reduction under paragraph (b) of this 
section).

    23. Section 404.412 is revised to read as follows:


Sec.  404.412  After my benefits are reduced for age when and how will 
adjustments to that reduction be made?

    (a) When may adjustment be necessary? The following months are not 
counted for purposes of reducing benefits in accordance with Sec.  
404.410;
    (1) Months subject to deduction under Sec.  404.415, Sec.  404.417, 
or Sec.  404.422;
    (2) In the case of a wife's or husband's benefit, any month in 
which she or he had a child of the insured individual in her or his 
care and for which the child was entitled to child's benefits;
    (3) In the case of a wife's or husband's benefit, any month for 
which entitlement to such benefits is precluded because the insured 
person's disability ceased (and, as a result, the insured individual's 
entitlement to disability benefits ended);
    (4) In the case of a widow's or widower's benefit, any month in 
which she or he had in her or his care a child of the deceased insured 
individual and for which the child was entitled to child's benefits;
    (5) In the case of a widow's or widower's benefit, any month before 
attainment of full retirement age for which she or he was not entitled 
to such benefits;
    (6) In the case of an old-age benefit, any month for which the 
individual was entitled to disability benefits.
    (b) When is the adjustment made? We make automatic adjustments in 
benefits to exclude the months of entitlement described in paragraphs 
(a)(1) through (6) of this section from consideration when determining 
the amount by which such benefits are reduced. Each year we examine 
beneficiary records to identify when an individual has attained full 
retirement age and one or more months described in paragraphs (a)(1) 
through (6) of this section occurred prior to such age during the 
period of entitlement to benefits reduced for age. Increases in benefit 
amounts based upon this adjustment are effective with the month of 
attainment of full retirement age. In the case of widow's or widower's 
benefits, this adjustment is made in the month of attainment of age 62 
as well as the month of attainment of full retirement age.

    24. Section 404.413 is revised to read as follows:


Sec.  404.413  After my benefits are reduced for age what happens if 
there is an increase in my primary insurance amount?

    (a) What is the general rule on reduction of increases? After an 
individual's benefits are reduced for age under Sec. Sec.  404.410 
through 404.411, the primary insurance amount on which such benefits 
are based may subsequently be increased because of a recomputation, a 
general benefit increase pursuant to an amendment of the Act, or 
increases based upon a rise in the cost-of-living under section 215(i) 
of the Social Security Act. When the primary insurance amount increases 
the monthly benefit amount also increases.
    (b) How are subsequent increases in the primary insurance amount 
reduced after 1977? After 1977, when an individual's benefits have been 
reduced for age and the benefit is increased due to an increase in the 
primary insurance amount, the amount of the increase to which the 
individual is entitled is proportionately reduced as provided in 
paragraph (c) of this section. The method of reduction is determined by 
whether entitlement to reduced benefits began before 1978 or after 
1977. When an individual is entitled to more than one benefit which is 
reduced for age, the rules for reducing the benefit increases apply to 
each reduced benefit.
    (c) How is the reduction computed for increases after 1977?
    (1) Entitlement to reduced benefits after 1977. If an individual 
becomes entitled after 1977 to a benefit reduced for age, and the 
primary insurance amount on which the reduced benefit is based is 
increased, the amount of the increase payable to the individual is 
reduced by the same percentage as we use to reduce the benefit in the 
month of initial entitlement. Where the reduced benefit of an 
individual has been adjusted at full retirement age (age 62 and full 
retirement age for widows or widowers), any increase to which the 
individual becomes entitled thereafter is reduced by the adjusted 
percentage.
    (2) Entitlement to reduced benefits before 1978. For an individual, 
who became entitled to a benefit reduced for age before 1978, whose 
benefit may be increased as a result of an increase in the primary 
insurance amount after 1977, we increase the amount of the benefit by 
the same percentage as the increase in the primary insurance amount.
    (d) How was the reduction computed for increases prior to 1978? 
When the individual's primary insurance amount increased, the amount of 
the increase was reduced separately under Sec. Sec.  404.410 and 
404.411. The separate reduction was based on the number of months from 
the effective date of the increase through the month of attainment of 
age 65. This reduced increase amount was then added to the reduced 
benefit that was in effect in the month before the effective date of 
the increase. The result was the new monthly benefit amount.

    25. Section 404.421 is revised to read as follows:


Sec.  404.421  How are deductions made when a beneficiary fails to have 
a child in his or her care?

    Deductions for failure to have a child in care (as defined in 
subpart D of this part) are made as follows:
    (a) Wife's or husband's benefit. A deduction is made from the 
wife's or husband's benefits to which he or she is entitled for any 
month if he or she is under full retirement age and does not have in 
his or her care a child of the insured entitled to child's benefits. 
However, a deduction is not made for any month in which he or she is 
age 62 or over, but under full retirement age, and there is in effect a 
certificate of election for him or her to receive actuarially reduced 
wife's or husband's benefits for such month (see subpart D of this 
part).
    (b) Mother's or father's benefits.--(1) Widow or widower. A 
deduction is made from the mother's or father's benefits to which he or 
she is entitled as the widow or widower (see subpart D of this part) of 
the deceased individual upon whose earnings such benefit is based, for 
any month in which he or she does not have in his or her care a child 
who is entitled to child's benefits based on the earnings of the 
deceased insured individual.
    (2) Surviving divorced mother or father. A deduction is made from 
the mother's or father's benefits to which he or she is entitled as the 
surviving

[[Page 4711]]

divorced mother or father (see subpart D of this part) of the deceased 
individual upon whose earnings record such benefit is based, for any 
month in which she or he does not have in care a child of the deceased 
individual who is her or his son, daughter, or legally adopted child 
and who is entitled to child's benefits based on the earnings of the 
deceased insured individual.
    (c) Amount to be deducted. The amount deducted from the benefits, 
as described in paragraphs (a) and (b) of this section, is equal to the 
amount of the benefits which is otherwise payable for the month in 
which she or he does not have a child in his or her care.
    (d) When a child is considered not entitled to benefits. For 
purposes of paragraphs (a) and (b) of this section a person is 
considered not entitled to child's benefits for any month in which she 
or he is age 18 or over, and:
    (1) Is entitled to child's benefits based on her or his own 
disability and a deduction is made from the child's benefits because of 
her or his refusal of rehabilitation services as described in Sec.  
404.422(b); or
    (2) Is entitled to child's benefits because she or he is a full-
time student at an educational institution. This paragraph applies to 
benefits for months after December 1964.

Subpart G--[Amended]

    26. The authority citation for subpart G of part 404 continues to 
read as follows:

    Authority: Secs. 202(i), (j), (o), (p) and (r), 205(a), 
216(i)(2), 223(b), 228(a) and 702(a)(5) of the Social Security Act 
(42 U.S.C. 402(i), (j), (o), (p) and (r), 405(a), 416(i)(2), 423(b), 
428(a) and 902(a)(5)).


    27. Section 404.621 is revised to read as follows:


Sec.  404.621  What happens if I file after the first month I meet the 
requirements for benefits?

    (a) Filing for disability benefits and for old-age, survivors', or 
dependents' benefits. (1) If you file an application for disability 
benefits, widow's or widower's benefits based on disability, or wife's, 
husband's, or child's benefits based on the earnings record of a person 
entitled to disability benefits, after the first month you could have 
been entitled to them, you may receive benefits for up to 12 months 
immediately before the month in which your application is filed. Your 
benefits may begin with the first month in this 12-month period in 
which you meet all the requirements for entitlement. Your entitlement, 
however, to wife's or husband's benefits under this rule is limited by 
paragraph (a)(3) of this section.
    (2) If you file an application for old-age benefits, widow's or 
widower's benefits not based on disability, wife's, husband's, or 
child's benefits based on the earnings record of a person not entitled 
to disability benefits, or mother's, father's, or parent's benefits, 
after the first month you could have been entitled to them, you may 
receive benefits for up to 6 months immediately before the month in 
which your application is filed. Your benefits may begin with the first 
month in this 6-month period in which you meet all the requirements for 
entitlement. Your entitlement, however, to old-age, wife's, husband's, 
widow's, or widower's benefits under this rule is limited by paragraph 
(a)(3) of this section.
    (3) If the effect of the payment of benefits for a month before the 
month you file would be to reduce your benefits because of your age, 
you cannot be entitled to old-age, wife's, husband's, widow's, or 
widower's benefits for any month before the month in which your 
application is filed, unless you meet one of the conditions in 
paragraph (a)(4) of this section. (An explanation of the reduction that 
occurs because of age if you are entitled to these benefits for a month 
before you reach full retirement age, as defined in Sec.  404.409, is 
in Sec.  404.410.) An example follows that assumes you do not meet any 
of the conditions in paragraph (a)(4) of this section.

    Example: You will attain full retirement age in March 2003. If 
you apply for old-age benefits in March, you cannot be entitled to 
benefits in the 6-month period before March because the payment of 
benefits for any of these months would result in your benefits being 
reduced for age. If you do not file your application until June 
2003, you may be entitled to benefits for the month of March, April 
and May because the payment of benefits for these months would not 
result in your benefits being reduced for age. You will not, 
however, receive benefits for the 3 months before March.

    (4) The limitation in paragraph (a)(3) of this section on your 
entitlement to old-age, wife's, husband's, widow's, or widower's 
benefits for months before you file an application does not apply if:
    (i) You are a widow, widower, surviving divorced wife, or surviving 
divorced husband who is disabled and could be entitled to retroactive 
benefits for any month before age 60. If you could not be entitled 
before age 60, the limitation will prevent payment of benefits to you 
for past months, but it will not affect the month you become entitled 
to hospital insurance benefits.
    (ii) You are a widow, widower, or surviving divorced spouse of the 
insured person who died in the month before you applied and you were at 
least age 60 in the month of death of the insured person on whose 
earnings record you are claiming benefits. In this case, you can be 
entitled beginning with the month the insured person died if you choose 
and if you file your application on or after July 1, 1983.
    (b) Filing for lump-sum death payment. An application for a lump-
sum death payment must be filed within 2 years after the death of the 
person on whose earnings record the claim is filed. There are two 
exceptions to the 2-year filing requirement:
    (1) If there is a good cause for failure to file within the 2-year 
period, we will consider your application as though it were filed 
within the 2-year period. Good cause does not exist if you were 
informed of the need to file an application within the 2-year period 
and you neglected to do so or did not desire to make a claim. Good 
cause will be found to exist if you did not file within the time limit 
due to--
    (i) Circumstances beyond your control, such as extended illness, 
mental or physical incapacity, or a language barrier;
    (ii) Incorrect or incomplete information we furnished you;
    (iii) Your efforts to get evidence to support your claim without 
realizing that you could submit the evidence after filing an 
application; or
    (iv) Unusual or unavoidable circumstances which show that you could 
not reasonably be expected to know of the time limit.
    (2) The Soldiers' and Sailors' Civil Relief Act of 1940 provides 
for extending the filing time.
    (c) Filing for special age 72 payments. An application for special 
age 72 payments is not effective as a claim for benefits for any month 
before you actually file.
    (d) Filing for a period of disability. You must file an application 
for a period of disability while you are disabled or no later than 12 
months after the month in which your period of disability ended. If you 
were unable to apply within the 12-month time period because of a 
physical or mental condition, you may apply not more than 36 months 
after your disability ended. The general rule we use to decide whether 
your failure to file was due to a physical or mental condition is 
stated in Sec.  404.322.
    (e) Filing after death of person eligible for disability benefits 
or period of disability. If you file for disability benefits or a 
period of disability for

[[Page 4712]]

another person who died before filing an application and you would 
qualify under Sec.  404.503(b) to receive any benefits due the 
deceased, you must file an application no later than the end of the 
third month following the month in which the disabled person died.

    28. Section 404.623 is revised to read as follows:


Sec.  404.623  Am I required to file for all benefits if I am eligible 
for old-age and husband's or wife's benefits?

    (a) Presumed filing for husband's or wife's benefits. If you file 
an application for old-age benefits, you are presumed to have filed an 
application for husband's or wife's benefits in the first month of your 
entitlement to old-age benefits, if--
    (1) Your old-age benefits are reduced for age because you choose to 
receive them before you reach full retirement age (as defined in Sec.  
404.409); and
    (2) You are eligible for either a husband's or a wife's benefit for 
the first month of your entitlement to old-age benefits.
    (b) Presumed filing for old-age benefits. If you file an 
application for a husband's or a wife's benefit, you are presumed to 
have filed an application for old-age benefits in the first month of 
your entitlement to husband's or wife's benefits if--
    (1) Your husband's or wife's benefits are reduced for age because 
you choose to receive them before you reach full retirement age (as 
defined in Sec.  404.409); and
    (2) You are eligible for old-age benefits for the first month of 
your entitlement to husband's or wife's benefits.
    (c) Exception. Paragraph (b) of this section does not apply if you 
are also entitled to disability benefits in the first month of your 
entitlement to husband's or wife's benefits. In this event, you are 
presumed to have filed for old-age benefits only if your disability 
benefits end before you reach full retirement age (as defined in Sec.  
404.409).

[FR Doc. 03-1949 Filed 1-29-03; 8:45 am]
BILLING CODE 4191-02-P