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Retiree Earnings Allowance Released for 2024

The annual earnings allowance for 2024 is $40,980. To view your specific allowance, log in to your ORBIT account.

Some retirees of the Teachers' and State Employees' Retirement System and Local Governmental Employees' Retirement System will officially retire and later be reemployed. If the retiree returns to work for an employer in the Retirement System from which they retired, certain earnings limitations may apply.

For more information, please visit the Return-to-Work webpage.

Memorandum Regarding New Retirement Law Affecting UNC Health, Certain Parts of ECU, and Potentially Other UNC-CH and ECU Employees

Session Law 2023-134, the 2023 Appropriations Act enacted October 3, 2023, included Sections 4.10.(a)-(dd) related to retirement and other benefits for current or future employees of UNC Health Care (UNCHC) and certain parts of East Carolina University (ECU). This document refers to Sections 4.10.(a)-(dd) of Session Law 2023-134 as the “New Retirement Law.”

Some parts of the New Retirement Law may, in the future, affect additional employees of ECU and UNC-Chapel Hill (UNC-CH). It appears this could occur at the direction of UNCHC or ECU, without the legislature making additional laws.

The Retirement Systems Division of the Department of State Treasurer (RSD) does not make laws, but RSD must administer the Retirement Systems in accordance with applicable State and federal laws.

RSD has found some details of the New Retirement Law difficult to understand. The guidance in this document may change if there are clarifications from the legislature. Meanwhile, RSD is providing this guidance to help our members understand the new law as much as possible.

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RSD hopes this information will be useful to members of the Teachers’ and State Employees’ Retirement System (TSERS), especially those who work, or are considering working, at ECU, UNC-CH, or UNCHC.

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Note regarding “Similar Plans”: The New Retirement Law anticipates that UNCHC or ECU may adopt brand-new retirement plans for their employees in the future. These are called “Similar Plans” because, if they are adopted, they must be “similar” to the UNC Optional Retirement Plan (ORP). RSD is not currently aware that UNCHC or ECU has adopted a “Similar Plan.” The information in this document is based on the expected situation in January 2024, with no “Similar Plans” adopted. This document has some comments about what may happen if and when a “Similar Plan” is adopted, but they are not comprehensive.

Questions

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  • The New Retirement Law applies to UNC Health Care, the ECU Medical Faculty Practice Plan, and the ECU Dental School Clinical Operations.
  • Also, parts of the New Retirement Law may apply in the future to other “schools or components” of ECU and UNC-CH. It appears this could occur at the direction of UNCHC or ECU, without the legislature making additional laws.
  • If you work for ECU, UNC-CH, or UNCHC, and are unsure whether the New Retirement Law applies to your employer or position, check with your employer.
  • For purposes of this document, if and when the New Retirement Law applies to your employer, we refer to your employer as an “affected employer.”

  • No. If you are hired by an affected employer on or after January 1, 2024, and you are not already a member of TSERS, you will not be eligible for TSERS.
  • Similarly, if you were previously a member of TSERS but voluntarily withdrew your contributions after separating from service with the State, you will not be eligible for TSERS.
  • If you are hired in a position requiring at least 30 hours of work per week for at least nine months per year, the affected employer must place you in the UNC Optional Retirement Plan (ORP), or a “Similar Plan” (not yet adopted), or give you a choice between the ORP and the “Similar Plan.”
  • Until the affected employer adopts a “Similar Plan,” they must enroll you in the ORP. Although the name of the ORP includes the word “Optional,” it is not optional in this situation.
  • TSERS is a defined benefit retirement plan administered by RSD. The ORP is a defined contribution retirement plan operated by the UNC System. Both TSERS and the ORP require employee contributions equal to 6% of your compensation. Contact your employer for more details about the ORP.
  • After working with the affected employer, if you go to work for a non-affected employer that is not a UNC institution, in a position requiring TSERS membership, then you will join TSERS. Your time with the affected employer will not count toward your TSERS benefits, for eligibility or calculation purposes.
  • After working with the affected employer, if you go to work for a non-affected employer that is a UNC institution, you should contact your employer regarding the details of your situation. Depending on the situation, you may be required to remain in the ORP rather than having the option to join TSERS.

  • Yes, under the current law, at least as long as you stay employed in your same role or position.
  • If you are considering a change of positions on or after January 1, 2024, you should discuss with your employer to understand their interpretation. There are two parts of the New Retirement Law that seem to conflict with one another on this question. RSD has sought clarification from the legislature.
    • One part of the New Retirement Law says you will remain in TSERS unless your employer adopts a “Similar Plan” and you elect to join it.
    • Another part of the New Retirement Law says you have the right to continue in TSERS if you “maintain State employee status.” Maintaining State employee status is guaranteed only if “[you] remain in [your] current role or position, unless terminated in accordance with the terms of employment that existed immediately prior to January 1, 2024.”
    • RSD believes clarification is urgently needed. Meanwhile, RSD will rely on the affected employers to certify accurately as to which of their employees are eligible for TSERS according to the governing laws.
  • If you cease employment with the affected employer on or after January 1, 2024, and you are later rehired by an affected employer, you will be treated as a new employee. That means you cannot resume earning benefits under TSERS (see Q&A #2). Also, your service after being rehired will not count toward TSERS thresholds such as 5, 10, 20, 25, or 30 years. This could cause a long delay in your eligibility for retirement or retiree health care benefits, or even prevent your eligibility.
    • An exception is that any service under the ORP will continue to count for eligibility purposes only, if you were first hired as a TSERS member before January 1, 2021 and have not withdrawn your contributions associated with that service.
       

If I take a job with an affected employer on or after January 1, 2024, can I remain under TSERS?

  • Apparently, no. The New Retirement Law allows affected employers’ employees, who worked for the affected employers before 2024, to remain under TSERS in certain circumstances (see Q&A #3). This does not appear to extend to people who worked for non-affected employers before 2024 and take jobs with affected employers on or after January 1, 2024.
  • You will stop earning benefits under TSERS when you begin working for the affected employer, and the information in Q&A #2 will apply to you.
  • Your service with the affected employer will not count toward TSERS thresholds such as 5, 10, 20, 25, or 30 years. This could cause a long delay in your eligibility for retirement or retiree health care benefits, or even prevent your eligibility.
    • An exception is that any service under the ORP will continue to count for eligibility purposes only, if you were first hired as a TSERS member before January 1, 2021 and have not withdrawn your contributions associated with that service.
       

I earned benefits under TSERS from previous employment. Can I retire under TSERS while working for the affected employer?

  • No. For a retirement to become effective under TSERS, you must completely separate from employment with State employers, with no intent or agreement, express or implied, to return to work. You must also perform no work for State employers, including part-time, temporary, substitute, or contractor work, at any time during the six months immediately following your effective retirement date.
     
  • Even if you do not maintain “State employee” status (see Q&A #3), the affected employers under the New Retirement Law are still State employers. The “six-month waiting period” applies to any work you perform for the affected employers in any capacity.
     
  • Importantly, the restriction on pre-arranged work or work performed during the six-month period includes “contractor work” you may perform for a State entity while employed by a non-State entity, such as a private nonprofit affiliated with the State entity. 
     

  • Any TSERS retiree considering returning to work for a State employer should become closely familiar with the general Return-to-Work Laws, summarized on RSD’s website at https://www.myncretirement.com/retirees/return-work-laws.
  • If your return to work is with a non-affected employer:
  • The New Retirement Law has not changed any requirements.
  • If your return to work is with an affected employer:
    • You cannot resume earning benefits under TSERS (see Q&As #2 and #3).
    • If your position requires you to participate in the ORP, payment of your TSERS retirement benefit must be suspended while you work in the position.
    • If your position does not require you to participate in the ORP, the re-employment earnings limitation will apply (see website address above).
  • If you retired from certain affected employers and your return to work is with a non-State entity “affiliated with” the affected employer:
    • According to the New Retirement Law, the re-employment earnings limit does not apply to your compensation from this employment. Prior to the New Retirement Law, the limit would not have applied unless you were performing contractual services for the State.
    • RSD has sought clarification from the legislature. Pending any clarification, to qualify for this special rule, you must retire from the affected employer with no pre-arrangement to return to work for the State (including contractual work), observe the six-month period of performing no work (including contractual work), and then become employed in a position with a non-State entity affiliated with the affected employer where you perform contractual services for the State.

I earned benefits under TSERS from previous employment. Can I withdraw my TSERS contributions while working for the affected employer?

  • While participating in the ORP, you cannot withdraw your contributions. Generally, with certain exceptions, you become eligible for a voluntary withdrawal 60 days after you have stopped working in a position requiring contributions to TSERS or the ORP.
     

  • All members actively earning benefits under TSERS or the ORP are participants in DIPNC, and are eligible for DIPNC benefits if they experience a qualifying disability and meet the other requirements. The employer pays all contributions for DIPNC benefits. Participation in DIPNC does not include people earning benefits in “Similar Plans” if those are established.

2023 One-Time Supplement for TSERS, CJRS, LRS

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A one-time supplement was granted by the General Assembly.  This one-time supplement did not come out of the Plan and does not reduce funding levels.  

The one-time supplement will be issued to most eligible retirees in the October benefit payment, paid on October 25. Benefit payments will return to the regular monthly payment in November.

Retirees with an effective retirement date of October 1, 2023, will receive the one-time supplemental payment on or prior to the November pay date.

The one-time supplement will be paid  to monthly payees who retired on or before October 1, 2023, and are living as of October 1, 2023. This payment is equal to 4% of the annual retirement allowance, where the annual retirement allowance is 12 times the monthly allowance that was payable for October 2023. 

This payment applies to the Teachers’ and State Employees’ Retirement System (TSERS), Consolidated Judicial Retirement System (CJRS), and Legislative Retirement System (LRS). It does not apply to the Local Governmental Employees’ Retirement System (LGERS).


View Treasurer Folwell's Statement on One-Time Supplement

Legislation

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In 2023, the General Assembly made several changes that affect the Retirement Systems. Click here for a  brief explanation of some of the changes.

Retirement

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Members with a retirement date effective on or before Dec. 1, 2023
Your first retirement benefit payment should be a paper check. By cashing or depositing that check, you are locking in your retirement selections. If you do not cash or deposit that first check,  you are locking in your retirement selections. If you do not cash or deposit that first check, you have until the next benefit payment date to change your mind about your selections. After that payment date, your retirement selections will be locked in, even if you didn't cash the first check. For a list of benefit payment dates, click here.

Members with a retirement date effective on or after Jan. 1, 2024
Your first retirement benefit payment should be made by direct deposit. Instructions must be received and acknowledged by the Retirement Systems before your effective retirement date. Otherwise, a paper check will be mailed.

Your retirement selection is locked in when the first payment becomes normally due and the first benefit payment date has occurred.

Retirement Online is the most efficient way to apply for your retirement. Located in your secure ORBIT account, Retirement Online is available 120 days from your retirement date for members of the Teachers’ and State Employees’ Retirement System (TSERS) and Local Governmental Employees’ Retirement System (LGERS). For more information about the process, click here

If you have already submitted your retirement application, you can cancel your application through your ORIBT account or by sending a signed and dated cancellation letter.  

If you have already received or cashed your first retirement payment, you are not able to cancel your retirement. 

If you cancel your retirement, you will need to resubmit a retirement application when you are ready, and these are processed in the order received.  

Resubmitting a retirement application may present a delay in the available retirement date and payment, which require processing time as we head into the busy retirement season.  

If you are considering canceling your retirement, it is important to also communicate directly with your employer to confirm the availability of your position.

State Health Plan for Eligible Retirees

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The North Carolina State Health Plan has a blog discussing Humana Medicare Advantage Plans for Retirees who currently use providers at WakeMed and ECU Health (including Vidant, University Health Systems of Eastern Carolina, Inc).

Read the blog here.

SHP has created a flyer for retirees to take to their provider. View the Provider Flyer here. 
 

LGERS Membership for Volunteer Fire Departments

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Nonprofit-incorporated fire/rescue departments are sometimes called "volunteer fire departments" (VFDs) but often have paid employees. Based on federal law and IRS guidance, VFDs cannot join the Local and Governmental Employees Retirement System (LGERS) as employing units, because they are not governments, but nonprofit incorporations. 

Certain towns in LGERS recently inquired about whether employees of a VFD serving the town's jurisdiction could participate in LGERS as employees of the town if the town agreed to be the formal employer and "lease" the employees to the VFD. 

The North Carolina Retirement Systems (RSD) asked for an analysis by our tax counsel, Groom Law Group. The document listed below contains two pages of summary guidance from RSD and a ten-page memorandum from Groom outlining the relevant issues and questions. RSD urges employers considering a "leased employee" agreement to review the Groom analysis carefully and make their own determination based on the questions raised, and understanding the risks of misclassification.

Fire/Rescue Leased Employees Memo