[Federal Register Volume 70, Number 46 (Thursday, March 10, 2005)]
[Rules and Regulations]
[Pages 11863-11865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-4638]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960-AF90


Wage Credits for Veterans and Members of the Uniformed Services

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: We are amending our rules on wage credits for veterans and 
members of the uniformed services. The revisions are required by the 
Department of Defense Appropriations Act of 2002 and the Social 
Security Protection Act of 2004. The enactments changed a Social 
Security Act requirement providing deemed military wage credits for 
service as members of the uniformed services

[[Page 11864]]

on active duty or active duty for training beginning in 1957 (when that 
service was first covered for Social Security purposes on a 
contributory basis). The provisions provide for the termination of such 
deemed military wage credits effective with military wages earned after 
December 31, 2001. The wage credits will continue to be given for 
periods prior to calendar year 2002.

DATES: These regulations are effective March 10, 2005.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register on the 
Internet site for the Government Printing Office, http://www.gpoaccess.gov/fr/index.html. It is also available on the Internet 
site for SSA (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT: Marylin Buster, Social Insurance 
Specialist, Office of Income Security Programs, Social Security 
Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, 
(410) 965-2490 or TTY (410) 966-5609. For information on eligibility, 
claiming benefits, or coverage of earnings, call our national toll-free 
number, 1-800-772-1213 or TTY 1-800-325-0778.

SUPPLEMENTARY INFORMATION:

Background

    Beginning in 1957, earnings of members of the uniformed services 
became covered for Social Security purposes. In 1968, Congress added a 
new section in the Social Security Act (section 229) providing for 
deemed military wage credits for active duty service and requiring 
Social Security to deem wage credits to the earnings record of 
uniformed service members when determining benefit entitlement and 
payment. Subsequently, the provision for the wage deeming program was 
made retroactive to 1957. The deemed military wage credits were granted 
in recognition that active service members did not get Social Security 
credit for the value of pay in kind such as food, shelter, and medical 
care, which is generally counted for other jobs covered under Social 
Security. However, due to the lower pay of service members, it was 
decided that it would be unfair to have the service members pay 
additional Federal Insurance Contributions Act (FICA) tax. The Trust 
Funds were to be reimbursed from general revenues on a current basis 
for the added cost of benefits, much the way the trust funds were 
reimbursed for gratuitous wage credits.
    The amount of deemed military wage credits changed over the years. 
The last change in 1977, provided for the crediting of deemed military 
wages of $100 for every $300 of covered military wages up to a maximum 
of $1,200 in deemed military wage credits per year. This modification 
was due to the change to annual wage reporting from quarterly wage 
reporting.
    In 1983, the method of financing deemed military wage credits 
changed by authorizing the General Fund of the Treasury to reimburse to 
the Trust Funds the amount of FICA tax (both employer and employee 
shares) that would have been paid on the deemed military wages had they 
been actual earnings. Before enactment of the 1983 amendments, the 
Social Security trust funds were reimbursed annually by Treasury (i.e., 
general revenues), based on an amortization schedule, for the cost of 
additional Social Security benefits attributable to the deemed military 
wage credits for military service for the period after 1956. The 1983 
amendments changed the financing structure so that the Trust funds are 
reimbursed for an amount equal to the Social Security taxes that would 
have been imposed annually if the deemed wage credits had been 
remuneration for employment.
    Section 8134 of The Department of Defense Appropriations Act of 
2002 (Pub. L. 107-117) modified the requirement of providing deemed 
military wage credits for service as members of the uniformed services 
on active duty or active duty for training beginning in 1957 (when that 
service was first covered for Social Security purposes on a 
contributory basis). With this modification, military wage credits will 
no longer be provided for military wages earned after December 31, 
2001.
    In 2004, a technical amendment in section 420 of Pub. L. 108-203, 
the Social Security Protection Act of 2004 amended section 229 of the 
Act to reflect section 8134 of Pub. L. 107-117 which ended the wage 
deeming program after 2001. The wage credits will continue to be given 
for periods prior to calendar year 2002. These qualifying periods of 
military service include active service during the World War II period 
September 16, 1940 through July 24, 1947, the post-World War II period 
July 25, 1947, through December 31, 1956, and members of the uniformed 
service on active duty after 1956 and before 2002.

Explanation of Changes

    We are revising Sec. Sec.  404.1301, 404.1302, and 404.1341 to 
reflect the termination of automatic across-the-board wage credits 
effective with military wages earned after December 31, 2001. The wage 
credits will continue to be applied for periods prior to calendar year 
2002.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 
902(a)(5), as amended by section 102 of Public Law 103-296, SSA follows 
the Administrative Procedure Act (APA) rulemaking procedures specified 
in 5 U.S.C. 553 in the development of its regulations. The APA provides 
exceptions to its notice and public 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.
    In the case of these final rules, we have determined that, under 5 
U.S.C. 553(b)(B), good cause exists for dispensing with the notice and 
public comment procedures. Good cause exists because these regulations 
merely conform our rules on deeming military wage credits to current 
law. The Agency has operated in accordance with the revised laws since 
January 2002. These regulations contain no substantive changes of 
interpretation. Therefore, opportunity for prior comment is 
unnecessary, and we are issuing these 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 for by 5 
U.S.C. 553(d). As explained above, these revisions conform our rules to 
current law and reflect our current practice. However, without these 
changes, our rules on military wage credits will conflict with current 
law and may mislead the public. Therefore, we find that it is in the 
public interest to make these rules effective upon publication.

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. We 
have also determined that these rules meet the plain language 
requirement of Executive Order 12866, as amended by Executive Order 
13258.

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities under the 
criteria of the

[[Page 11865]]

Regulatory Flexibility Act, as amended, 5 U.S.C. 601, et seq. 
Therefore, a regulatory flexibility analysis as provided in the 
Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    These final regulations will impose no additional information 
collection requirements requiring OMB clearance under the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3501, et seq.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security--Disability Insurance; 96.002, Social Security--Retirement 
Insurance; 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: December 2, 2004.
Jo Anne B. Barnhart,
Commissioner of Social Security.

0
For the reasons stated in the preamble, we are amending subpart N of 
part 404 of Title 20 of the Code of Federal Regulations as follows:

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

Subpart N--[Amended]

0
1. The authority citation for subpart N of part 404 continues to read 
as follows:

    Authority: Secs. 205(a) and (p), 210(l) and (m), 215(h), 217, 
229, and 702(a)(5) of the Social Security Act (42 U.S.C. 405(a) and 
(p), 410(l) and (m), 415(h), 417, 429, and 902(a)(5)).


Sec.  404.1301  [Amended]

0
2. In Sec.  404.1301, at the end of the fifth sentence in paragraph 
(a), add ``through 2001.''


Sec.  404.1302  [Amended]

0
3. In Sec.  404.1302, in the definition of ``Wage credit,'' the second 
sentence is revised by removing the words ``after 1956'' and adding in 
their place ``from 1957 through 2001.''


Sec.  404.1341  [Amended]

0
4. In Sec.  404.1341, in the first sentence of paragraph (a), remove 
the words ``after 1956'' and add in their place ``from 1957 through 
2001'' and in paragraph (b)(1), remove the words ``after 1977'' and add 
in their place ``from 1978 through 2001.''

[FR Doc. 05-4638 Filed 3-9-05; 8:45 am]
BILLING CODE 4191-02-P