§ 220.164 Employee end-of-year adjustment.

(a) General. After the end of a year, the employee whose annuity was withheld for earnings over $400 in a month receives a form on which to report his or her earnings for the year. (b) Earnings are less than $5000. If the employee's yearly earnings are less than $5000, all annuity payments and penalties withheld during the year because of earnings over $4800 are paid. (c) Earnings are $5000 or more. (1) If the employee's yearly earnings are $5000 or more, the annuity payments are adjusted so that the employee does not have more than one regular deduction for every $400 of earnings over $4800. The last $200 or more of earnings over $4800 is treated as if it were $400. If the annuity rate changes during the year, any annuities due at the end of the year are paid first for months in which the annuity rate is higher. Penalty deductions may also apply as described in paragraph (c)(2) of this section. (2) If the employee's yearly earnings are $5000 or more and the employee failed to report monthly earnings over $400 within the time limit described in § 220.162(b), penalty deductions will also apply. If it is the employee's first failure to report, the penalty deduction is equal to one month's annuity. If it is the employee's second or later failure to report, the penalty deduction equals the annuity amount for each month in which the employee earned over $400 and failed to report it on time. (d) This section is illustrated by the following examples: