SECTION 7. DRAFTING

INFORMATION.

The principal author of this notice is Willard W. Yates of the Office of Associate Chief Counsel (International). For further information regarding this notice, contact Willard W. Yates at (202) 622–3880 (not a toll-free call).

Tier 2 Tax Rates for 2004

Notice 2003–78

This notice publishes the tier 2 Railroad Retirement Tax Act (RRTA) tax rates for 2004 under §§ 3201(b), 3221(b), and 3211(b) of the Internal Revenue Code for railroad employees, employers, and employee representatives, respectively. For 2004, the tier 2 tax rate on employees is 4.9 percent of compensation and the tier 2 tax rate on employers and employee representatives is 13.1 percent of compensation.

BACKGROUND

Under RRTA, railroad employment is subject to a separate and distinct system of taxes from the taxes imposed under the Federal Insurance Contributions Act (Old-Age, Survivors, and Disability Insurance (social security) and Hospital Insurance (Medicare) taxes), which covers most other employees. Parts of the RRTA system are the responsibility of Internal Revenue Service and parts of the system are the responsibility of the U. S. Railroad Retirement Board (RRB), an independent agency of the Federal Government. The

iii. The annuitant’s address;

iv. The name and address of the custodian of the RRSP or RRIF and the plan account number, if any;

v. The total amount of distributions received from the RRSP or RRIF during the taxable year; and

vi. The balance in the RRSP or RRIF at

the end of the taxable year. The annuitant must provide a separate statement for each such RRSP or RRIF from which he or she has received a distribution during the taxable year. The annuitant must comply with section 2.05 of this notice with respect to such distributions.

.05. Distributions . A U.S. citizen or resident alien who has received any distributions during the taxable year from an RRSP or RRIF must report the total amount of distributions received during the taxable year from all such RRSPs and RRIFs on line 16a of the Form 1040 and the taxable amount of all such distributions (as determined under section 72) on line 16b of the Form 1040.

.06. Definition of Beneficiary and An- nuitant. For purposes of the new simplified reporting regime described in this notice, a beneficiary of an RRSP or RRIF is an individual who is subject to current U.S. income taxation on income accrued in the RRSP or RRIF or would be subject to such taxation had the individual not made the election under Article XVIII(7) of the U.S.-Canada income tax convention to defer U.S. income taxation of income accrued in the RRSP or RRIF. For these purposes, an annuitant of an RRSP or RRIF is an individual who is designated pursuant to the RRSP or RRIF as an annuitant.

.07. Record Retention . Taxpayers must retain supporting documentation relating to information required by the new reporting regime, including Canadian Forms T4RSP, T4RIF, or NR4, and periodic or annual statements issued by the custodian of the RRSP or RRIF.