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February 18, 1949

Captain Clayton Stiles
Air Line Pilots Association
3145 West 63rd Street
Chicago 29, Illinois

Dear Clayton:

In accordance with your request I am enclosing a draft of changes in the bill which would copy the new refund provisions of the Railroad Retirement Act.

As you will appreciate, one of the major problems on this refund has to do whether to pay a lump sum to those widows or parents who may be entitled to an annuity when the attain 60 (if a woman) or 65 (if a man--quite unusual). The usual case will be a widow whose immediate income ceases with the attainment of age 21 by the youngest child. In the amendment to the Railroad Retirement Act it was thought desirable to give some immediate payment to the widows entitled to deferred annuities (unless the amount of the husband's taxes had already been paid in the benefits), but it was thought too costly to both to pay the lump sum and the deferred annuity when the proper age is attained. The situation was compromised by giving the widow or parent the right of choice.

When you called it happened that one of the research staff of the Railroad Retirement board was in my office. He had mentioned that he had just done an article on this particular subject. i asked him to give me the results of his analysis of the situation, and the next two paragraphs are what he write in response to my request.

Residual Death Benefit Under the Railroad Retirement Act

The 1948 amendments to the Railroad Retirement Act resumed the residual type of lump-dum death benefit that had been established under the 1937 Act and abandoned under the 1946 amendments. Under the new amendments, with respect to the deaths of covered employees on or after January 1, 1947, when no further benefits would be payable other than a deferred annuityto a widow or parent at the age of 65, the residual lump sum is paid. The gross amount of this payment is 4 per cent of the employee's compensation earned from January 1, 1937, through the end of 1946, and