The Retirement System laws govern the types of compensation employers can include when reporting an employee’s compensation to the Retirement System each month and when completing an employee’s retirement paperwork. The guidance for compensation is found in both the Employer Manual and the North Carolina Retirement Systems Law Book under G. S. 135-1(7a) and 128-21(7a). 

Highlights of the Retirement Systems laws governing compensation

Compensation should be reported to the Retirement System via ORBIT for:

• Salary and wages paid to a member for work performed as a part of their job. This would be before deductions to cafeteria plans, 401(k), 414(h)(2), and 457 plans.
• Bonuses, provided they are based on performance or years of service, for a member.
• Lump sum vacation or annual leave payouts (provided they adhere to retirement statutes and are non-discriminatory).

Compensation should NOT be reported to the Retirement System via ORBIT for:

• Sign-on bonuses.
• Bonuses that are not based upon performance or longevity.
• Terminal payouts for unused sick leave.
• Travel, housing, moving, business or automotive allowances or reimbursement.
• Allowances or compensation paid to a member for the purpose of purchasing additional benefits such as medical insurance, disability insurance.
• Reimbursement of medical expenses or other personal expenses.
• Incentive payments for early retirement or contract buyouts or severance payments.
• Law enforcement officer special separation allowance.

• Refers to a day-to-day to day exhaustion of annual leave
• Report as REG

• Report as ANNLEAVE
• Note: Annual Leave Payouts should not exceed 240 hours
• Can only be reported when the member has been terminated, and the termination date and reason are reported for the member
• Pay period dates CANNOT extend after the retirement/termination dates.
   
• If the Annual Leave payout is paid in the same month as the retirement/termination date, please breakout the various pay types and follow the examples below.
  • To properly report an Annual Leave payment for a member that retires on 7/1/2xxx (retirement effective dates are always the 1st of the month):
    • Enter pay period dates prior to the term date such as 6/1/2xxx thru 6/30/2xxx.
    • For the last day of the pay period, use the last day worked NOT the retirement date.
    • The last day worked and retirement effective date CANNOT be the same date.
  • To properly report an Annual Leave payment for a member who terminates on
    6/15/2xxx:
    • Enter the payment amount coded with the pay type of ANNLEAVE
    • Enter pay period dates prior to the termination date such as 6/1/2xxx thru 6/15/2xxx
    • For the last day of the pay period, use the last day worked, 6/15/2xxx in this example.
       
• If the Annual Leave payment is paid AFTER the retirement/termination date, please breakout the various pay types and adjust the pay period dates per below.
  • To properly report an Annual Leave payment for a member that retires on 7/1/2xxx (retirement effective dates are always the 1st of the month):
    • Enter the payment amount coded with the pay type of ANNLEAVE
    • Code it as a RETRO adjustment
    • Enter pay period dates prior to the term date such as 6/1/2xxx thru 6/30/2xxx.
    • For the last day of the pay period, use the last day worked NOT the retirement date.
    • The last day worked and retirement effective date CANNOT be the same date.
  • To properly report an Annual Leave payment for a member who terminates on
    6/15/2xxx:
    • Enter the payment amount coded with the pay type of ANNLEAVE
    • Code it as a RETRO adjustment
    • Enter pay period dates prior to the termination date such as 6/1/2xxx thru 6/15/2xxx.
    • For the last day of the pay period, use the last day worked, 6/15/2xxx in this example.

• Report as ANNLONG.
• Can be reported on an annual basis or upon retirement/termination.
• Pay period dates CANNOT extend after the retirement/termination dates.
   
• If the Longevity payment is paid in the same month as the retirement/termination date, please breakout the various pay types and follow the examples below.
  • To properly report an Annual Longevity payment for a member that retires on 7/1/2xxx (retirement effective dates are always the 1st of the month):
    • Enter the payment amount coded with the pay type of ANNLONG
    • Enter pay period dates prior to the retirement effective date such as 6/1/2xxx thru 6/30/2xxx.
    • For the last day of the pay period, use the last day worked NOT the retirement date.
    • The last day worked and retirement effective date CANNOT be the same date.
  • To properly report an Annual Longevity payment for a member that terminates on
    6/15/2xxx:
    • Enter the payment amount coded with the pay type of ANNLONG
    • Enter pay period dates prior to the termination date such as 6/1/2xxx thru 6/15/2xxx.
    • For the last day of the pay period, use the last day worked, 6/15/2xxx in this example.
       
• If the Longevity payment is paid AFTER the retirement/termination date, please breakout the various pay types and adjust the pay period dates per below.
  • To properly report an Annual Longevity payment for a member that retires on 7/1/2xxx (retirement effective dates are always the 1st of the month):
    • Enter the payment amount coded with the pay type of ANNLONG
    • Code it as a RETRO adjustment
    • Enter pay period dates prior to the retirement effective date such as 6/1/2xxx thru 6/30/2xxx
    • For the last day of the pay period, use the last day worked NOT the retirement date.
    • The last day worked and retirement effective date CANNOT be the same date.
  • To properly report an Annual Longevity payment for a member that terminates on
    6/15/2xxx:
    • Enter the payment amount coded with the pay type of ANNLONG
    • Code it as a RETRO adjustment
    • Enter pay period dates prior to the termination date such as 6/1/2xxx thru 6/15/2xxx.
    • For the last day of the pay period, use the last day worked, 6/15/2xxx in this example.

Report as BONUS and adjust pay dates

Report as ANNLEAVE and adjust pay dates

• If the member is actively employed, report as REG. 
• If the member is not active, report as ANNLEAVE and adjust pay dates

• Report as REG
• Employer and Employee contributions should be made
• Retirement Service is not granted

• Report as SUMMERPAY
• Employer and Employee contributions should be made

• Report as OVERTIME
• This is ONLY accepted when sent paired together with a corresponding REG payment record for a member.
• If an Overtime record is transmitted without a REG record, the monthly ORBIT report will be rejected.

• If paid on a regular monthly basis, report as REG.
• If paid on a quarterly, semi-annual or annual basis, report as BONUS.

• Report as REG
• This is the ONLY pay type that grants retirement service and $0.00 amounts are NOT accepted.

• Do not report on the ORBIT report
• Does not meet the definition of “compensation”

• Refers to a day to day exhaustion of sick leave
• Report as REG
• If on 1/3 exhaustion of leave while in receipt of Worker’s Comp benefits, report a $0.00 Worker’s Comp record. Do not report the payment amount.

• Do not report on the ORBIT report
• Does not meet the definition of “compensation”

• Do not report on the ORBIT report
• Does not meet the definition of “compensation”

• SUMMERPAY does not grant retirement service but salary will be included in the member’s Average Final Compensation (AFC) calculation.
  • Below are some examples of when to report a payment as SUMMERPAY. This typically refers to members at educational institutions working summer school.
    • For an 11-month school employee that works starting 8/15/2xxx and ending on 6/14/2xxx, report any salary earned from 6/15/2xxx through 8/14/2xxx as SUMMERPAY.
    • For an employee on a 10-month contract who works part-time in the summer, report any time salary earned as SUMMERPAY

• If paid on a monthly basis, report the pay as REG.
• If paid in a lump-sum once or twice a year, report the pay as SUMMERPAY.

• Do not report on the ORBIT report
• Does not meet the definition of “compensation”

• Plan Code STG or LOCG and LeavePay
• Note that Salary and Contributions are $0.00
• Placeholder record showing time on any type of Leave except for time on the State Disability Plan. Examples include Military Leave.
• If a member changes status during a reporting period, the pay periods should be split up and 2 records should be sent, one for the time worked and one for the time on Leave.

• Plan Code STG or LOCG and WORKCOMP
• Note that Salary and Contributions are $0.00
• WC Benefit Payments should not be reported
• If on 1/3 exhaustion of leave while in receipt of WC Benefits, do not report leave payments
• Placeholder record showing time on Workers’ Compensation
• Members may be eligible to purchase retirement credit using Form 441

• Plan Code STDIS must be reported with Leave Pay
• Note that Salary and Contributions are $0.00

• Plan Code LOCWP and REG
• Note that Salary and Contributions are $0.00

• If a negative prior period adjustment is reported via ORBIT and the time period in question has crossed calendar years, the ORBIT record will be deleted and an invoice will be generated.
• If the member is still an active employee and your agency attempts to recover contributions that cross calendar years, only the member will be eligible to recover his/ her contributions via a manual refund commonly referred to internally as a pink sheet refund. Your agency will not be able to recover the employer contributions.

• If the member has retired and your agency is attempting to recover an overpayment from the prior calendar year, your agency should send us a letter on agency letterhead detailing the situation.
• We will issue a supplemental benefit payment to the retiree; your agency will not be allowed to recover any portion of its employer contributions that were reported in error.

If the member has received a refund and your agency attempts to recover an overpayment, the ORBIT record will be deleted and an invoice will be generated.

• If your agency is attempting to remit additional funds to the Retirement System that were omitted from an earlier ORBIT report for active members, within 90 days the contributions can be reported as a RETRO adjustment. The pay periods should match the period(s) of time that were underreported.
• If you have an active employee who was underreported and the period since the omission has been more than 90 days, the member may request a cost calculation for purchasing this service by completing a Form 466, Purchasing Retirement Credit for Unreported Service Omitted Through Error. This salary should not be reported via ORBIT.

• If a member has retired and your agency underreported the member’s salary and contributions, your agency may report the underpayment via ORBIT within a period of 90 days as a RETRO adjustment.
• If the period of omission for a retired member is more than 90 days, the member may request a cost calculation for purchasing this service by completing  Form 466.

• If a member has received a refund and your agency reports a RETRO adjustment via ORBIT within 90 days from omission, the member will receive a supplemental refund.
• If 90 days has passed and the member has received a refund, the record cannot be processed in ORBIT and, whenever possible, should not be reported in ORBIT. If the record is reported in ORBIT, the record will be deleted and an invoice will be generated.