of an individual who died prior to September 1950 is his primary insurance benefit as computed under the act in effect prior to the Social Security Act Amendments of 1950 (see § 403.301 et seq. of Regulations No. 3 (20 CFR, 1961 ed., Part 403)), except that if the individual served in the active military or naval service of the United States after September 15, 1940, his primary insurance benefit shall be computed so as to include wage credits for such service, provided they are otherwise creditable under the provisions of Subpart N of this part, but only if it results in a primary insurance benefit higher than that obtained under section 210 of the act in effect prior to the Social Security Act Amendments of 1950.

(c) Other cases. In all other cases, the primary insurance benefit of an individual shall be computed under the provisions of title II in effect prior to the Social Security Act Amendments of 1950, except that

(1) His average monthly wage shall be determined under the provisions of 88 404.205-404.211. using as his starting date December 31, 1936;

(2) The date the individual became entitled to old-age insurance benefits shall be deemed the date he became entitled to primary insurance benefits; and

(3) The one per centum addition provided for in section 209 (e) (2) of the act In effect prior to the Social Security Act Amendments of 1950 (§ 403.301 of Regulations No. 3 (20 CFR, 1961 ed.. Part 403)) shall be applicable only with respect to calendar years prior to 1951.

[16 F.R. 13043, Dec. 28, 1951, as amended at 17 F.R. 10285, Nov. 13, 1952; 28 F.R. 1037, Feb 2, 1963; 29 F.R. 15510, Nov. 19, 1964] § 404.204a Special cases not requiring use of conversion table appearing in § 404.203(b).

The provisions of §§ 404.203 (b) and 40.204 shall not apply where:

(a) A person was entitled (without the application of section 202 (j) (1) of the act) to a monthly benefit under section 202 for August 1952 (except under subsection (a) thereof); and

(b) Such person's entitlement to such benefit continued after August 1952; and

(c) The primary insurance amount of the individual on the basis of whose wages and self-employment income such benefit is payable was determined through the use of the conversion table

appearing in § 404.203 (a). In cases, the amount of such person's fit for months after August 1952 sh the amount for August 1952 (afte plying the provisions of sections 20 and 215 (g) of the act) increased b larger of the following amounts: per centum of such amount, rais the next higher multiple of $0.10 if not a multiple of $0.10, or an am equal to the product of $5 and the tion applied to the primary insur amount in determining such be raised to the next higher multipl $0.10 if it is not a multiple of $ The resulting amount shall be sul to the reductions required by 8 404 and after application of the provis of such section, it shall be raised to next higher multiple of $0.10 if it is a multiple of $0.10.

[17 F. R. 10285, Nov. 18, 1952]

§ 404.204b When the provisions § 404.204a become inoperative. The benefit amount of any person termined under $404.204a will be determined in accordance with the p visions of § 404.203 (b) and where:

404.

(a) Another person becomes entit on the basis of the same wages and se employment income to a benefit to whi he was not entitled, on the basis of su wages and self-employment income August 1952: or

person, entitled

(b) Another August 1952. to a benefit. on the ba of the same wages and self-employme income, is not entitled to such benefit the basis of such wages and self-emplo ment income: or

(c) The benefit amount payable such person or another person entitl on the basis of the same wages and sel employment income is different fro the benefit amount that would have bee payable for August 1952 had the Socia Security Act Amendments of 1952 bee applicable in such month.

The redetermined benefit amount shal be payable for the first month afte August 1952 in which the provisions o § 404.204a become inoperative. [17 F. R. 10285, Nov. 13, 1952]

§ 404.205 Method of determining aver age monthly wage.

An individual's average monthly wage for the purpose of computing his primary insurance amount, is computed by dividing

(a) His total wages after his starting date and before his wage closing date. and

(b) His total self-employment income after such starting date and before his self-employment income closing date by the number of months elapsing after such starting date and before his divisor closing date. There shall be excluded from the divisor any month in any quarter before the quarter in which such individual attained the age of 22 which was not a quarter of coverage, except that if the number of elapsed months is less than 18, it is increased to 18.

§ 404.206 Wages and self-employment income used in determining average monthly wage.

For the purposes of § 404.205, "total wages" and "total self-employment income" shall include

(a) All wages after an individual's starting date and before his wage closing date and all self-employment income after such starting date and before his self-employment closing date. Such wages and self-employment income shall not include, however, the excess over $3,600 of wages paid in and self-employment income credited to any calendar year after 1950, or any self-employment income for taxable years ending in or after the month in which the individual died or became entitled to old-age insurance benefits, whichever first occurred.

(b) All wage credits established or preserved pursuant to section 2 (b) of the act of June 14, 1948 (62 Stat. 438) (see § 404.813);

(c) All wage credits which have become conclusive pursuant to section 205 (c) of the act (see § 404.804);

(d) All wages deemed paid to an individual by reason of his service in the active military or naval service of the United States after September 15, 1940, and prior to April 1, 1956, provided such wages are otherwise creditable under the provisions of Subpart N of this part.

(e) All compensation certified to the Administration by the Railroad Retirement Board pursuant to section 5 (k) (3) of the Railroad Retirement Act, provided such compensation may otherwise be treated as wages under the provisions of Subpart O of this part.

[16 F.R. 13043. Dec. 28, 1951, as amended at 20 FR. 8073, Oct. 27, 1955]

41

§ 404.207 Rounding average monthly

wage.

If the average monthly wage as computed under § 404.205 is not a multiple of $1, it is reduced to the next lower multiple of $1.

[16 F.R. 13044, Dec. 28, 1951]

§ 404.208 Starting date.

An individual's "starting date" for purposes of 8 404.205 is December 31, 1950, or if later, the day before the quarter in which such individual attained the age of 22, whichever results in a higher average monthly wage, except that if such individual's primary insurance amount is determined by use of the conversion table (§ 404.203) and under the provisions of § 404.204 (c), his starting date shall be December 31, 1936. [16 F.R. 13044, Dec. 28, 1951]

§ 404.209 Closing date. of § 404.205.

For purposes

(a) Wage closing date. An individual's "wage closing date" is the first day of the second quarter before the quarter in which such individual died or became entitled to old-age insurance benefits, whichever first occurred. In the case of an individual who, in 1952, became entitled (without the application of section 202 (j) (1) of the act) to oldage insurance benefits or died and whose primary insurance amount is computed under § 404.202 (a) or (b), his "wage closing date" shall, instead of the date specified in the preceding sentence, be the first day of the quarter of death or entitlement, whichever first occurred, but only if it yields a higher primary insurance amount.

(b) Self-employment closing date. An individual's "self-employment income closing date" is the first day of the quarter following the end of such individual's last taxable year provided that

(1) Such year ended before the month in which he died or became entitled to old-age insurance benefits, whichever first occurred and

(2) He derived self-employment income during such year.

(c) Divisor closing date. An individual's "divisor closing date" is such individual's "wage closing date" or "selfemployment income closing date" whichever is the later.

However, if such individual died or became entitled to old-age insurance benefits after the first quarter in which he was both fully insured (see §404.111(a)

(1) and (a) (2)) and had attained age 65, his closing dates under paragraphs (a), (b), and (c) of this section shall be determined as though he became entitled to old-age insurance benefits in such first quarter, if a higher average monthly wage would result.

Example. A attained age 65 on December 1, 1953, and filed an application for old-age insurance benefits on December 15, 1953. He had self-employment income of $3,600 for the calendar year 1951 and for the calendar year 1952. A's "wage closing date" is April 1, 1953. His "self-employment income closing date" is January 1, 1958. His "divisor closing date" is April 1, 1953.

[16 F.R. 13044, Dec. 28, 1951, as amended at 17 F.R. 10285, Nov. 13, 1952; 29 FR. 15510. Nov, 19. 1964]

§ 404.210 Average monthly wage for conversion table.

For the purpose of computing maximum benefits, the average monthly wage of an individual whose primary insurance amount is determined by use of the conversion table (see $ 404.203) is the appropriate amount in column III of the conversion table.

[16 F.R. 13044. Dec. 28, 1951]

§ 404.211 Average monthly wage of veteran of World War II. Where entitlement to any monthly insurance benefit or a lump sum is based on the guaranteed-insured status granted to a veteran of World War II under the provisions of section 217(b) of the act (see § 404.1315), the average monthly wage of such veteran shall be deemed to be $160.

[16 FR 13044. Dec. 28. 1951, as amended at 28 FR. 1037, Feb. 2, 1963]

BASIC COMPUTATION ARISING FROM SOCIAL

SECURITY AMENDMENTS OF 1954 SOURCE: The provisions of 404.230 to 404.244 appear at 20 F.R. 2650, Apr. 21, 1955. unless otherwise noted.

§ 404.230 Effect of Social Amendments of 1954.

Security

The Social Security Amendments of 1954 changed in many respects the method by which an individual's primary insurance amount (8 404.201) is computed. It provides a new formula for computing an individual's primary insurance amount, standard end-ofyear starting dates and first-of-year closing dates. the dropping out of as much as 5 years of low earnings (or no earnings) in the determination of average monthly wage, and various methods

Except as may be otherwise specified, the regulations in this subpart following this section are applicable with respect to monthly benefits, for months after August 1954 and with respect to lumpsum death payments, in the case of deaths after August 1954.

§ 404.232 Method of determining primary insurance amount. Subject to the provisions of

404.233,

the primary insurance amount of an individual shall be either:

(a) Fifty-five percentum of the first $110 of his average monthly wage, plus 20 percentum of the next $240, such amount, if not a multiple of 10 cents, being raised to the next higher multiple of 10 cents; or

(b) The amount determined by use of the conversion table in § 404.234.

§ 404.233 Applicability of § 404.232.

The provisions of § 404.232 (a) and (b) are applicable in the case of any individual:

(a) Who does not become eligible for old-age insurance benefits under section 202 (a) until after August 1954 or dies after such month and without becoming eligible for such benefits under section 202 (a), and with respect to whom not less than 6 of the quarters elapsing after 1950 are quarters of coverage, or

(b) With respect to whom not less than 6 of the quarters elapsing after June 30, 1953, are quarter overage. Except as may be specifica, provided, in all other cases, only the provisions of § 404.232 (b) are applicable. Where the provisions of paragraphs (a) and (b) of § 404.232 are applicable to an individual his primary insurance amount shall be the larger of the two amounts determined under such paragraphs. For purposes of this section an individual shall be deemed eligible for old-age insurance benefits under section 202 (a) for any month if he was or would have been, upon filling application therefor in such month, entitled to such benefits for such month.

table is applicable shall be whichever of the following amounts is the larger:

(a) The amount appearing in column III of such table on the line on which in column I appears his primary insurance benefit as determined by § 404.235, or

(b) The amount appearing in column III of such table on the line on which in column II appears his primary insurance amount as determined under § 404.236.

The average monthly wage of any such individual shall, for purposes of section 203 (a) of the act, be the amount appearing in column IV on the line on which in column III appears his primary insurance amount.

§ 404.235 Determination of primary insurance benefit for conversion table (column I).

For purposes of 404.234 (a), the primary insurance benefit of an individual shall be determined under the provisions of paragraph (a), (b), or (c) of § 404.204; except that:

(a) If such individual cannot become entitled (without the application of section 202 (j) (1) of the act) to old-age insurance benefits under section 202 (a) of the act until after August 1954, or in death cases, died after August 1954 without becoming entitled to such benefits, then, for purposes of subparagraph (1) of paragraph (c) of § 404.204, such individual's average monthly wage shall be determined under the provisions of §§ 404.237 to 404.244, using as his starting date December 31, 1936;

(b) The provisions of paragraph (c) of § 404.204 shall not be applicable in any case in which the individual attained age twenty-two after 1950 and with respect to whom not less than 6 of the quarters elapsing after 1950 are quarters of coverage;

(c) Where the individual is a fully insured individual by reason of the provisions of § 404.111 (a) (3), the provisions of paragraph (b) of § 404.204 shall apply only where such individual died a currently insured individual and some other person was entitled to monthly benefits or a lump-sum death payment on the basis of his wages; in all other cases to which the provisions of such § 404.111(a) (3) are applicable, the provisions of paragraph (c) of § 404.204 shall apply and such individual's closing date, for purposes of 404.209 (a), shall be the first day of the quarter in which the individual died.

[20 F.R. 2650, Apr. 21, 1955, as amended at 29 F.R. 15510, Nov. 19, 1964]

§ 404.236 Determination of primary insurance amount for conversion table (column II).

For purposes of 404.234 (b), the primary insurance amount of an individual shall be determined under § 404.202 (a) (2); except that if such individual did not become entitled to (without the application of section 202 (j) (1) of the act) old-age insurance benefits under section 202 (a) of the act until after August 1954, or in death cases, died after August 1954 without becoming entitled to such benefits, then such individual's average monthly wage shall be determined under the provisions of §§ 404.237 to 404.244, but without regard to the provisions of § 404.242. § 404.237 Method of determining aver age monthly wage.

An individual's average monthly wage, for the purpose of computing his primary insurance amount, is computed by dividing his total wages and selfemployment income after his starting date and prior to his closing date by the number of months elapsing after such starting date and before his closing date, excluding from such elapsed months any month in any year prior to the year in which such individual attained the age of twenty-two but only if less than 2 quarters of such prior year are quarters of coverage. If the total number of elapsed months is less than 18, the divisor shall be increased to 18. § 404.238 Wages and self-employment income used in determining average monthly wage.

For purposes of § 404.237, "total wages" and "total self-employment income" of an individual shall include all wages and self-employment income after such individual's starting date and before his closing date and any other credits established for his account as specified in paragraphs (b), (c), (d) and (e) in § 404.206. "Total wages" and "total self-employment income" of an individual shall not include:

(a) The excess over $3,600 of wages paid in and self-employment income credited to any calendar year after 1950 and prior to 1955, or

(b) The excess over $4,200 of wages paid in and self-employment income credited to any calendar year after 1954

or

(c) If such individual's closing date is determined under paragraphs (a), (c) or (d) of § 404.241, and he has self-employment income in a taxable year which begins prior to such closing date and ends after the last day of the month preceding the month in which he becomes entitled to old-age insurance benefits under section 202 (a), his selfemployment income in such taxable year, except as provided in § 404.268. or

(d) The excess over $2,100 of wages paid in and self-employment income credited to the year 1956, but only if with respect to such individual's average monthly wage, a closing date pursuant to § 404.241 (d) is used.

§ 404.239 Rounding average monthly

wage.

If the average monthly wage as computed under § 404.237 is not a multiple of $1, it is reduced to the next lower multiple of $1.

§ 404.240 Starting date.

An individual's "starting date" shall be whichever of the following results in a higher primary insurance amount: (a) December 31, 1950. or

(b) The last day of the year in which he attains the age of twenty-one if such last day is after December 31, 1950, except that if such individual's primary insurance amount is determined by use of the conversion table in § 404 234 and under the provisions of § 404.235, his starting date shall be December 31, 1936. § 404.241 Closing date.

An individual's closing date shall be whichever of the following results in the highest primary insurance amount:

(a) The first day of the year in which he died or became entitled to old-age insurance benefits under section 202 (a), whichever first occurred, or

(b) The first day of the first year in which he both was a fully insured individual and had attained age 65. or

(c) The first day of the year following the year referred to in paragraph (a) of this section, but only if the Secretary determines. on the basis of evidence readily available to him at the time of the computation of the individual's primary insurance amount. that the use of a closing date under this paragraph will result in the highest primary insurance amount, or

(d) July 1, 1956. but only if the individual died or became (without the application of section 202 (1) (1) of the

act) entitled to old-age insurance benefits in 1956 and he had 6 quarters of coverage after 1954 and prior to the quarter following the quarter in which he died or became entitled to old-age insurance benefits, whichever first occurred.

If an individual's closing date is determined to be the date specified in paragraph (d) of this section, then such individual's starting date shall be December 31, 1954, instead of the day specified in § 404.240, and his primary insurance amount shall, after the determination of his average monthly wage, be computed under the provisions of 404.232 (a).

§ 404.242 Exclusion from computation of average monthly wage.

Except as may be otherwise provided, in the case of any individual to whom the provisions of paragraph (a) (but without regard to whether he has 6 quarters of coverage after 1950) or (b) of § 404.233 are applicable, the Secretary shall determine the 4 or fewer calendar years after his starting date and prior to his closing date which. if the months of such years and his wages and selfemployment income for such years were excluded in computing his average monthly wage, would produce the highest primary insurance amount. Such months and such wages and self-employment income shall be excluded for purposes of computing such individual's average monthly wage. The maximum number of calendar years determined under the first sentence of this section shall be 5 instead of 4 in the case of any individual who has not less than 20 quarters of coverage prior to the date he became entitled to old-age insurance benefits or died, whichever first occurred. § 404.243 Average monthly wage for conversion table.

For the purpose of computing maximum benefits. the average monthly wage of an individual whose primary insurance amount is determined by use of the conversion table (§ 404.234) is the appropriate amount in column IV of such table.

§ 404.244 Average monthly wage of veteran of World War II.

Where entitlement to any monthly insurance benefit or a lump sum is based on the guaranteed-insured status granted to a veteran of World War II under the provisions of section 217(b)