LGERS Disability Retirement Frequently Asked Questions

Q: What are the eligibility requirements for LGERS disability retirement benefits?

1. You must have 5 years of LGERS creditable service (one year of creditable service if you are a firefighter or rescue squad worker who becomes disabled as a result of line-of-duty injury, or any creditable service if you are a law enforcement officer who becomes disabled as a result of a line-of-duty injury;
2. You must apply to receive LGERS disability retirement at least one day, but not more than 120 days prior to your disability retirement date;  
3. You must be approved by the Medical Board to be permanently disabled for the further performance of your job;  
4. Your disability must have been continuous, permanent, and must have been incurred at the time of active employment; and  
5. You must not be eligible to receive an unreduced LGERS service retirement benefit.

You will need to contact your employer to determine what, if any, health benefits are provided by your employer to LGERS disability retirement retirees. LGERS does not provide State Health Plan (SHP) coverage to LGERS disability retirement or service retirement retires, except for retirees of a few local units which participate in the SHP. 

You should reach out to your employer and review the guides on the applicable disability forms to determine eligibility. If eligible, you must submit a complete disability application package to the Retirement Systems Division for processing. 

Forms can be mailed to the Retirement Systems or faxed to (919) 855-5800.

You can provide your medical documentation and Form 7A directly to the Retirement Systems Division, but your employer will need to verify your employment information and provide other information on the Form 7 to the Retirement Systems Division in order for your disability retirement benefits to be processed.

Upon receipt of a complete disability application package, the Retirement Systems Division’s Disability Section will review your account to verify that you meet disability benefit eligibility requirements and then schedule your file for Medical Board review, typically within 60 days.  

Once your application has been approved by the Medical Board, you will be sent a Form 7E to complete and submit to the Retirement Systems Division. Once this form has been processed, you should expect your first benefit payment to be mailed from our office on the 25^th of the month in which you retire (as long as you apply in advance of your retirement date), with all future benefits being directly deposited into your banking account by the 25^th of each following month.  

If your application has not been approved by the Medical Board as of the disability retirement effective date, you can expect to begin receiving LGERS disability retirement benefits following your approval from the Medical Board and submission of the Form 7E to the Retirement Systems Division.

Your first monthly disability retirement benefit will be mailed to you. Thereafter, we will direct deposit your monthly benefit into your bank account on the 25^th day of each month. In December, your benefit will be deposited on the 20^th. If the pay date falls on a Saturday, Sunday, or holiday, your deposit will be made on the last workday before the pay date. Direct deposit is fast, automatic, and free.

Reduced payment survivor plans under Options 2, 3, 6-2 and 6-3 are also available; however, Option 4 is not longer available.

On an annual basis, you may earn up to the difference between your highest consecutive 12 months of salary in the 48 months preceding your disability retirement date and the amount of your annual disability retirement benefits, without affecting your disability retirement benefit. If you earn more than this amount, your disability benefit will be reduced to an amount equal to the amount you exceeded the earnings limit. The amount you are allowed to earn is increased each January by any increase in the annual national consumer price index.

We encourage you to reach out the Retirement Systems Division to confirm your earnable allowance amount for each year you plan to return to work.

If you exceed your earnable allowance limit, the Retirement Systems Division is required to reduce your benefit equal to the amount you exceeded the earnings limit. If you are eligible to convert to a service retirement, the benefit will remain reduced and continue to be reduced each year based on  earnings, unless you contact the Retirement Systems Division to make an irrevocable election to convert to an early service retirement. The early service retirement will be based on your salary and years of service prior to your disability date.

State law requires each LGERS disability retiree to complete and submit a SOI form to report earnings from employment each year to the Retirement Systems Division until you reach the date on which you would have been first eligible for a unreduced retirement had you been able to continue working. If you do not provide the information within 120 days of the request, your disability retirement benefit may be suspended until he information is provided, and if the requested information is not provided after an additional 180 days, your benefit and health coverage through the SHP, if applicable, may be terminated.

The frequency of your re-examinations will be determined by the Medical Board depending on your disabling condition.

The Retirement Systems Division will send you the re-examination forms and notification 120 days prior to your re-examination date. After 60 days have passed, you will be sent a reminder notice and a final notice will be sent 30 days before your re-examination date which will inform you of the date your disability benefit will be suspended if you have not submitted the requested information. Upon suspension, your disability benefit will not be reinstated until you have submitted the requested information and have been re-approved by the Medical Board.

If you do not provide the requested information within one year,  your disability retirement benefit, including health coverage through the SHP, if applicable, may be terminated. If your disability retirement benefit is suspended and later reinstated, your SHP coverage may be reinstated retroactively, if applicable. However, as a result, you may experience a lapse in your health coverage which means you may not have health coverage for a month or more.  

Your disability retirement benefit will end:

• if a licensed physician does not continue to certify your disability when a re-examination is requested by the Medical Board;
• if you return to work as a contributing LGERS member;
• when you become eligible for an unreduced service retirement benefit;
• if you do not provide the annual Statement of Income within 120 days of the request, your disability retirement benefit may be suspended until the information is provided, and if the requested information is not provided after an additional 180 days, your benefit including health coverage through the State Health Plan, if applicable, may be terminated;
• if you do not provide the requested information for re-examination within one year of the request, your benefit including health coverage through the State Health Plan may be terminated; or
• at your death

When you reach the eligibility requirements for an unreduced service retirement, the Retirement Systems Division will send you a letter notifying you that you are being converted from disability retirement to service retirement. Upon conversion to service retirement, your monthly benefit amount will continue to be the same amount, but you will not longer be subject to medical re-examinations, disability retirement earnings limitations, and you will not longer be required to submit an annual SOI form. However, you will be subject to the return-to-work laws that apply to retirees who are receiving LGERS service retirement benefits, except that you are not required to “sit out” during the month following the effective date of your service retirement.

After you retire, each year by January 31 we will send you a Form 1099-R, which is similar to Form W-2 (Statement of Income and Tax Withheld), which you received annually while you were employed. The 1099-R shows the amount of your retirement benefits, the taxable portion (if any) of those benefits, the amount of tax withheld (if any), and other related information. We also send copies to the Internal Revenue Service and the North Carolina Department of Revenue.

Federal Income Tax

Part of your retirement benefit may not be subject to federal income tax because the tax was withheld while you were working. Included in the non-taxable part of your retirement benefits are contributions you made before the date your employer adopted a tax sheltering resolution (if they have done so), and any non-rollover service purchases you made.

North Carolina Income Tax

If you are a North Carolina resident and have maintained five or more years of retirement service credit as of August 12, 1989, your LGERS retirement benefit is not subject to North Carolina income tax. If you do not have five years of maintained retirement service credit as of August 12, 1989, the taxable portion of your retirement benefit is subject to North Carolina income tax.

If you are not a resident of North Carolina, you may not owe North Carolina income tax on your LGERS retirement benefit. However, you may owe state income tax in the state where you live. Contact your tax advisor, the North Carolina Department of Revenue or the Department of Revenue in your resident state for information relative to your situation. NC Retirement Systems can withhold only North Carolina income tax. We cannot withhold any other state’s income tax from your monthly benefit.

You may contact us at the number and email below.